Investing in Ethiopia’s future
Tags: Drought, Climate Change, Ethiopia, Insurance, Risk

Investing in Ethiopia’s future

How managing risks now helps reduce the cost of an emergency response in the future WFP_Africa Follow Apr 23, 2020 · 4 min read

Story by Berhan Tsegaye

Staff from REST (Relief Society of Tigray), a local NGO, distribute cash at pay-out events. Photo: WFP/Edward Johnson

It is ironic that those most affected by climate change are the ones that contribute the least to global warming — the poorest and most food-insecure communities. It is just not fair.

The poor populations of Ethiopia are acutely aware of this, as they regularly experience cyclical droughts, floods and failed harvests, which affect crop production directly. They also have indirect effects.

First, farmers who lack savings and access to credit sell productive assets during a drought to pay for food. Second, as uncertainty about the crops increases, farmers reduce investments in crop production to maintain cash to cover expenses in case of poor harvests. Both behaviors reduce farmers’ ability to generate income in good seasons. A drought can launch a descent into poverty, which is difficult to reverse.

Insurance schemes mean that contributing farmers receive cash payouts if harvests fail due to drought. Photo: WFP/Edward Johnson

The World Food Programme’s (WFP) R4 Rural Resilience Initiative is helping families to manage these risks from harvest to harvest. The concept was designed not only because it helps empower farmers but because it also just makes sense; WFP knows that it costs less to manage risks than it does to provide relief in a crisis.

Why R4 in Tigray?

Ethiopia’s northern Tigray region is arid and is becoming increasingly drought prone as the climate changes. Most pastoralists’ plots are small, and their cultivation is almost entirely dependent on the frequency and quantity of rainfall. The soil is often degraded by deforestation and intensive cultivation. This is where the four components of R4 work together to improve agricultural productivity.

R4 refers to the four approaches taken in offsetting the risks that such disasters pose to communities:

1. Risk reduction — building community assets such as water traps;

2. Risk transfers — insurance schemes where contributing farmers receive payouts if harvests fail due to drought whilst they continue to invest in their own production in hope of good yields;

3. Risk taking — providing pastoralists with access to loans and advice on how to use them to broaden their agricultural activities in order to generate enough food and income; and

4. Risk reserves — savings and credit schemes which provide additional resources needed for farmers to invest in their fields.

If droughts reoccur, the ambition of R4 is that their effects on families and their lives will be less severe than before.

So what do people think?

Haddish. Photo: WFP/Edward Johnson

“Today, I’m collecting premiums from participants in Habes village but I’m also receiving a pay out,” explained Haddish, a 76-year-old Tigrayan with no family. The insurance is a safety net for me because the cash is recompense for some of my losses last harvest. It’s enough to buy one lamb and eventually it’ll grow into an expensive sheep.”

Netsanet. Photo: WFP/Edward Johnson

Netsanet is a 38-year-old mother of six and sat patiently with a wide smile throughout the morning event. She’s been an R4 participant for one year.

“It’s a really important initiative that supports the community in a positive way,” she explained. “I’m part of a savings and loan group of 20 women. We’re running them ourselves and allocating the loans where they’ll have the biggest impact. We also put a few Birr aside each month in case someone in the community needs support like paying for a funeral.”

Hadgu. Photo: WFP/Berhan Tsegaye

Hadgu turned 75 this year and explained, “with the money I received today, I am planning to start my own poultry farm. It’s something I can manage, and it’s given me a boost knowing I’ll be able to enhance my livelihood. I’m old but my life is changing in a good way.”

It’s clear that real changes are being made in Tigray. R4 is helping families across the region, especially female-headed ones who are prioritized for inclusion, to reduce the impact of drought on food security while maintaining their productive assets and diversifying income sources through various means. Importantly, R4 also supports change towards more resilient initiatives that in the long-term will reduce costly humanitarian interventions.

In 2020, thanks to generous support from Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) and KfW, WFP is planning to involve more than 40,000 people in its various R4 projects throughout Tigray region.