EIB Global and WFP launch climate-risk insurance for Ethiopian farmers

EIB Global is providing a grant of up to €4 million to the World Food Programme (WFP) to develop and implement climate-risk insurance products for smallholder farmers in Ethiopia. This initiative, announced at the UNCCD COP 17, marks the first climate-risk insurance project backed by the European Investment Bank.

The program aims to protect approximately 210,000 smallholder farmers from crop and livestock losses caused by adverse weather or natural disasters through index-based parametric microinsurance. The grant will complement EIB Global’s €110 million credit line for the third phase of the Rural Financial Intermediation Programme (RUFIP III) in Ethiopia.

Key components of the project include capacity building for the Development Bank of Ethiopia, rural finance institutions, and farmers. It also involves the establishment of a Premium Guarantee Fund to address liquidity constraints and provide a guarantee for financial institutions in the event of premium payment defaults. The WFP will initially administer this fund before transferring management to the Development Bank of Ethiopia to ensure long-term sustainability.