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PRESS RELEASE: African Risk Capacity Becomes a Member of the World Economic Forum

New York, September 24 – The African Risk Capacity (ARC) today announced that it has joined the World Economic Forum (WEF) towards sharing ideas with other global, independent, impartial and future-oriented leaders keen on improving the state of the world, especially in natural disaster risk reduction and resilience.

Over the past four decades, Sub-Saharan Africa has experienced more than 1,000 disasters often with devastating humanitarian crises. The escalating frequency of these extreme hydro-meteorological events and the challenges posed to Africa’s effort to achieve food security and development goals warranted that the development of a homegrown solution.

In November 2012, African Union (AU) established the African Risk Capacity (ARC) as a Specialised Agency to respond to the impacts of extreme weather events and natural disasters and serve as a continental disaster risk financing mechanism. ARC was given the mandate to help Member States improve their capacities to better plan, prepare and respond to extreme weather events and natural disasters, thereby protecting the food security of their vulnerable populations. The initial funding support for ARC came from the Governments of Sweden, United States, Switzerland, Canada, France, The Rockefeller Foundation and the International Fund for Agricultural Development (IFAD).

Subsequently, in 2014, ARC launched its first financial affiliate, the African Risk Capacity Insurance Company Limited (ARC Ltd) through a no-interest 20-year loan by the governments of Germany (KfW/BMZ) and the United Kingdom (DfID). Together, ARC Agency and ARC Ltd comprise the ARC Group and represents an effective public-private partnership model for natural disaster risk financing and management on the continent. To date, ARC has paid a total of US $36.8 million to member countries affected by drought, which has directly helped 2.1 million people and over 1 million livestock.

As the international organization leading dialogues for public-private cooperation, the World Economic Forum is uniquely positioned to enable the ARC join other key global stakeholders in useful and mutually benefiting dialogue on climate and natural disaster risk financing and management.

Speaking on the membership, ARC Director-General, Mohamed Beavogui, explained that the ARC concept is based on the fundamental rationale that responding earlier to a disaster before it develops into a crisis is financially efficient and more economical. “Our early intervention helps to save lives and livelihoods, with every dollar invested with ARC saving nearly four and a half dollars spent after a crisis evolves.”

Development experts on climate and natural disaster risk financing and management agree that such an approach is critical in building resilience of countries and communities. Most critically, it also helps to reduce the reliance of African countries on the international humanitarian system to fund response to disasters on the continent. The ARC model works by linking early warning systems with contingency planning and modern financial mechanisms, specifically insurance. This enables governments to provide targeted responses to disasters in a more timely, cost-effective, objective, and transparent manner.

“We are pleased to welcome the African Risk Capacity as a new member of the World Economic Forum,” said Bertrand Assamoi, the Forum’s Community Lead and Business Engagement Manager for Africa. “The innovative approach of ARC in helping African countries build capacities to better understand and manage natural disaster risks is critical in developing the necessary tools and financing to bridge humanitarian needs within a broader development and resilience framework.”

One of the most meaningful ways to engage with the World Economic Forum, according to a WEF official document, is through its System Initiatives. This works towards cultivating a shared vision for change, empowering widespread innovation and action, and enabling mutual accountability that offer a more effective public-private response to complex global challenges.

In the African region, the ‘Grow Africa’ project under ‘The Shaping the Future of Food’ initiative is mobilising investment through market-based partnerships to advance agricultural transformation and food security in 12 countries.

ARC expects that its membership tothe WEF will further strengthen its innovative work to disseminate invaluable data to government decision makers and the private sector through its reinsurance partners on the untapped potential of insurance and its application on the continent.

ARC, in partnership with Metabiota, Health Systems Consult Limited, and Columbia University, with support from The Rockefeller Foundation and the Swiss Agency for Development and Cooperation is also pioneering an Outbreak and Epidemic product for mitigating the unpredictable funding that amplifies both the risk and impact of outbreaks on the continent.

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About African Risk Capacity (ARC) ARC consists of ARC Agency and ARC Insurance Company Limited (ARC Ltd). ARC Agency was established in 2012 as a Specialised Agency of the African Union to help Member States improve their capacities to better plan, prepare and respond to weather-related disasters. ARC Ltd is a mutual insurance facility providing risk transfer services to Member States through risk pooling and access to reinsurance markets; it is owned by Member States with active insurance policies as well as KfW Development Bank and the UK Department of International Development (DfiD), as capital contributors.

With the support of the United Kingdom, Germany, Sweden, Switzerland, Canada, France, The Rockefeller Foundation and the United States, ARC assists AU Member States in reducing the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign disaster risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective and transparent manner. ARC is now using its expertise to help tackle some of the other greatest threats faced by the continent, including outbreaks and epidemics.

 

PRESS CONTACT

Chinedu Moghalu chinedu.moghalu@africanriskcapacity.org
                                  chinedu.moghalu@wfp.org

Confronting Drought: African Risk Capacity contributes to World Bank study

Three-quarters of Africa’s Sub-Saharan Africa’s cropland are drylands, which accounts for two-thirds of its cereal production and four-fifths of its livestock holdings. In East and West Africa, drylands are home to over 300 million people, and a large share of them are households vulnerable to drought. With climate change and population growth, the impact of drought could be even more severe in coming years.

To improve drought resilience in Africa’s drylands, it is key to identify interventions that would make the greatest impact on vulnerable livelihoods. African Risk Capacity’s Research and Development team contributed to the World Bank’s study Confronting Drought in Africa’s Drylands, which evaluated the 20-year impact of implementing drought-mitigating interventions in Africa’s drylands today compared to business-as-usual practices.

The methodology used in Africa RiskView to estimate the number of people affected by drought served as an underlying model for the impact assessment and cost/benefit analysis of drought-mitigating interventions for agriculture in the World Bank study. The model and methodology are outlined in greater detail in the background study Mitigating Drought Impacts in Drylands. The study was conducted in 2017/18 as a collaborative effort between contributors from various organizations working under the guidance of a team comprised of World Bank and African Risk Capacity’s Research and Development staff. By combining high levels of analytical rigor and policy relevance, this work applied the model and its estimated impacts of drought-mitigating interventions to various topics important to the social and economic development of Sub-Saharan Africa.

Conducting collaborative research with partners is a pillar of African Risk Capacity’s work across the continent. Through partnership with governments, multilateral organizations, and research institutions, ARC aims to build the resilience of the governments and peoples of Africa’s drylands against weather shocks that can drive back development gains. Through rigorous research and a focus on policies that work, ARC is providing a comprehensive package for African governments to identify, respond to, and financially address their natural disaster risks and build long-run resilience in the face of a changing climate.

Global network of aid agencies signs ‘game-changing’ drought insurance policy for early humanitarian response in Senegal

The Start Network has signed a ‘game-changing’ insurance policy, intended to pay out if a drought hits Senegal, enabling aid agencies to offer life-saving help before a famine threatens to take people’s lives.

The Start Network has taken this bold step because it believes that pre-emptive disaster financing could revolutionise the aid sector and catalyse a new way of preparing for crises. This new financial product will disburse funds early, based on pre-agreed ‘parametric’ triggers, unlike the current model, in which aid agencies are reliant on funding agreed after a crisis has taken place.

Run in a partnership with the Government of Senegal, the African Risk Capacity (ARC) and the Start Network, the pilot is funded by the German Federal Ministry for Economic Cooperation and Development (BMZ) through the German Development Bank, Kreditanstalt für Wiederaufbau (KfW). The pilot also received start-up support from the Rockefeller Foundation in its initial stages.

Under the arrangement, members of the Start Network will be able to secure funding, based upon a pre-agreed trigger, well before the worst effects of a drought are felt. This will enable farmers and their families to protect livestock and other valuable assets. In the most severe drought, with the largest payout, Start Network could help more than 200,000 people through cash interventions. Even more people could be helped through nutrition or agricultural projects.

The Government of Senegal has a pre-existing drought insurance policy from the African Risk Capacity, which is a basis for the complementary policy signed by the Start Network. If a drought occurs, payouts would be made separately to the Government and to Start Network, with participating NGOs as implementing partners. This will allow the government and Start Network members to immediately launch pre-agreed and coordinated activities to help people to protect their livestock and other assets, well in advance of any international humanitarian aid arriving.

The African Risk Capacity insurance policies are built on parametric insurance mechanisms.

  • Payouts would be made automatically when pre-agreed triggers are met.
  • The triggers in this pilot are based on rainfall data. When the rainfall levels fall below a certain threshold, the insurance policy will pay-out.
  • The policy is for the 2018-2019 agricultural season, and if it pays out, it will do so in November, towards the latter half of the 2018 growing season.

“We are delighted to have signed the insurance policy. This is a potential game-changer for the sector. Slow aid funding is one of the biggest structural problems in disaster response efforts, and this costs lives. Study after study shows that early action means more lives saved. That’s exactly what this tool aims to do. We will be working closely with the Government of Senegal and others to ensure swift relief is available to vulnerable people threatened by drought when it occurs.” – Emily Montier, Start Labs Manager

“Many developing countries face the risk of natural disasters without being sufficiently prepared. When a disaster strikes, the way that humanitarian organisations respond is predominantly based on ex-post disaster risk financing which is not able to quickly reach the poor and vulnerable. We are very pleased to finance ARC Replica as an initiative which builds up processes, structures and capacities within NGOs to purchase ARC’s drought insurance which improves preparedness and financing in case of a disaster to better help the people in need.” – Veronika Bertram-Hümmer, KfW Project Manager

The pilot is part of a wider programme, which also covers Mali and Mauritania where it is led by the United Nations World Food Programme (WFP). Through its EUR 10 million contribution to the programme, KfW hopes to encourage other donors to provide funding to expand the programme even further.

The pilot will provide an opportunity for NGOs to test the ARC insurance mechanism and learn the skills needed to manage new models of financing. The NGO implementing partners in this pilot include Catholic Relief Services, Action Against Hunger, Oxfam, Plan International, World Vision and Save the Children.

The Start Network believes, that through a wide adoption of innovative financial mechanisms by other stakeholders, the disaster risk management landscape will be transformed and will ultimately become more resilient. The Start Network also aims to generate evidence from the initiative to inform the development of a ‘family’ of global financing mechanisms for frontline humanitarian responders, set to include a financial tool-box of products such as contingency funds, forecast-based-financing, and loans in addition to insurance.

African Risk Capacity Strengthens the Board of Its Insurance Arm with World-Class Professionals

The African Risk Capacity Limited (the ARC Ltd) has appointed three new Non-Executive Directors (NEDs) and a Special Advisor to join its Board of Directors to bring independent strategic guidance and oversight to its operations.

