ETHIOPIA INDUSTRY UPDATE: New Levies to Support Disaster Risk Response Fund
- Feb 19
- 2 min read
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New Levies to Support Disaster Risk Response Fund
On 31 January 2026, it was reported that a new decree issued by the Council of Ministers will take effect in February, directing levies on bank loans, insurance premiums and other sources into the newly created Disaster Risk Response Fund. Insurance companies will be required to contribute 1% of all monthly premiums to the Fund.
The new Disaster Risk Response Fund decree introduces significant obligations for Ethiopia’s financial and insurance sectors, embedding private institutions directly into national disaster financing. By mandating contributions from insurers, banks, and fintech companies, the regulation not only expands the country’s funding base for disaster preparedness but also creates new operational, compliance, and financial considerations for industry participants.
The Fund is designed to reduce reliance on foreign aid and institutionalize disaster financing through predictable revenue streams collected across multiple sectors. Officials have identified at least 17 income sources, including loans, telecom services, airline tickets, fuel sales, and dividends effectively embedding disaster preparedness into routine economic activity rather than relying on emergency mobilization.
Impacts on Financial, Insurance and Economy
Financial & Insurance Sector:
Insurers must surrender 1% of premiums, aligning the industry with broader national risk-pooling responsibilities.
Banks must contribute 1% of loan values, while fintech income faces a 5% levy.
Economic Implications
The regulation broadens the funding base but raises concerns about:
Cost pass-through to consumers
Administrative enforcement capacity
Cumulative regulatory burden on heavily supervised sectors
Implications for Multinational Insurance
Increased business costs
Pricing fragmentation across jurisdictions
Capital and structuring
Compliance Complexity
Strategic Takeaway
This decree signals a structural evolution in sovereign disaster financing — one
that embeds insurers directly into national resilience frameworks.
For multinational organizations, the development reinforces three realities:
Regulatory costs tied to climate resilience are rising.
Insurance is increasingly viewed as public financial infrastructure.
Jurisdictional divergence will continue to shape global program design.
Expect more governments - particularly climate-exposed economies - to formalize
disaster funds with mandatory industry contributions, gradually redefining the boundary between insurance markets and public risk financing.
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