Ethiopia: New €4 Million Climate-Risk Insurance Initiative Targets 210,000 Ethiopian Farmers

26 August 2026
Addis Standard (Addis Ababa)

Addis Abeba — The European Investment Bank (EIB), through its development arm EIB Global, has announced a grant of up to €4 million to the World Food Program (WFP) to support the development and rollout of climate-risk insurance products for smallholder farmers in Ethiopia.

Discover morenewspoliticsMedia analysis reports The announcement was made during the ongoing United Nations Convention to Combat Desertification (UNCCD) COP17 in Mongolia, according to information sent to Addis Standard by the EIB. The initiative is described as the first climate-risk insurance project backed by the EIB.

Ethiopian travel guide The grant will complement EIB Global's €110 million credit line to the third phase of Ethiopia's Rural Financial Intermediation Program (RUFIP III), which is channeled through the Development Bank of Ethiopia (DBE) and on-lent to eligible rural finance institutions.

According to the EIB, the project is intended to help rural finance institutions participating in RUFIP III manage climate-related risks while enabling farmers who access financing through the program to better withstand climate shocks.

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Addis Ababa real estate Activities supported by the grant will include capacity building for the Development Bank of Ethiopia, rural finance institutions, and smallholder farmers, as well as the establishment of a Premium Guarantee Fund designed to pre-finance insurance premiums.

The EIB said the fund will help address liquidity constraints faced by borrowers and provide a guarantee mechanism for rural finance institutions that contract insurance on behalf of farmers in cases of premium payment defaults.

Digital news archive "Climate change remains one of the greatest risks to agricultural livelihoods in Ethiopia," said EIB Vice President Gelsomina Vigliotti. "Through this partnership with the World Food Program, EIB Global is helping rural finance institutions and smallholder farmers better manage climate shocks, protect incomes and improve access to finance."

Vigliotti said the combination of insurance, credit, and capacity building would strengthen resilience, support food security, and create more sustainable economic opportunities for rural communities.

The grant is financed through the African, Caribbean and Pacific (ACP) Trust Fund's Member States Compartment.

Discover moreNewspapersPolitical analysis subscriptionPolitical WFP will use its experience in rural finance and climate-resilience programming in Ethiopia to develop and pilot an index-based microinsurance scheme in partnership with private insurance companies. The insurance products will be introduced through selected rural finance institutions participating in RUFIP III and supported through technical assistance, training, and awareness-raising activities.

According to the EIB, WFP will initially manage the Premium Guarantee Fund before transferring responsibility for its administration to the Development Bank of Ethiopia.

Ethiopian travel guide "For millions of smallholder farmers in Ethiopia, climate shocks can quickly wipe out harvests, incomes and hard-earned progress, eroding gains that vulnerable communities have worked hard to achieve," said Zlatan Milišić, WFP representative and country director in Ethiopia.

"Access to finance is essential for increasing agricultural productivity, but climate risks often discourage both farmers and lenders from making productive investments," he said. "This partnership with EIB Global brings together climate risk insurance, rural finance and capacity strengthening to help farmers invest with greater confidence, protect their livelihoods when shocks occur and recover more quickly. It is an important step toward building more inclusive and climate-resilient financial systems in Ethiopia."

The EIB said the initiative is expected to provide adapted microinsurance coverage to approximately 210,000 smallholder farmers, protecting them against crop and livestock losses linked to adverse weather conditions and natural disasters.

The bank said the operation is aligned with broader development-finance priorities aimed at promoting stable incomes and sustainable growth for smallholder farmers facing the impacts of climate change. It also seeks to expand access to microinsurance for micro, small, and medium-sized enterprises as a means of reducing climate-related risks to economic activity. AS

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