The ARC Ltd is a financial affiliate of the African Risk Capacity (ARC), which is a Specialised Agency of the African Union established to assist member states in tackling the impact of natural disasters on vulnerable people. ARC transfers the burden of weather and other natural disaster risks away from governments, enabling them to build resilience and better plan, prepare, and respond to extreme events.

ARC Ltd is a ground-breaking public-private partnership that focuses on facilitating economic development in Africa and empowering governments to protect their vulnerable populations from the impact of natural disasters through the provision of sovereign insurance. Seeded by the UK’s DFID and Germany’s BMZ through KFW, ARC Ltd is a mutual insurance company that will eventually be wholly owned by African sovereigns.

Working alongside the Board Chairman, Mr Dele Babade, the Non-Executive Directors will join a team that is making concrete strides in empowering African sovereigns to build resilience against the catastrophic effects of climate and other natural disasters. Mr Babade highlighted that “the new Non-Executive Directors are bringing on board deep expertise, versatile experience, tested knowledge, and expansive networks to chart new paths that will continue to place ARC Ltd as a leader in innovative natural disaster risk financing and management.”

In just over 4 years of operations, the ARC Ltd has led the early disbursement of $36.8 million to ARC Ltd policyholders against drought events. These funds have gone towards assisting over 2.1 million people whose livelihoods rely on agriculture, preventing the loss of hard-earned developmental gains. Governments have used ARC Ltd funding to scale up cash transfers, subsidize livestock feeds, replenish depleted food reserves, and distribute emergency food supplies.

Speaking on the timeliness of the appointments of the new NEDs, Mohamed Beavogui, the Director-General of African Risk Capacity Agency said, “the natural disaster risk insurance ecosystem is evolving rapidly with more diversified products and services being introduced to the market by many players. Africa’s resilience is best assured by fielding its best team; and this is what has been done by seeking out the most fertile and respected minds in the industry to ensure that disaster risks are transferred in the most cost-effective manner.”

Expressing strong faith that these appointments will be a game-changer for the work of the African Risk Capacity, the CEO of ARC Ltd, Ms Dolika Banda, stated, “the high-level of combined international development experience, commercial insurance, savviness in building strategic global relationships, proven expertise in natural disaster financing, management and response systems, and a commitment to Africa that the new members are bringing on board will provide the requisite catalyst to the work of African Risk Capacity in providing customised solutions to Africa’s sovereigns for food security and economic growth.”

Mr Babade heartily welcomed Mr Abdoulie Janneh, Ms Delphine Traoré Maïdou, and Dr Frannie Leautier as Non-Executive Directors, as well as Dr Michel Jarraud, who will serve as Special Advisor to the Board

The appointments take effect from Wednesday, August 1.

For profiles of the ARC Ltd Board of Directors, including the new NEDs, visit http://www.africanriskcapacity.org/board-of-directors

African Risk Capacity Hones Innovation, Partners with the African Institute for Mathematical Sciences

Johannesburg, July 23, 2018 – The African Risk Capacity (ARC) and the African Institute for Mathematical Sciences – Next Einstein Initiative (AIMS-NEI) held an inception meeting at ARC Agency Offices in Johannesburg as part of their framework agreement to work together towards promoting innovation and assisting AU Member States to better prepare for and respond to natural disasters and extreme weather events.

The objective of the meeting was to discuss, first hand, the feasibility of developing a certification programme, and implementing an internship programme and support to Research and Development which are components of activities contained in an already existing AIMS-NEI / ARC partnership agreement.

Earlier, in March 2018, the African Risk Capacity and the African Institute of Mathematical Sciences entered into a formal partnership agreement to foster innovation through scientific learning and problem solving aimed at helping African countries better respond to natural disasters and climate change.

Established in 2003, the AIMS-NEI is a pan-African network of Centres of Excellence for postgraduate training, research and public engagement in mathematical sciences that enables Africa’s brightest students to become problem solvers and innovators that propel scientific, educational, and economic self-sufficiency.

Speaking at the meeting, the Director-General of the African Risk Capacity, Mohamed Beavogui, paid tribute to the founders of the AIMS-NEI and reaffirmed the resolve of African Union to pursue home-grown solutions for climate and other natural disaster problems facing the continent. He indicated that the Africa RiskView, the tool deployed by the ARC, is the leading tool for drought risk management on the continent. With expansion into flood modelling and parametric insurance for outbreaks and epidemics, Mr. Beavogui stated that the ARC requires continuous high-quality research to develop the requisite insurance tools.

“The intention of the African Union in establishing the African Risk Capacity is to protect its vulnerable population from the costly impacts of natural disaster risks. In addition to pooling financial resources, this requires scientific research and innovation to work. Our partnership with the African Institute for Mathematical Sciences connects us with the continent’s top existing scientists and those in the making.”

To effectively deliver on its mission and stay abreast of cutting edge knowledge and best practices, ARC needs a progressive pool of African experts, as well as partnerships with other global actors, on risk modelling, actuarial sciences, insurance, disasters management, and pathogen modelling.

The AIMS-NEI has an extensive network of technical and professional experts with the know-how and facilities to conduct research and develop solutions that respond to industry objectives, including ARC’s goal to catalyse a better risk management system for Africa and provide the capacity building support required to implement such a system.

In his remarks, Mr. Moulaye Camara, the Managing Director of Operations of the AIMS-NEI Global Network, thanked the African Risk Capacity and its leadership for the innovative and trailblazing work they are doing towards helping Africa become weather risk and natural disaster resilient.

“Mathematical sciences underlies every modern technology and its application is found in every field. Considering that Africa, will be home to 40 percent of the world’s youth by 2050, investing in mathematical sciences is critical to drive the continent’s development forward. This requires collaborations with like-minded institutions and persons, hence our goal in partnering with ARC in its mission to create cutting-edge pan-African natural disaster response systems to help governments in protecting the livelihoods of their vulnerable populations.”

The African Institute for Mathematical Sciences (AIMS) is Africa’s first network of Centres of Excellence in mathematical sciences. It was established to enable the continent’s youth to shape the continent’s future through science, technology, engineering and math education.

The African Risk Capacity model is home-grown, innovative, cost-effective, and is proving that it can assist member-states to strengthen their capacities to better plan, prepare, and respond to extreme weather events and natural disasters, thereby achieving the food security for their populations.

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About African Risk Capacity (ARC):

ARC consists of ARC Agency and ARC Insurance Company Limited (ARC Ltd). ARC Agency was established in 2012 as a Specialised Agency of the African Union to help Member States improve their capacities to better plan, prepare and respond to weather-related disasters. ARC Ltd is a mutual insurance facility providing risk transfer services to Member States through risk pooling and access to reinsurance markets; it is owned by Member States with active insurance policies as well as KfW Development Bank and the UK Department of International Development (DfiD), as capital contributors.

With the support of the United Kingdom, Germany, Sweden, Switzerland, Canada, France, The Rockefeller Foundation and the United States, ARC assists AU Member States in reducing the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign disaster risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective and transparent manner. ARC is now using its expertise to help tackle some of the other greatest threats faced by the continent, including outbreaks and epidemics.

PRESS CONTACT

Chinedu Moghalu
chinedu.moghalu@africanriskcapacity.org
chinedu.moghalu@wfp.org

PRESS RELEASE: Sudanese Government signs MoU with African Risk Capacity to address impacts of extreme weather events

Johannesburg, July 11, 2018 – The Government of Republic of the Sudan signed a Memorandum of Understanding (MoU) with the African Risk Capacity (ARC) to work together towards helping the country better prepare to efficiently deal with extreme weather events and natural disasters. The MoU was signed during the ARC ‘Lessons Learned Workshop’ for the countries of East and Southern African (ESA) region which held at the Capital on the Park Hotel, Johannesburg, South Africa, to take stock of the ARC programme implementation.

The Minister of Interior, Mr. Ibrahim Mahmoud Hamad, represented by Dr. Hashim Hussein, the Secretary-General of the Sudanese National Council for Civil Defence (NCCD), restated the faith of the Government of Sudan in the African Risk Capacity as a tested mechanism to provide sustainable solutions against the impact of natural disasters in the country. The Government of Sudan formalised the partnership with the Agency shortly after an ARC workshop in June. He reiterated the power the African continent can unleash when there is unity of purpose, as exemplified in the ARC initiative to combat natural disaster risks.

“The adverse impact of droughts and floods in Sudan threatens livelihoods,” said Mr. Hussein. “Unless measures to prepare for natural disaster risk are quickly taken, the country’s ongoing efforts to combat poverty, reduce food insecurity, and sustainably manage natural resources cannot be adequately achieved. This is our hope and objective in signing the MoU to work with the African Risk Capacity.”

The Director-General of the African Risk Capacity, Mr. Mohamed Beavogui, stated that this collaboration is yet another milestone in the resolve of Africans to taking charge of their own destiny.

“The commitment of the African Risk Capacity to protect the livelihoods of vulnerable people in Africa against the impact of natural disasters can best be realised when other member states join Sudan in signing the Memorandum of Understanding with ARC for structured national technical capacity building. The disaster risks confronting Africa affects all of the continent, and therefore, can best be combatted when we all work together.”

The Government of Sudan began engaging with the African Risk Capacity in September 2017 to explore ways to diversify existing disaster risk management strategies through a sovereign insurance mechanism. Through the MoU, the Government of Sudan will work with the African Risk Capacity to strengthen the national disaster risk management and financing systems in Sudan and create a pathway to effectively and sustainably finance disaster responses, namely to climate disasters like drought and flood.

Several vulnerability indices rank Sudan among the countries most affected by climate variability and change in the world. Sudan has the second largest holding of livestock in Africa after Ethiopia, and a large percentage of the livestock are kept by nomadic pastoralists who are severely exposed to drought. Although Sudan practices a mixed system of agriculture, 70% of its cereal production is rainfed agriculture that is susceptible to drought and flood.

The African Risk Capacity model is home-grown, innovative, cost-effective, and is proving that it can assist member-states to strengthen their capacities to better plan, prepare and respond to extreme weather events and natural disasters, thereby achieving the food security for their populations.

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About the African Risk Capacity (ARC):

The ARC consists of ARC Agency and ARC Insurance Company Limited (ARC Ltd). ARC Agency was established in 2012 as a Specialised Agency of the African Union to help Member States improve their capacities to better plan, prepare and respond to weather-related disasters. ARC Ltd is a mutual insurance facility providing risk transfer services to Member States through risk pooling and access to reinsurance markets; it is owned by Member States with active insurance policies as well as KfW Development Bank and the UK Department of International Development (DfiD), as capital contributors.

