Estimating the Demand for Micro-Insurance in Ethiopia

Abstract

Commissioned by the International Labour Organization (ILO) and the United Nations Capital Development Fund (UNCDF), this study by Oxfam America constitutes one step in a much larger effort to determine how micro-insurance can help Ethiopia‘s poor become more resilient to negative financial shocks. The Centre for Financial Regulation and Inclusion (CENFRI) of South Africa has handled a supply and regulatory analysis in a separate study. This report focuses on the demand components, and investigated two main research questions: Do low-income households in Ethiopia need insurance? If so, would they be willing to buy it if it were made widely available? We researched the answer to these two questions through the combination of a thorough literature review and original qualitative participatory research in four socioeconomic systems of Ethiopia: low-income urban workers in Addis Ababa; agro-pastoralists in Hagere Mariam, Oromia; pastoralists in Yabello, Oromia; and coffee farmers in Yirgacheffe, Southern Nations, Nationalities and People‘s Region (SNNPR). The results of this study indicate the answer to both research questions is affirmative, though the final outcome of the second question depends largely upon whether the eventual supply of insurance products is affordable and truly client-centered. We recommend the Ethiopian government take adequate consumer protection measures to ensure the healthy development of this infant industry.