Home ITCNational Insurance Scheme launched to cover Ethiopian farmers against risks

National Insurance Scheme launched to cover Ethiopian farmers against risks

Farmland in Ethiopia

The GIACIS project (Geo-data for Innovative Agricultural Credit Insurance Schemes) has launched its first agricultural micro-insurance product. The remotely sensed driven scheme aims to secure farmers against investment losses that are at peril due to droughts. Around 200,000 Ethiopian farmers will be reached this year, potential rising to 15 million within five years. University of Twente’s Faculty of Geo-information Science and Earth Observation (ITC) provided the technological input for the satellite-based geo-data application.

Vulnerable to risks

The majority of farmers in Ethiopia have less than 0.5 ha of land. That makes them very vulnerable to risks caused by perils like droughts. This vulnerability results in risk-avoiding behavior, which means that farmers have a natural aversion to invest and to adopt the use of recommended management and inputs. Hence, farmers are caught in a poverty trap even though proper investments could substantially increase their yields and income.

Once insured at grass-roots level, farmers will experience less risks when deciding on the purchase of needed investments for growing their crops. Thus this agricultural micro-insurance product aims to lower the barriers to investment and stimulate economic decision making by farmers, which in turn will result in easier adoption of improved management techniques.

“This new insurance will make sustainable income for smallholder farmers possible by managing risks related to weather variation,” said Sintayehu Woldemichael, director general of the Public Financial Enterprises Agency at the launch in Addis Ababa.

Application of geo-data

The scheme will cover against exposure to drought (defined here as a negative anomaly in land cover greenness from what is considered climatologically-normal) of the farmer’s fields during a growing season. Tailoring by policy and by farmer to limit the insured period to his/her factual cropping period is already built-in. Farmer’s fields will be identified using printed high resolution satellite imagery and by an app that enables mobile phones to extract a position through triangulation techniques. The spatial resolution of a policy and of the information product for the scheme is 1x1 km.

ITC has prepared the logic, method and algorithms to process and interpret the satellite imagery into a sound business-oriented micro-insurance scheme. Dr.ir. Kees de Bie, associate professor in Spatial Information for Sustainable Agriculture at ITC: “We have developed an innovative scheme using advanced geo-data to locally detect the occurrence of adverse weather conditions that impact on crop development and productivity. Using probabilities, we construct very objective indexes, that can be marketed at very low costs. Developed risk transfer tools provide financial inclusion to farmers, promotes agricultural investments, and broker sustainable production methods.”


Service owner Kifiya is responsible for the information technology, training and marketing of GIACIS services. National Meteorological Agency (NMA) will operate the remote sensing applications, and agronomic aspects are under responsibility of the Agricultural Transformation Agency (ATA) of the Government of Ethiopia. University of Twente’s ITC Faculty caters for the scientific part, algorithm development and knowledge transfer as needed in the Public-Private Partnership (PPP). The Netherlands Space Office (NSO) oversees project implementation on behalf of Dutch Ministry of Foreign Affairs which is financing G4AW Facility.