With the support of the United Kingdom, Germany, Sweden, Switzerland, Canada, France, The Rockefeller Foundation and the United States, ARC assists AU Member States in reducing the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign disaster risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective and transparent manner. ARC is now using its expertise to help tackle some of the other greatest threats faced by the continent, including outbreaks and epidemics.

For more information, please visit: www.africanriskcapacity.org

PRESS CONTACT

Chinedu Moghalu
chinedu.moghalu@africanriskcapacity.org
chinedu.moghalu@wfp.org

PRESS RELEASE: Nigerian Government signs MoU with African Risk Capacity to address impact of extreme weather events

Busan, May 24, 2018 – The Government of Nigeria has signed a Memorandum of Understanding (MoU) with the African Risk Capacity (ARC) to work together to address the impact of extreme weather events in Nigeria, including training support to government personnel.

The signing ceremony, which happened on the margins of the Annual Meetings of the African Development Bank (AfDB) on Thursday, in Busan, South Korea, comes on the heels of AfDB President Akinwumi Adesina’s pledge to support for the work of African Risk Capacity in the region, calling for more stakeholders to join the ARC to ensure the availability of insurance against natural disaster risks.

In March 2017, the AfDB and ARC partnered to strengthen technical collaboration towards enhancing the risk management infrastructure and policy across Africa, thereby building resilience against climate shocks through support to governments.

Nigeria’s Minister for Finance, Kemi Adeosun, congratulated the African Risk Capacity for its innovative approach towards climate risk financing and management in Africa. Adeosun assured that Nigeria will work with the African Risk Capacity to address the impact of extreme weather events in the country.

The journey towards a mutual technical collaboration with Nigeria began in July 2015 when African Risk Capacity conducted a scoping mission to the country that established the need for Nigeria to give greater consideration to the ARC initiative.

Nigeria participated in the discussions leading to the establishment of ARC in 2012 and the nomination of former Minister, Ngozi Okonjo-Iweala as the Chair of the African Risk Capacity Agency’s Governing Board. Nigeria subsequently signed the ARC Establishment Agreement on 4 December, 2014 to formally become a member of the institution.

ARC was established as a Specialized Agency of the African Union (AU) to help member states improve their capacities to better plan, prepare and respond to extreme weather events and natural disasters. Through its first financial affiliate, ARC Ltd, the institution provides African governments with innovative risk management and risk transfer tools and services towards creating a comprehensive pan-African disaster response system.

The leadership role of Nigeria in the continent and in the establishment of the ARC makes the signing of a formal MoU quite momentous for our work in the region,” said Mohamed Beavogui, the Director-General of African Risk Capacity. “We want to create systems that can truly protect the livelihoods of the most vulnerable and safeguard the significant development gains made by the country over the years.”

Earlier in the week, the Government of Nigeria announced the extension of its agreement with the African Development Bank on the Nigeria Trust Fund (NTF) for additional 10 years to assist the development efforts of low-income regional member countries.

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Media contact:

Chinedu Moghalu
Chinedu.moghalu@wfp.org
chinedu.moghalu@africanriskcapacity.org

PRESS RELEASE: Climate and disaster risk financing get fresh boost from African Development Bank

Busan, Korea, May 23, 2018 – The President of African Development Bank, Akinwumi A. Adesina, and the Bank’s Board of Governors held a high-level session on “Climate and Disaster Risk Financing” focusing on the Role of the African Risk Capacity (ARC) and the Africa Disaster Risk Financing Program (ADRiFi) on Wednesday in Busan, Korea.

The high-level session, part of the 53rd African Development Bank Group Annual Meetings underway in Busan, Korea, provided a platform for African Ministers of Finance, the Economy and Planning, who form its Board of Governors, to extend ongoing discussions between the Bank and regional member countries on the importance of disaster risk financing solutions in building resilience and protecting development gains.

In his opening remarks, Adesina stated that “Africa contributes no more than 2-3% of greenhouse gas emissions, but suffers disproportionately from the negative impacts of climate change. All across Africa, you see today the high frequency of droughts. Africa has been shortchanged by the climate financing architecture. Therefore, we need instruments that will help mitigate climate risks.”

Pledging Bank support for ARC operations, he encouraged others to follow suit. “It must not be only about the African Development Bank,” he said. “We want more stakeholders to join and more partnerships to make sure that the financing mechanism is there.”

“The future of Africa depends on the actions we take today. And we have to have a sense of urgency. If we pump in the alliance and partnerships needed, countries will be able to insure themselves of risks.”

Reiterating the challenges of climate change in Africa, especially the continent’s vulnerability to droughts, floods, tropical cyclones and outbreak and epidemics, ARC Chairperson Ngozi Okonjo-Iweala stated that ARC is about African countries taking charge of their own issues and finding ways to finance their response efforts and broader resilience and development. “We cannot remain a continent that is reliant on the generosity of the broader development community.”

She highlighted the critical role the ADRiFi will play in promoting disaster risk financing on the continent and how countries can access both capacity building and premium financing as part of their long-term resilience building efforts.

The Bank and ARC formalized their partnership In March 2017 to strengthen their technical collaboration towards enhancing the risk management infrastructure and policy across Africa while supporting countries in building resilience against climate shocks.

Following requests from regional member countries for premium financing support, the Bank proposed the ADRiFi program, which will run from 2018-2022, as a comprehensive, sustainable solution for risk transfer within the broader context of disaster risk management.

ADRiFi aligns with the Bank’s Ten-Year Strategy by enhancing resilience and response to climate shocks in regional member countries by improving the management of natural disaster risk and adaptation to climate change.

The Bank’s Board of Governors shared a common resolve and readiness to galvanize efforts and resources to help regional member countries improve their capacity to plan, prepare, and respond to extreme weather events and natural disasters so as to safeguard food security for Africa’s vulnerable populations.

The livelihoods of more than 70% of Africans depend on farming. A critical component of the High 5 Agenda of the African Development Bank is “Feed Africa” and hinges on unlocking the potential of agriculture.

Most agricultural activity in Africa is rain-fed, making it susceptible to the vagaries of climate change and natural disasters. ARC deploys innovative mechanisms and customized financial tools to help member countries reduce the risk of loss and damage caused by extreme weather events and natural disasters in a timely, cost-effective, objective and transparent manner.

Since its first financial affiliate was established in 2014, ARC has issued policies to eight governments over four drought risk pools. These countries have paid US $54 million in premiums (95% of which has come directly from national budgets) for a total coverage of approximately US $400 million over the period. ARC has further paid out US $37 million to countries affected by drought whose policies were triggered (Malawi, Mauritania, Niger, and Senegal). These funds have been used to support over 2 million people and 1 million livestock.

Sharing his excitement for the partnership with the Bank and especially the ADRiFi program, ARC Director General, Mohamed Beavogui, expressed optimism that more African member states will be able to participate in the insurance pool when the Bank makes premium-financing support available to them.

“The ability of Africa to fully provide parametric insurance against extreme weather events and other natural disasters is a critical next step towards achieving food security on the continent and reducing the current over reliance on the international humanitarian financing system for support.”

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About African Risk Capacity (ARC)

ARC consists of ARC Agency and ARC Insurance Company Limited (ARC Ltd). ARC Agency was established in 2012 as a Specialized Agency of the African Union to help Member States improve their capacities to better plan, prepare and respond to weather-related disasters. ARC Ltd. is a mutual insurance facility providing risk transfer services to Member States through risk pooling and access to reinsurance markets; it is owned by Member States with active insurance policies as well as KfW Development Bank and the UK Department of International Development as capital contributors.

With the support of the United Kingdom, Germany, Sweden, Switzerland, Canada, France, The Rockefeller Foundation and the United States, ARC assists AU Member States in reducing the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign disaster risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective and transparent manner. ARC is now using its expertise to help tackle some of the other greatest threats faced by the continent, including outbreaks and epidemics. www.africanriskcapacity.org

About the African Development Bank Group

The African Development Bank Group is Africa’s premier development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). On the ground in 41 African countries with an external office in Japan, the Bank contributes to the economic development and the social progress of its 54 regional member states. www.afdb.org

Media contacts:

Chinedu Moghalu. African Risk Capacity, chinedu.moghalu@africanriskcapacity.org
Olivia Ndong Obiang, Principal Communication Officer, African Development Bank, o.ndong-obiang@afdb.org

For more information on the 2018 Annual Meetings: https://am.afdb.org/en

PRESS RELEASE: Ebola, Meningitis, Marburg and Lassa Fever to be piloted in African Risk Capacity Outbreaks & Epidemics Insurance Programme

Version française ci-dessous

JOHANNESBURG, April 9, 2018 – The African Risk Capacity (ARC), an agency of the African Union, is developing an insurance product to facilitate rapid, first-line financial responses to disease outbreaks. In the pilot phase, Ebola, Marburg, Meningitis, and Lassa Fever will be covered. Over 30 countries across Africa are at risk of an outbreak of one or more of these four epidemic-prone diseases.

The Ministries of Health in Guinea and Uganda, the two countries implementing ARC’s Outbreak and Epidemic (O&E) Pilot Programme, selected these four pathogens due to the history-based potential for outbreaks and accompanying devastating impact on populations and economies.

O&E builds on ARC’s successes in implementing climate disaster risk financing programmes in Africa. It is designed as an integrated system to enable governments to respond early and effectively to public health emergencies. The programme will work with countries to determine their epidemic risks and select pathogens to be covered, optimize early warning systems, create pre-established contingency plans for rapid response, and provide access to swift disbursement of financing through parametric insurance.

Mohamed Béavogui, Director General of ARC Agency and United Nations Assistant Secretary General said, “Identifying this first set of pathogens for our programme is a significant milestone. After working closely with the governments of Uganda and Guinea, and with WHO AFRO, Africa CDC, and other stakeholders, this is a product that will make a difference for Africa, that targets the public health needs of Africans, and that was built through African and international collaboration.”

The highest global incidence of bacterial meningitis occurs in the “meningitis belt” of Africa, spanning 26 countries from Senegal to Ethiopia. West, East, and Central African nations are at risk of outbreaks of the Marburg virus disease and Lassa Fever, both of which are viral haemorrhagic fevers.

