Understanding the Ethiopian country context: First steps toward increasing resilience of poor rural households
Of Ethiopia’s 100 million plus residents –second only to Nigeria’s population on the continent – 80% reside in rural areas. This matters because rural people face different risks than those in urban areas, and they are often cut off from access to financial services that might help them manage those risks. Insurance is one of a slew of tools that can enable families to cope with the financial burden of risks; however as of 2014, less than 2% of Ethiopians were covered by any type of formal microinsurance product. Without sustainable methods to confront risk events such as loss of crops due to drought or an unexpected hospitalization, it is difficult for rural households to build their resiliency or ability to easily recover from financial shocks.
Ethiopia is one of three countries at the center of a current four-year project the MicroInsurance Centre at Milliman (MIC) is carrying out for the U.N.’s International Fund for Agricultural Development (IFAD) titled “Managing risks for rural development: promoting microinsurance innovations.” Officially started in April 2017, this project aims to increase resilience, build capacity to manage risks, and improve livelihoods among poor rural households in three selected countries, Ethiopia, China, and the Republic of Georgia.
Project lead and microinsurance technical expert Clémence Tatin-Jaleran returned from her second field visit to Ethiopia in October 2017 as part of the initial country assessments that team members are carrying out in each of the target countries. These assessments provide knowledge and understanding of the country context in order to identify the key risk management issues and areas where microinsurance or other risk management tools can address them. Specifically, the teams are evaluating the status and past experiences of microinsurance programs, the gaps faced by the rural population, potential distribution channels and other partners, and the regulatory environment, as well as gaining an understanding of IFAD country programs.
Tatin-Jaleran met with smallholder farmers in the regions of Tigray and Amhara to learn first-hand about the key risks they are exposed to and the current financial services they use. In addition to this, she met with local organizations that currently serve rural populations in Ethiopia as well as with IFAD program staff to evaluate any potential synergies with current projects in the country. Gathering this information is the critical first step in understanding the country context and the producers’ needs; it will inform potential services design and an innovation strategy for the next phase of the project–implementation.