Ethiopia – Integrated risk financing to protect livelihoods and foster development

Publication´s abstract

The paper presents a proposal for reform to the system of emergency relief in Ethiopia by building on recent innovations in resource mobilisation as well as delivery mechanisms to better address the needs of beneficiaries. It proposes to shift, to the extent possible, away from ex-post disaster relief to ex-ante risk management as the appropriate way of responding to emergencies. After discussing the need for early interventions in drought emergency situations, the paper presents new approaches to drought risk management. It then proposes the introduction of a new risk management strategy for Ethiopia including recommendations for the quantification of the risk, of potential beneficiaries and of required finances in order to optimise a portfolio of drought-financing instruments that minimises risk-transfer costs.

Conclusions:

• The current emergency appeal system for responding to humanitarian risk in Ethiopia leaves a critical gap in the government strategy for promoting sustainable livelihoods and protecting people from sliding, or falling back into destitution and chronic poverty.
• A new risk-management strategy increasing efficiency and minimising risk transfer cost is needed
• Financing of the risk-management instruments needs to be set aside in advance to allow timely, predictable and appropriate responses.