The 2015 Ebola outbreak in West Africa resulted in 11,310 deaths in Guinea, Sierra, and Liberia with an estimated economic impact on the three countries of US $2.8 billion, according to the World Bank. Studies estimate that initiating the Ebola response two months earlier could have reduced the fatalities by up to 80%.

On the need to rapidly respond to disasters on the continent, Mr. Béavogui said, “African governments identified the need for faster financing to avoid another tragedy like the recent Ebola outbreak in West Africa, and ARC is working in close collaboration with governments and our partners to address that need. We are creating an innovative system that acts early to finance efficient, effective responses to help stem an outbreak before it reaches a crisis level.”

The ARC O&E Pilot Programme is supported by The Rockefeller Foundation and Swiss Development Cooperation. Metabiota Inc, Health Systems Consult Limited and public health economists affiliated with Columbia University are collaborating with ARC on the development of its pilot product.

When launched as a full product in the fall of 2019 and made available to all African Union countries, O&E will help strengthen African health systems by contributing to national capacities in risk profiling and contingency/response planning, and ensuring that slow and unpredictable funding does not continue to prevent African countries and partners from adequately responding to outbreaks and epidemics.

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About African Risk Capacity (ARC)

ARC consists of ARC Agency and ARC Insurance Company Limited (ARC Ltd). ARC Agency was established in 2012 as a Specialised Agency of the African Union to help Member States improve their capacities to better plan, prepare and respond to weather-related disasters. ARC Ltd is a mutual insurance facility providing risk transfer services to Member States through risk pooling and access to reinsurance markets; it is owned by Member States with active insurance policies as well as KfW Development Bank and the UK Department of International Development (DfiD), as capital contributors.

With the support of the United Kingdom, Germany, Sweden, Switzerland, Canada, France, and the United States, ARC assists AU Member States in reducing the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign disaster risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective and transparent manner. ARC is now using its expertise to help tackle some of the other greatest threats faced by the continent, including outbreaks and epidemics.

For more information, please visit: www.africanriskcapacity.org

PRESS CONTACT

Chinedu Moghalu
chinedu.moghalu@africanriskcapacity.org


La maladie à virus Ebola, la méningite, la maladie à virus de Marburg et la fièvre de Lassa seront couvertes lors de la phase pilote du programme d’assurance contre les foyers et flambées épidémiques de la Mutuelle panafricaine de gestion des risques

JOHANNESBURG, le 9 avril 2018 – La Mutuelle panafricaine de gestion des risques (ARC), une institution de l’Union africaine, développe actuellement un produit d’assurance visant à faciliter la mise en œuvre d’interventions rapides et l’accès à une aide financière immédiate en cas d’épidémie. La maladie à virus Ebola, la maladie à virus de Marburg, la méningite et la fièvre de Lassa seront couvertes lors de la phase pilote. Plus de 30 pays africains sont exposés au risque de survenue de l’une de ces quatre maladies potentiellement épidémiogènes.

Les ministères de la Santé de la Guinée et de l’Ouganda, les deux pays où la phase pilote du programme d’assurance contre les foyers et flambées épidémiques de l’ARC est mise en place, ont sélectionné ces quatre agents pathogènes en raison du risque connu d’épidémies et de leur impact dévastateur sur les populations et les économies.

Le produit d’assurance O&E s’appuie sur les succès rencontrés par l’ARC lors de la mise en œuvre de programmes de financement des risques de catastrophe naturelle en Afrique. Il est conçu comme un système intégré visant à permettre aux gouvernements d’intervenir rapidement et efficacement en situation d’urgence de santé publique. Dans le cadre du programme, une collaboration sera établie avec les pays afin de déterminer leurs risques épidémiques et sélectionner les agents pathogènes à couvrir, optimiser les systèmes d’alerte précoce, mettre en place des plans d’urgence préétablis en vue d’une intervention rapide et un décaissement rapide des fonds par le biais de l’assurance indicielle.

Mohamed Beavogui, Directeur général de l’Institution de l’ARC et sous-secrétaire général des Nations Unies a déclaré que « l’identification de ce premier groupe d’agents pathogènes en vue de la réalisation de notre programme marque une étape significative. Après avoir travaillé en étroite collaboration avec les gouvernements ougandais et guinéen, le Bureau régional de l’OMS pour l’Afrique, le CACM/UA et d’autres intervenants, nous disposons d’un produit qui permettra de changer la donne en Afrique, qui cible les besoins en matière de santé publique des Africains et qui est le fruit d’une collaboration africaine et internationale ».

À l’échelle mondiale, l’incidence des méningites bactériennes est extrêmement élevée dans la « ceinture africaine de la méningite », qui comprend 26 pays et s’étend du Sénégal à l’Éthiopie. De nombreux pays d’Afrique de l’Ouest, d’Afrique de l’Est et d’Afrique centrale sont exposés au risque d’épidémie de maladie à virus de Marburg et de fièvre de Lassa, toutes deux classées dans la catégorie des fièvres hémorragiques virales.

L’épidémie d’Ebola qui a touché l’Afrique de l’Ouest en 2015 a fait 11 310 morts en Guinée, en Sierra Leone et au Liberia. La Banque mondiale a évalué le montant des pertes dans ces trois pays à 2,8 milliards de dollars. Selon certaines études, une riposte engagée face à l’épidémie d’Ebola deux mois plus tôt aurait permis de réduire le nombre de morts de 80%.

Concernant la nécessité de répondre rapidement aux catastrophes qui touchent le continent, M. Beavogui a déclaré que « les gouvernements africains ont souligné la nécessité de disposer d’un financement plus rapide afin d’éviter une nouvelle tragédie comme la récente épidémie d’Ebola qui a sévi en Afrique de l’Ouest. Dans cette optique, l’ARC travaille en étroite collaboration avec les gouvernements et ses partenaires. Nous sommes en train de mettre en place un système innovant permettant d’agir à un stade précoce afin de financer des interventions efficientes et efficaces qui contribueront à enrayer les épidémies avant qu’elles ne se transforment en crises ».

Le programme pilote O&E de l’ARC est soutenu par la Fondation Rockefeller et la Direction du développement et de la coopération de la Confédération suisse. Metabiota Inc., Health Systems Consult Limited et des économistes spécialistes des questions de santé publique affiliés à l’Université Columbia travaillent au développement du produit pilote de l’ARC en collaboration avec cette dernière.

Lorsqu’il sera lancé sous sa forme complète en automne 2019 et mis à la disposition de tous les pays de l’Union africaine, le produit O&E permettra de renforcer les systèmes de santé africains en contribuant au développement des capacités nationales en termes d’établissement des profils de risque et en planification d’urgence/des interventions. Il permettra également aux pays africains et à leurs partenaires de réagir de manière appropriée aux foyers et flambées épidémiques sans que ces interventions soient compromises par des financements lents et imprévisibles.

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À propos de la Mutuelle panafricaine de gestion des risques (ARC)

L’ARC comprend deux entités, l’Institution de l’ARC et la Société d’assurance de l’ARC (ARC Ltd). L’Institution de l’ARC a été créée en 2012 en tant qu’institution spécialisée de l’Union africaine afin d’aider les États membres de l’UA à améliorer leurs capacités en vue de mieux planifier, de mieux se préparer et de mieux répondre à des catastrophes naturelles liées au changement climatique. ARC Ltd est une société d’assurance mutuelle qui offre des services de transfert de risque aux États membres par le biais de la mutualisation des risques et l’accès aux marchés de la réassurance. L’ARC est détenue par les États membres disposant d’un contrat d’assurance en cours, ainsi que par la banque de développement KfW et le département britannique du développement international (DfID), en qualité de bailleurs de fonds.

Avec le soutien du Royaume-Uni, de l’Allemagne, de la Suède, de la Suisse, du Canada, de la France et des États-Unis, l’ARC aide les États membres de l’UA à réduire leurs risques de pertes et de dommages dus aux événements climatiques extrêmes qui touchent les populations africaines en apportant, par le biais de produits d’assurance contre les risques liés aux catastrophes, des réponses ciblées aux catastrophes naturelles, et cela, de manière plus rapide, économique, objective et transparente. L’ARC met ses compétences au service de la lutte contre certaines des plus importantes menaces auxquelles fait face le continent, dont les foyers et flambées épidémiques.

Pour en savoir plus, veuillez consulter notre site Internet : www.africanriskcapacity.org

CONTACT PRESSE ET MÉDIAS

Chinedu Moghalu
chinedu.moghalu@africanriskcapacity.org

PRESS RELEASE: African Risk Capacity Ltd awarded ‘Most Innovative ESG Risk Protection Company Africa 2017’

The African Risk Capacity Ltd (ARC Ltd) is delighted to announce that it has been awarded Global Banking & Finance Review magazine’s Most Innovative ESG Risk Protection Company Africa 2017.

Dolika Banda, CEO of ARC Ltd, said, “We are gratified to receive this great recognition. In 2017, we celebrated half a decade of tireless work and look forward to continuing to build inclusive and cutting-edge approaches to managing climate risks in the years ahead.”

In 2017, and in each year since ARC began offering sovereign disaster risk insurance, ARC interventions have helped avert situations that could have forced millions of families to sell off household assets, take children out of school, and face chronic food insecurity as a result of herds and crops perishing.

When ARC was being developed, it was recognised that ARC’s value proposition would be maximised through the integration of risk assessment, early warning, risk reduction through contingency planning, and risk financing through parametric insurance. This crucial combination allows for early, pre-planned response, which has been shown to be greater than four times more cost-effective than the appeals-based drought response historically used to address Africa’s food security shocks.

Countries participating in ARC’s insurance offering benefit from being part of a diversified risk pool and from the remarkably cost-effective access to global risk markets made possible through ARC Ltd.

ARC’s offering enables African countries to be equipped to manage climate-related disasters to a greater extent than previously experienced, while providing access to funding that is much more immediate.

The award announcement is published on the Global Banking and Finance Review website.

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About African Risk Capacity (ARC)

ARC consists of ARC Agency and ARC Insurance Company Limited (ARC Ltd). ARC Agency was established in 2012 as a Specialised Agency of the African Union to help Member States improve their capacities to better plan, prepare and respond to weather-related disasters. ARC Ltd is a mutual insurance facility providing risk transfer services to Member States through risk pooling and access to reinsurance markets; it is owned by Member States with active insurance policies as well as KfW Development Bank and the UK Department of International Development (DfiD), as capital contributors.

ARC plays an important role in responding to countries’ needs at times of crisis by providing fast access to funding for pre-agreed-upon, rapid response plans developed in conjunction with governments. ARC’s financing complements other forms of local and international support.

