The InsuResilience Solutions Fund (ISF) has announced, in statements issued earlier this month, that it is supporting agricultural insurance in Ethiopia and Togo, as the agricultural sector is increasingly vulnerable to increasing climate-related risks such as droughts, excess rainfall, river flooding and extreme heat.
In Ethiopia, ISF is supporting a consortium led by Pula, an agricultural insurance and technology company, in partnership with the Ministry of Agriculture and the Ethiopian Agricultural Transformation Initiative (ATI), to introduce Area Yield Index Insurance (AYII). This insurance solution is embedded within Ethiopia's Input Voucher System (IVS), ensuring that smallholder farmers receive financial protection against crop failures.
At the initial pilot stage, AYII was rolled out in selected districts in the Amhara region in northern Ethiopia, covering 123,000 smallholder farmers. The insurance, priced at $6 per bag of fertiliser, provides payouts of up to ETB3,500 ($64) per bag in the event of yield losses caused by droughts, floods, pests, or diseases.
By integrating AYII within Ethiopia’s IVS, the initiative ensures that farmers automatically receive coverage when purchasing fertiliser. The IVS was introduced in response to the difficulties that smallholder farmers face in accessing credit for agricultural inputs such as fertiliser, improved seeds and labour-saving tools. The system engages local microfinance institutions to qualify farmers for loans and issue cash or credit vouchers that can be used to redeem inputs at stores.
Looking ahead, the AYII project aims to scale up coverage to 2m farmers in several regions, safeguarding key crops such as teff, wheat, maize, and barley.
Togo
ISF supports the introduction of the first agricultural insurance products in Togo by co-funding the development and implementation of five index-based insurance products designed to cover drought and excess rainfall for key staple and export crops: maize, rice, soy, cassava, and sesame.
Building on this foundation, ISF is now expanding its support through premium subsidies designed to make agricultural insurance more affordable and accessible for smallholder farmers.
This initiative is being implemented in partnership with Lorica Conseil, a local microinsurance consultancy, and SUNU Assurance, a local insurance company that will act as the risk taker for the subsidised products. The project specifically targets low-income farmers with less than three hectares of land, many of whom are unable to afford the full cost of premiums.
For those who opt for a bundled loan-insurance product, payouts in the event of a loss are used as partial loan repayments, thereby reducing their debt exposure. Alternatively, farmers who purchase standalone insurance receive direct compensation, typically via mobile money. In cases where index-based assessments do not detect actual crop losses, insurers may carry out on-site data collection and verification to determine compensation.