In the few years since ARC began, it has proved to be an effective and vital model – paying out USD $34 million to four countries (Senegal, Niger, Mauritania, and Malawi) affected by drought events. Those resources provided assistance for over two million people and approximately one million cattle.

ARC is using its expertise to help tackle some of the greatest threats faced by the continent, including droughts, outbreaks and epidemics, and tropical cyclones.

PRESS RELEASE: ARC and UN Partner to Increase Insurance Coverage in Africa

ADDIS ABABA – The African Risk Capacity (ARC), an agency of the African Union, and the United Nations Economic Commission for Africa (ECA) have announced a new partnership which will see the two organisations work together to increase insurance coverage against climate risks for African states.

The multilateral deal was announced at the African Union’s Annual Summit in Addis Ababa, and commits ARC and ECA to build the capacity of their 33 common Member States by embedding risk management investments into government planning through policy development. ARC and ECA also will share expertise and commit financial resources to joint analytical work in areas of economic and climate risk research in order to promote risk transfer instruments.

The UN estimates that Africa will see the adaptation costs of climate change rise to $50 billion per year by 2050.

“This partnership marks a bold new phase of heightened collaboration on combatting the effects of climate change in Africa,” said Mohamed Beavogui, Director-General of ARC Agency. “The future of disaster risk management is an increasingly urgent economic issue, and ECA’s unique expertise will complement ARC’s work serving its Member States and building preparedness and resilience on the continent.”

In the four years that ARC has offered insurance coverage to its Member States, it has paid out more than USD $34 million to Member States affected by drought events. These resources have assisted over two million people affected by climate disaster.

“Climate change is one of the biggest threats to Africa’s economic and social development,” said ECA Executive Secretary Vera Songwe. “We believe that efforts like our partnership with ARC will help move the needle, so that African countries can be well-guarded against these threats, and they can thrive.”

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About United Nations Economic Commission for Africa (ECA)

ECA is a UN regional commission established by the Economic and Social Council (ECOSOC) of the United Nations (UN) in 1958. ECA’s mandate is to promote the economic and social development of its member States, foster intra-regional integration, and promote international cooperation for Africa’s development. Made up of 54 Member States, and playing a dual role as a regional arm of the UN and as a key component of the African institutional landscape, ECA is well positioned to make unique contributions to address the Continent’s development challenges.

ECA’s strength derives from its role as the only UN agency mandated to operate at the regional and sub-regional levels to harness resources and bring them to bear on Africa’s priorities. To enhance its impact, ECA places a special focus on collecting up to date and original regional statistics in order to ground its policy research and advocacy on clear objective evidence; promoting policy consensus; providing meaningful capacity development; and providing advisory services in key thematic fields.

For more information, please visit: https://www.uneca.org/

About African Risk Capacity (ARC)

ARC consists of ARC Agency and ARC Insurance Company Limited (ARC Ltd). ARC Agency was established in 2012 as a Specialised Agency of the African Union to help Member States improve their capacities to better plan, prepare and respond to weather-related disasters. ARC Ltd is a mutual insurance facility providing risk transfer services to Member States through risk pooling and access to reinsurance markets; it is owned by Member States with active insurance policies as well as KfW Development Bank and the UK Department of International Development (DfiD), as capital contributors.

ARC plays an important role in responding to countries’ needs at times of crisis by providing fast access to funding for pre-agreed-upon, rapid response plans developed in conjunction with governments. ARC’s financing complements other forms of local and international support.

In the few years since ARC began, it has proved to be an effective and vital model – paying out USD $34 million to four countries (Senegal, Niger, Mauritania, and Malawi) affected by drought events. Those resources provided assistance for over two million people and approximately one million cattle.

ARC is using its expertise to help tackle some of the greatest threats faced by the continent, including droughts, outbreaks and epidemics, and tropical cyclones.

For more information, please visit: www.africanriskcapacity.org

PRESS CONTACTS:

Molly Toomey
mtoomey@mercuryllc.com

Sophia Denekew
Denekews.uneca@un.org

PRESS RELEASE: France contributes US $5 million to African Risk Capacity to support climate risk insurance

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PARIS—The African Risk Capacity (ARC) on December 13 welcomed a US $5 million contribution from the Agence Française de Développement (AFD) which will help African governments respond to climate-related disasters more quickly, effectively, and sustainably.

The contribution will help further ARC’s mission of building the capacity of African governments to manage disaster risks through the implementation of early warning tools, contingency planning, and specialized insurance.

ARC and the AFD, on behalf of the Government of France, signed the agreement at the occasion of the One Planet Summit in Paris. The Summit brought together some 60 heads of state, several international organizations, and financial institutions to mobilize public and private finance towards accelerating efforts to meet the goals outlined in the Paris Climate Agreement.

ARC provides sovereign disaster risk insurance to African governments through its insurance affiliate, ARC Ltd, creating rapid access to life-saving funding during extreme climate events, such as droughts. ARC’s technology and capacity-building efforts enable countries to monitor climate indicators and predict response costs. Its disaster preparedness work helps governments put plans and structures in place to manage disasters. All of these measures, coupled with the swift deployment of funds and resources afforded through ARC insurance policies, enable countries to pre-empt the devastating effects of drought before development gains are reversed and lives lost.

Since it began offering insurance coverage in 2014, ARC has paid out US $34 million to four countries – Senegal, Mauritania, Niger, and Malawi – to assist over two million people when the impact of drought affected food security and livelihoods.

The Government of France and ARC are members of InsuResilience Global Partnership, which aims to scale up climate insurance to cover an additional 400 million vulnerable people by 2020.

In putting its support and resources behind ARC, the Government of France joins the United Kingdom, Germany, Canada, Sweden, Switzerland, the United States, and the Rockefeller Foundation.

“We welcome this generous donation and value France’s commitment to the fight against the effects of climate change in Africa,” said Mohamed Beavogui, Director-General of ARC. “With support like this from international partners aligned with our mission, African governments are in a better position to utilize new methods of financing and build resilience against climate-related disasters – and to invest in our continent’s well-being.”

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About African Risk Capacity (ARC)

ARC works with African Union (AU) countries to reduce the risk of loss and damage caused by extreme weather events affecting the continent’s populations by providing sovereign disaster risk insurance and other support.

ARC consists of ARC Agency and ARC Insurance Company Limited (ARC Ltd). ARC was established in 2012 as a Specialised Agency of the AU to help Member States improve their capacities to better plan, prepare and respond to weather-related disasters. ARC Ltd is a mutual insurance facility providing risk transfer services to Member States through risk pooling and access to reinsurance markets; it is owned by Member States with active insurance policies as well as KfW Development Bank and the UK Department of International Development (DfiD), as capital contributors. www.africanriskcapacity.org

About the Agence Française de Développement (AFD)

AFD is a public institution responsible for the implementation of France’s cooperation policy. It has been working for 75 years to fight against poverty and promote sustainable development. AFD operates on four continents via a network of 85 offices and carries out the mission entrusted to it by the French Government by financing development projects and programs, contributing to a more sustainable and shared economic growth, improving living conditions for populations, participating in preserving the planet, and helping stabilize fragile and post-crisis countries. In 2016, AFD earmarked 9.4bn euros to finance projects in developing countries and in the French overseas territories. afd.fr

PRESS CONTACTS:

Mercury LLC
Molly Toomey
mtoomey@mercuryllc.com

AFD
Magali Mevellec
mevellecm@afd.fr

Celebrating 5 Years of Innovation and Collaboration at African Risk Capacity

Five years ago, in November 2012, eighteen African governments met in South Africa to take action against the impacts of natural disasters that repeatedly affect the continent, driving countless lives into destitution. Under the umbrella of the African Union, African sovereigns formed a continental institution dedicated to creating more effective, efficient, and equitable solutions to natural disaster risks across the continent. Through solidarity and innovation, African governments agreed to embark on a transformative journey together: to shift from responding to disasters after they strike to preparing for perils before they devastate the most vulnerable populations.

This is how the African Risk Capacity (ARC) was born as a Specialized Agency of the African Union.

Signing the ARC Establishment Treaty, November 2012Signing the ARC Establishment Treaty, November 2012

This month, we celebrated ARC’s five-year anniversary, and there is much to celebrate from a half-decade of tireless work. We celebrate the visionary work of our predecessors who built this institution with a strong foundation and a bold vision to always grow, innovate, and collaborate. We celebrate the continued support of the World Food Programme, which provided us fertile soil to grow from a seed of an idea into a partnered institution striving for a food secure Africa together. We celebrate the new partnerships we forged and the relationships we nurtured with regional economic communities, multilateral institutions and banks, international organizations, NGOs, the insurance industry, and academia to build comprehensive and inclusive approaches to climate risks in Africa. We celebrate the unwavering support, faith, and guidance of our donors – the United Kingdom, Germany, the Rockefeller Foundation, Canada, France, Sweden, the United States, and Switzerland – which helped propel us to where we are today.

Today, and every day, we celebrate the 2.1 million people we served when harvests failed, the US $34 million paid out which demonstrated the proof of the ARC concept, the US $54 million that African governments pooled together and budgeted from their own limited resources to spearhead this African innovation, and our 33 Member States and the African Union who steer us to build the best solutions for Africa.

157,000 people received assistance in Niger from ARC in 2015 following poor rainfall.
157,000 people received assistance in Niger from ARC in 2015 following poor rainfall.

As we work towards the first decade of our journey, the next five years promise to show deeper technical and financial collaboration to protect more lives and livelihoods against more frequent and intense natural disasters. We will use the coming years to explore the possibility of offering risk management products for additional perils, such as for public health outbreaks and epidemics, floods, and tropical cyclones, to ARC Member States. We look forward to heralding a future where Africa is fully equipped with the right tools, skills and systems in place to protect its populations against the uncertainties of climate change and other disasters, and we will achieve this with a steadfast commitment to this vision, hand-in-glove with our partners.

ARC @ COP23

Every year, the United Nations Climate Change Conference, or COP, gathers the influential thinkers and doers of climate change policy from around the world and across different sectors to discuss, deliberate, and decide on action that must be taken on crucial climate change issues.

Since 2014, the African Risk Capacity has attended the COP as an organization at the forefront of climate financing solutions. At COP20, ARC unveiled its plans for its Extreme Climate Facility (XCF). At COP21 – the historic summit when the Paris Agreement was signed – UN Secretary General Ban Ki-Moon and President Barack Obama strongly endorsed ARC by voicing support for climate insurance as a solution to climate change impacts. This endorsement was echoed at COP22 by Akinwumi Adesina, the President of the African Development Bank.

As in years before, ARC is attending COP23 in Bonn, Germany. Updates on the discussions and progress will be presented on a rolling basis on this page. Check back to see what ARC developments will come from this year’s global climate summit.

Pre-COP: ARC & ECOWAS Collaborate on Disaster Risk Financing

COP23 was kicking off in Germany, but ARC had an important climate deal to seal first on the continent. In Abuja, Nigeria, ARC and ECOWAS signed an agreement to work together on implementing disaster risk management and financing practices in West Africa.

ARC Director General Mohamed Béavogui and ECOWAS President Marcel de Souza formalize partnership to collaborate on improving disaster risk management in West Africa. Photo: ECOWAS
ARC Director General Mohamed Béavogui and ECOWAS President Marcel de Souza formalize partnership to collaborate on improving disaster risk management in West Africa. Photo: ECOWAS

Bringing together the Disaster Risk Reduction Policy of ECOWAS and ARC’s experience with working with West African governments on disaster risk financing, this partnership combines technical and political forces to increase the capacity of West African states to manage their climate risk and protect their most vulnerable populations.

Read the full press release here.

 

Innovations in Disaster Risk Financing in Africa

ARC’s first event at COP23 was a high-level policy dialogue hosted with the African Development Bank (AfDB) and the African Union Commission. Experts in climate change adaptation and financing gathered on a Sunday morning to share their ideas and perspectives on climate financing and why Africa needs to address its climate risk in new ways.

Kicking off the event, H.E. Lamin B. Dibba, the Minister of Environment of the Gambia, spoke about his country’s transformative experience with ARC. “There is a shift in thinking: from seeing disaster financing as unpredictable to something that can be anticipated and planned for. ARC complements and advances this thinking.”

Minister of Environment of the Gambia, H.E. Lamin B. Dibba, opening the policy dialogue.
Minister of Environment of the Gambia, H.E. Lamin B. Dibba, opening the policy dialogue.

H.E. Dibba emphasized the importance of this move towards preparing for disasters early. “It is important to be a part of a system that can quickly respond to such emergencies to support that critical mass of the population. 75% of the Gambian population relies on rain-fed agriculture for their livelihoods, so ARC is a very important mechanism for us.”

The panel featured Mr. Tosi Mpanu-Mpanu, board member of the Green Climate Fund; Ms. Dolika Banda, CEO of ARC Insurance Company Limited; Dr. Anthony Nyong, AfDB Director of Climate Change and Green Growth; and Ms. Kulthoum Omari, Coordinator of the African Group of Coordinators and Africa Adaptation Initiative.

Policy dialogue with experts on climate adaptation and financing.
Policy dialogue with experts on climate adaptation and financing.

Based on their perspectives and experiences from their work, different approaches to climate financing – and their successes and challenges – were discussed with the audience. Intentions and end goals were shared, ranging from creating an African-owned mutual insurance company to balancing investments in adaptation and resilience. The discussion was condensed into an outcome statement that will be released on COP23 Africa Day, 15 November. Stay tuned!

ARC Agency Director General, Mohamed Béavogui, delivers closing remarks.
ARC Agency Director General, Mohamed Béavogui, delivers closing remarks.

ARC Director General, Mohamed Béavogui, closed the session by emphasizing the need to assess risks, develop contingency plans, and increase access to disaster risk financing through capacity building and partnerships. “Insurance is the last resort, but we will rely on insurance for the next 30, 40, 50 years because none of us will have the resources to manage increasing climate risk without insurance.”

 

Insurance for Climate-Smart Land Use

Agriculture is affected by climate change: the agricultural sector contributes to about half of the greenhouse gas emissions from land use, and climate change degrades agricultural productivity by increasing the risk of longer and more intense extreme climate events. The Paris Agreement of 2015 included a collective commitment to mobilize US $100 billion in climate finance to help developing nations and the populations most affected by climate shocks to implement climate adaptation and resilience measures, including climate-smart land use.

Four UN organizations – the Food and Agriculture Organization, World Food Programme, International Fund for Agricultural Development, and the United Nations Convention to Combat Desertification – hosted a panel on the progress of climate financing and paths forward in building resilience, protecting small farmers, and funding a climate-smart agricultural practices in line with the Paris Agreement commitments.

As pioneers in climate financing in Africa, ARC was invited to share insights on how African governments have sought to access financing in innovative ways to address climate risks faced by small farmers.

ARC Director of Policy, Ekhosuehi Iyahen, speaks about impact of insurance on climate resilience
ARC Director of Policy, Ekhosuehi Iyahen, speaks about impact of insurance on climate resilience

Ms. Iyahen explained how ARC’s innovative disaster risk financing is important in securing the livelihoods of the most vulnerable whilst simultaneously protecting the development gains made by governments. “By responding earlier, farmers are not forced into a state of crisis and can give greater consideration to better land use. Additionally, risk analysis undertaken by ARC can strategically inform government agricultural land use policies towards climate smart agriculture.”

Stay tuned for more updates from COP23!

PRESS RELEASE: African Risk Capacity and ECOWAS Sign Memorandum of Understanding to Strengthen West African Climate Resilience

ABUJA, Nigeria, 8 November 2017 – The African Risk Capacity (ARC) and the Economic Community of West African States (ECOWAS) are collaborating more closely to build resilience against climate-related disasters in West Africa.

As global climate negotiations are underway at the 23rd United Nations Climate Change Convention in Germany, ARC and ECOWAS are taking a significant step to strengthen their partnership and amplify the impact of their work in disaster risk management, ensuring that the increasing risks of weather-related perils are addressed earlier and more effectively.

The signing of the Memorandum of Understanding between both institutions took place on the margins of the ECOWAS Annual Development Partners Meeting in Abuja, Nigeria, setting a course for closer collaboration on political, technical, and financial grounds. The partnership with ARC aligns with critical aspects of the ECOWAS Policy for Disaster Risk Reduction, with particular emphasis on the linkages with regional Agricultural Policy and climate change adaptation initiatives of ECOWAS.

ARC Director General Mohamed Beavogui and ECOWAS President Marcel de Souza signing the Memorandum of Understanding. Photo: African Risk Capacity
ARC Director General Mohamd Beavogui and ECOWAS President Marcel de Souza signing the Memorandum of Understanding. Photo: African Risk Capacity

Through this partnership, ECOWAS will further heighten awareness among West African nations of ARC’s work in assisting governments prepare for and respond to disasters effectively. The advocacy will be matched with an exchange of knowledge, data, and methodologies of early warning and climate risk financing mechanisms between ECOWAS and ARC. It will also include exploring innovative methods to use Africa RiskView, ARC’s early warning software to drive earlier response to disasters and assisting West African nations to access funding to join ARC’s insurance risk pool.

Mr. Mohamed Béavogui, Director General of ARC stated “ARC has a strong history in West Africa – of the 15 ECOWAS Member States, 14 have signed the ARC Establishment Agreement. In 2015, when ARC launched its first climate insurance risk pool, Senegal and Niger held drought insurance policies with ARC and received pay-outs of US $20 million collectively following the failed rains of 2014. Increasingly climate risks are a driver of security concerns in West Africa and this partnership is geared toward building our resilience but also ensuring that by responding earlier, such security risks are diminished”.

Earlier this year, ARC held a regional Lessons Learned workshop in Ouagadougou, Burkina Faso to take stock of the rich experiences of West African governments in working with ARC and launching disaster risk financing initiatives. In this workshop, ARC Member States recommended that ARC align more closely with regional disaster reduction and resilience-building programmes.

“This partnership between ECOWAS and ARC is a positive step for ECOWAS Member States” said Mr. Béavogui.

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About African Risk Capacity (ARC)

ARC was established in 2012 as a Specialised Agency of the African Union to help Member States better plan, prepare and respond to weather-related disasters. ARC works with countries to reduce the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing sovereign disaster risk insurance and other support, including capacity building, contingency planning, and access to early-warning technology.

ARC plays an important role in responding to countries’ needs at times of crisis by providing fast access to funding for pre-agreed-upon, rapid response plans developed in conjunction with governments. ARC’s financing complements other forms of local and international support.

In just the few years since ARC began, it has proven to be an effective and vital model – paying out USD $34 million to four countries (Senegal, Niger, Mauritania, and Malawi) affected by drought events. These resources provided assistance for over two million people and approximately one million cattle. ARC’s efforts are supported by donor partners who have contributed through grants or concessional loans. These include UK Department for International Development (DfID), Swiss Agency for Development and Cooperation (SDC), Swedish International Development Cooperation Agency (SIDA), United State Agency for International Development (USAID), The Rockefeller Foundation, Germany through KFW on behalf of BMZ, Global Affairs Canada and France.

For more information, please visit:               www.africanriskcapacity.org

Dr Joanna Syroka’s Fond Farewell

From an idea first outlined in 2006, to a full-fledged institution – with 32 member states, USD 500 million of drought risk transferred, over USD 30 million in insurance payouts triggered and 2.1 million people reached with payouts since starting operations in 2014 – the African Risk Capacity has certainly come a long way.

Dr Joanna Syroka has been there throughout this journey. Starting with just two colleagues and a concept, she developed the underlying analytics and operational processes that made possible ARC’s establishment, then served as ARC’s founding Programme Director managing its operations during its critical first years. Most recently, as ARC’s Director of Research and Development, she led the development of new products such as parametric flood, Outbreak & Epidemic insurance, and the Extreme Climate Facility (XCF). Wearing multiple hats, she has continually forged new paths with endless energy, optimism, and creativity, always looking for efficient and actionable ways to protect the most vulnerable populations in Africa at scale against the impacts of natural disasters.

As ARC continues to lead disaster risk management solutions on the continent, Dr Syroka – better known as Jo – will be watching the evolution of ARC instead of driving it. After nearly nine years with ARC, Jo will be starting a new chapter in her career. In the following interview, she reflects on her time at ARC and hopes for ARC in the future.

Let’s start from the beginning. How did your ARC story start?

The story starts long before ARC. I was working for an energy company in the UK in the then nascent weather risk management market. My PhD had focused on the variability of the crucial Indian summer monsoon, and when I saw a press release from the World Bank in late 2003 that announced it had helped insure 200 farmers against drought in India I thought, “I have to contact these people”.

I started working with the World Bank as a consultant in 2004, first working with Mumbai-based insurance company ICICI Lombard and Hyderabad-based micro-finance institution BASIX on the early transactions that paved the way for the Indian weather insurance market, and then moving on to agricultural weather and commodity risk management projects around the world as different opportunities arose. One of those opportunities was working with the United Nations World Food Programme, WFP.

Richard Wilcox, a Director in WFP’s Business Planning unit at the time, had written a concept note outlining how WFP could use modern financial instruments like weather derivatives and catastrophe bonds to finance its humanitarian responses more efficiently. It sounds like a reasonable suggestion today but it was a totally revolutionary idea at the time. He contacted the team I was working with at the World Bank for help with this idea and the rest, as they say, is history.

I started working with Richard and WFP on what became the first humanitarian weather derivative transaction in Ethiopia in 2006. We wrote a paper in the Journal of International Affairs on how this idea could be scaled to more countries in Africa to capitalise on the natural diversification of weather risk on the continent, but didn’t think much more about it.

In late 2008, the Rockefeller Foundation was speaking with the WFP about innovative projects they could help support and came across our paper. They gave us a seed grant of US $3 million to run with the concept that we had outlined in the Journal of International Affairs – I am eternally grateful to them for taking a chance on an idea. If it wasn’t for the Rockefeller Foundation, there would be no ARC.

In 2009 I started working full-time at WFP on the project with Richard and WFP business analyst, Bronwyn Cousins. Soon Fatima Kassam, who worked with us in Ethiopia, joined the team. ARC veterans Peter Hoefsloot and Federica Carfagna became part of the first technical team working to build out our software, risk models and analytics. We had no idea at the time that what we believed was a WFP project would become ARC. However, when we started talking to the African Union Commission, and with countries that would become our founding member states, we realised the way forward was to design something that would give countries the tools they needed to become the first responders to natural disasters, putting them in the driver’s seat of early, effective response to their vulnerable populations. In 2012, ARC was born.

It’s been an absolute privilege to serve our member states and their vulnerable populations. It’s been an honour to work on something that has gone from an initial idea to a fully developed and operational organization – in fact, two organizations: ARC Agency and ARC Ltd – that has helped change the dialogue on how natural disaster risks can be managed. On top of everything ARC has achieved to date, I’m also incredibly proud of the ARC team that I leave behind and excited for what they will achieve in the future.

What were the biggest milestones for ARC?

Obviously establishing the agency in 2012 and then establishing and capitalising ARC Insurance Company Limited in 2013/14. The first road show when placing our first insurance portfolio in the reinsurance market was a milestone. As someone coming from the private sector, to come to the market with a new programme at scale for Africa and to get commercial support was telling. Of course, this was followed by the first payouts from our inaugural pool due to drought in West Africa in 2014. To see our countries implement their pre-prepared ARC contingency plans with these payouts and have the systems we developed perform was incredible. Despite the payouts our reinsurance support increased for the second pool.

One more milestone comes to mind. The first business case we made to the UK’s Department for International Development, DFID, in 2010 for funding support was hard work, but we were successful and that first DFID contribution allowed us to take ARC to the next level. With each business case comes a set of milestones and targets to be achieved. ARC was classified as a high-risk project. Writing the final report when closing that first contribution a few years later, after having achieved and exceeded all of our initial targets and milestones, was a highly satisfying moment.

How has ARC’s development in the past nine years met or surpassed your expectations when you first started this project?

ARC is changing the way natural disaster risks are managed in Africa, but what I didn’t expect is how quickly it has helped change the dialogue on how these risks should be managed. The ideas Richard outlined in his original concept note were revolutionary. Contrast that to today when considering contingency financing instruments as part of the portfolio of tools for humanitarian response is par for the course. No matter what the future holds for ARC, this success will endure.

From the start I knew ARC was possible, that the weather risks facing millions of vulnerable households in Africa – risks that have happened before and will happen again – could be quantified, indexed and transferred, and I never doubted what we were building with our countries would be a success. I’m just grateful we had the opportunity to do it in the first place.

In your view and in your work, what were some of the largest challenges ARC has overcome? How has the project grown stronger from it? What are the lessons learned?

When you do something for the first time, when you have no playbook to follow, you will always find things you could have done differently. That’s normal and what’s important is to learn from those lessons and improve. By design we created a strong discussion, review and feedback loop with our countries – not just in terms of customisable products but also on the overall country engagement process – which helped us quickly identify what we needed to be adjusted in ARC’s processes and parameters to increase effectiveness. Like with any business, it’s a constant learning process, but I believe this close interaction with its countries will continue to make ARC a stronger institution and the products it offers its member states more meaningful.

At the end of the day ARC is tackling a big problem. The challenges facing the humanitarian system and African countries can be daunting and complex. It’s easy to be overwhelmed, but you need start somewhere. With ARC, we first focused on the technical underpinnings of a pool – developing our Africa RiskView software to support a parametric drought insurance product and to calculate potential risk pool savings. That gave us something tangible to talk about with countries, partners and donors to bring them on board and moreover it gave us actual transactions to aim for. The rest of ARC grew from there. With its infrastructure and track record now in place, ARC is in a position where it can start thinking about new ground-breaking initiatives – like XCF, Replica Coverage, and Outbreaks & Epidemics – and is forging new partnerships that will offer more comprehensive risk management opportunities to its member states. That wouldn’t have been possible had we tried to do it all from the outset and not started with one simple flagship product and program.

Personally, what was your most memorable moment with ARC?

The moment I most remember was the first ARC Ltd board meeting in London in January 2014. The company was about to be capitalised with the first insurance pool soon to be launched and placed in the market. It proved that all these ideas we had been working on with our countries and partners were not only actionable, but were about to become real.

Where do you hope to see ARC in the next five years?

Through ARC, Africa has led the way in innovative risk finance and I hope it continues to do so. In addition to growing the drought insurance pool with more member states, I look forward to seeing ARC launch the slated products we have been working on in R&D, including parametric flood and tropical cyclone coverage, XCF, as well as the Outbreak & Epidemic insurance programme. With its unique position as a member state organisation, ARC can run with these ground-breaking initiatives and continue to transform how risks are quantified and managed on the continent and beyond.

PRESS RELEASE: ARC launches outbreak & epidemic insurance for African governments

African Risk Capacity to Provide Innovative Financing to Protect against and Control Diseases

African experts and government officials came together for the launch of African Risk Capacity’s (ARC) Outbreak & Epidemic (O&E) insurance pilot programme on September 13-15 in Accra, Ghana. This product represents an effort to significantly improve the continent’s ability to protect against and respond to disease outbreaks and epidemics.

Representatives from across Africa met to establish the fundamentals for ARC’s O&E parametric insurance product, which will be able to deliver rapid and targeted funds for detected outbreaks, an intervention that studies have shown can result in a more contained outbreak.

Having successfully built an insurance and support model to protect millions of lives and livelihoods against the impact of drought and extreme weather, ARC was called upon by African Finance Ministers to develop a similar program to cope with disease challenges. Africa continues to be at extremely high risk of disease outbreaks that quickly can reach epidemic level. Many nations have experienced the severe human and economic impact of such outbreaks in recent years, and creating as part of the programme faster access to funding, while building an environment of improved preparedness and response capabilities, is an important priority.

Together with Africa Centres for Disease Control and Prevention (Africa CDC), ARC hosted a technical workshop in Accra to mark the launch of the O&E programme in order to bring together partners and collaborators.

A significant outcome of the three-day technical workshop was the determination regarding which specific disease pathogens or pathogen families should be covered by the pilot programmes. As part of the discussions, a decision was made to focus efforts on diseases that have the most severe impacts and with which local or national authorities are least familiar due to the infrequency of the occurrence of outbreaks. Such diseases include Ebola, meningitis, yellow fever, dengue fever, SARS, MERS, Marburg virus, and smallpox.

The workshop was opened by the Ghanaian Deputy Minister of Health, Kingsley Aboagye Gyedu.  Keynote addresses were delivered by the World Health Organization (WHO) Representative for Ghana, as well as the Director General of the Ghana Health Services.

Robert Kwame Agyarko, ARC’s lead advisor for O&E, said “This launch marks an important step in a programme that has the potential to provide our continent with meaningful support and progress in controlling and minimizing the damage done by disease outbreaks. We cannot afford to wait until after disaster strikes – Africa must prepare, and we must invest in saving lives.”

“Africa is under the threat of infectious diseases like Ebola and Marburg that can take hold and spread viciously, endangering lives and seriously harming security, the economy and public order,” he continued. “Had Ebola been identified and the response begun two months earlier, the total number of deaths could have been reduced by 80%. We can never allow that to happen again. Together with all our partners, we will be able to establish the effective and sustainable solutions Africa needs.”

ARC is currently beginning its pilot phase for O&E, with Guinea and Uganda to be the first two countries in which the programme is offered. These two locations were selected based on regional balance and their previous experience with epidemic-prone diseases of international concern.

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About African Risk Capacity (ARC)

ARC was established in 2012 as a Specialised Agency of the African Union to help Member States better plan, prepare and respond to weather-related disasters. ARC works with countries to reduce the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing sovereign disaster risk insurance and other support, including capacity building, contingency planning, and access to early-warning technology.

ARC plays an important role in responding to countries’ needs at times of crisis by providing fast access to funding for pre-agreed-upon, rapid response plans developed in conjunction with governments. ARC’s financing complements other forms of local and international support.

In just the few years since ARC began, it has proved to be an effective and vital model – paying out USD $34 million to four countries (Senegal, Niger, Mauritania, and Malawi) affected by drought events. These resources provided assistance for over two million people and approximately one million cattle.

ARC is now using its expertise to help tackle another of the continent’s great threats by creating and offering O&E insurance.

For further information about ARC or O&E insurance, visit www.africanriskcapacity.org

 

CORRECTION (21 September): The press release previously listed ARC’s technical partnerships. These partnerships are not yet finalized.

Exclusive Interview with Mohamed Béavogui in Al Wihda

During a visit to the Government of Chad where ARC reaffirmed our commitment to working with the Government to improve disaster risk management in the country, ARC Director-General Mohamed Béavogui sat with Al Wihda for an exclusive interview.

To catch his views on the impact the Government of Chad has made on ARC, the importance of agriculture in Africa, and ARC’s collaborations in Chad and the African Union, you can find his interview on the Al Widha website (in French).

“Africa can no longer suffer in silence” – AfDB President boosts African Risk Capacity at 37th SADC Summit

At the 37th Southern Africa Development Community (SADC) Heads of State Summit, Mr Akinwumi Adesina, the President of the African Development Bank (AfDB), encouraged the leaders of Southern African countries to join him in his efforts to increase access to African Risk Capacity’s disaster risk financing facilities.

“Africa can no longer suffer in silence,” Mr Adesina said. “I ask that the Heads of State of the SADC region support my call for the Green Climate Fund and the Global Environment Facility to co-pay for disaster risk insurance premiums for all African countries, to the African Risk Capacity facility.”

Highlighting the importance of agriculture and its untapped potential in the region, Mr Adesina urged SADC Heads of States to support the growth of the agricultural sector by protecting it from the impact of climate change. “Agriculture is not a way of life and it is not a development activity. Agriculture must be treated as a business for wealth creation. Africa must feed itself, instead of spending $35 billion a year importing food.”

Along with AfDB funds to support drought-afflicted countries, Mr Adesina included premium support to African Risk Capacity as one of the ways AfDB can help African states to mitigate the impact of climate change and rising food prices on food security for the rural and urban poor. “The African Development Bank is ready to co-pay for insurance premiums for African countries, so let’s start this with SADC region.”

Earlier this year, AfDB and African Risk Capacity formally joined forces to help build the capacity for member states to understand of the value of risk transfer tools, develop adequate risk financing infrastructure, and embed risk management in national plans.

During the Summit, SADC Heads of State addressed the issues of food security and disaster risk insurance, urging SADC Member States to explore risk insurance options for disasters and extreme weather events related to climate change, such as the facilities offered by the AfDB.

The Summit also acknowledged that the overall food security improved for the 2017-18 harvest season, compared to the preceding years of drought in the Southern Africa region, and encouraged SADC Member States to reap the benefits of a good year by taking steps to improve storage facilities and set up contingency plans to manage disaster risk before natural hazards can affect livelihoods.

The 37th SADC Heads of State Summit echoed the conclusions reached from the Disaster Risk Management and Financing Workshop for SADC Member States held earlier in the month. The workshop convened representatives from ministries focused on disaster management, food security, and climate change to discuss national methods of managing disaster risk, explore the regional disaster risk financing landscape, and share knowledge and experience between SADC Member States.

The work between AfDB, SADC, and African Risk Capacity highlight the fruits of continuing collaboration between African institutions to develop sustainable solutions to regional problems. The 37th SADC Heads of State Summit stands as an assertion of the issues to address, the joint efforts made so far, and the forthcoming work of building a climate-resilient Africa together.

Read the full speech from AfDB President Akinwumi Adesina here.

Read the full communique from the SADC Heads of State Summit here.

PRESS RELEASE: Countries exchange disaster risk financing experiences at African Risk Capacity workshop

Click here to download the PDF version

ARC Lessons Learned Workshop, Ouagadougou, 18 July 2017
ARC hosts country-led lessons learned workshop in Ouagadougou, 18 July 2017

Ouagadougou, 20 July 2017 – Countries from across Africa came together in Ouagadougou for the first African Risk Capacity Agency (ARC) lessons learned regional workshop. Government officials from 13 African nations and representatives from Inter-African Conference on Insurance Markets (CIMA) shared their experiences with and ideas for African-owned disaster risk financing against climate events on the continent.

“We are convinced that all the positive reflections that will emerge from your work will make an additional brick on the construction site of a more resilient Africa facing climate change,” said Ms Bénédicta Ouédraogo, Executive Secretary of the National Council for Food Security of Burkina Faso.

Since 2012, ARC has assisted African Union Member States to improve their capacities to better plan, prepare and respond to extreme weather events and natural disasters. ARC, a Specialized Agency of the African Union, convened its new and its more experienced Member States, as well as partners in disaster risk management in Africa, to take stock of five years of disaster risk financing in the West and Central African region and share the successes, challenges, and paths forward in an open African-led platform.

“Through ARC, the African Union is giving us an institution to face our climate change related issues,” said Mr Saley Saidou, the Executive Secretary of Dispositif National de Gestion des Crises Alimentaires in Niger, during the opening ceremony.

From West and Central Africa, six countries – Burkina Faso, Mauritania, Niger, Senegal, Mali, Gambia joined ARC’s insurance pools by purchasing coverage against the impact of drought events from ARC Insurance Company Limited (ARC Ltd), a financial affiliate underwriting insurance for ARC Member States. In the past five years, ARC Ltd provided up to US$402.7 million in coverage against drought damages through resources pooled from premium contributions of eight African countries, public-private partnerships, and an interest-free loan from KfW Development Bank and the United Kingdom.

Four countries – Senegal, Niger, Mauritania and Malawi – have received pay-outs totalling over US $34 million, which assisted 2.1 million people and nearly a million livestock from the effects of drought-related disasters on food security.

Officials from the Governments of Malawi participated to offer their experience as members of ARC’s risk pool and to facilitate a cross-regional exchange of experiences from Southern Africa, and officials from Côte d’Ivoire, Togo, Guinea, Ghana, and Nigeria attended the workshop to learn from past experiences of veteran ARC risk pool countries as potential entrants into ARC’s pool.

ARC is led by 32 member states, eight of which have joined ARC's risk pools by purchasing insurance coverage for drought response costs.
ARC is led by 32 member states, eight of which have joined ARC’s risk pools by purchasing insurance coverage for drought response costs.

Africa has historically faced a high risk of drought, and the risk continues to grow with climate change. For the third consecutive year, the Horn of Africa is facing insufficient rains and food insecurity, contributing to what a UN senior official has called the worst humanitarian crisis since World War II. Instead of waiting for pledges of international aid, African governments are taking measures to provide earlier, more predictable funding at critical moments through mechanisms like ARC’s to save more lives and livelihoods.

ARC’s disaster risk financing model was recently bolstered by the UK announcement of the new London Centre for Global Disaster Protection at the G20 Meetings in Hamburg. The centre will help build the capacity of developing nations to use disaster planning and risk transfer tools – work that ARC has been spearheading in Africa since 2012 and demonstrating through the workshop in Ouagadougou.

“Africa and Burkina Faso need frameworks in the field of disaster risk management,” said Ms Ouédraogo. “At the level of our continent, the ARC is the only continental African solution that takes care of the risks of natural disasters.”

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About African Risk Capacity (ARC)

The African Risk Capacity Agency (ARC Agency) was established as a Specialised Agency of the African Union (AU) to help African Union Member States improve their capacities to better plan, prepare and respond to weather-related disasters. The objective of the ARC Agency is to assist AU Member States to reduce the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign disaster risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective and transparent manner.

For more information, please visit: www.africanriskcapacity.org

For further information on this workshop, please contact:

Mrs Assia Sidibe
Head of Government Relations for West and Central Africa
Email: assia.sidibe@africanriskcapacity.org

 

Click here to download the PDF version

African Risk Capacity – Response to ActionAid’s Flawed Claims

ActionAid recently issued a report criticising the expansion of climate risk insurance markets for the poor and vulnerable and urging African Risk Capacity (ARC), the G7, World Bank, Insurance Development Forum and others to halt their work in this space. ActionAid’s stance and recommendations, as presented in the report, are misguided.

In an attempt to validate its position on the issue, ActionAid suggested that ARC’s sovereign disaster risk insurance failed in Malawi. This is simply untrue and many of ActionAid’s claims regarding this issue are inaccurate or misleading.

ActionAid’s assumptions about ARC and its open risk modelling platform, Africa RiskView, which were based on one season in one Member State, were flawed and do not represent the true picture of ARC, its services, or even what occurred in Malawi during the period in question.

ARC has a proven track record of helping to protect millions of people against the devastating impact of drought and extreme weather on the continent.

Below are the facts.

African Risk Capacity 

ARC is comprised of and governed by 32 African Union Member States

ARC was established by the African Union (AU) to work with African governments to find better ways to finance responses to disasters on the continent and reduce the level of reliance on the traditional humanitarian approach. Importantly, it was established also to work with AU countries to strengthen public policy and climate risk management systems.

ARC provides climate-related disaster insurance to African governments – managed through its insurance affiliate, ARC Insurance Company Limited (ARC Ltd). Using modern finance mechanisms such as risk pooling and risk transfer, ARC is creating pan-African climate response systems. By pooling risks, countries can reduce the cost of insurance by about half, as drought is very unlikely to affect the whole of Africa at any one time. With an insurance payout triggered at times of crisis, ARC’s offering provides governments with fast access to funding. The government can then quickly implement previously agreed-upon, rapid response plans to help the affected population.

In its first three years, ARC paid out USD $34 million to Senegal, Niger, Mauritania and Malawi to support communities affected by drought. These resources have assisted more than two million people and protected close to one million cattle.

In addition to its insurance offering, ARC’s cutting-edge technology and capacity-building efforts have enabled countries to monitor climate indicators and predict response costs, while its disaster preparedness efforts help African governments pre-empt the devastating effects of drought before development gains are reversed and lives are lost.

ARC is helping to create a sustainable African-led strategy for addressing some of the continent’s most urgent challenges.

Malawi’s 2015/16 Insurance Payout

Flag_of_Malawi

Malawi purchased an insurance policy with ARC for its 2015/16 crop season, during which time the country faced a severe drought. Although funding through ARC is designed to be delivered swiftly in such cases, a payout was not immediately triggered. ARC’s payouts are based on the output of Africa RiskView, the open risk modelling platform developed by ARC and customised specifically for each country and crop season in close cooperation with an in-country government team. In the case of Malawi, the customised Africa RiskView model indicated far lower numbers of drought-affected people compared with the actual impact of the drought on the ground. Immediately recognising there was an issue, ARC initiated a technical review process to identify the causes.

As part of its thorough review, the ARC team conducted a number of field missions and meetings with the Malawi technical working group and other partners in-country. ARC also commissioned the Centre for Agricultural Research and Development (CARD) at the Lilongwe University of Agriculture and Natural Resources in Malawi to carry out an independent household survey and conduct farmer focus groups to determine potential sources of the discrepancy. 

It was determined that farmers had been growing a different variety of maize in significant and increasing amounts in the recent past than initially selected as the reference crop in Malawi’s customisation of Africa RiskView. It also was determined that the out-of-date information on farming practices prevented the model from accurately replicating conditions on the ground at the end of the season. Using incorrect critical information in the model resulted in inaccurate output from Africa RiskView.

Based on these findings, the Africa RiskView customisation was revised to reflect the most recent farming practices. The result was an assessment that aligned with the drought’s actual food security impact on the ground. Once Malawi’s insurance coverage information was adjusted to be consistent with the corrected customisation, a payout of USD 8.1 million was triggered to the Government of Malawi, based on the magnitude and severity of the drought event and the amount of insurance coverage purchased by the government, as is the case under all of ARC’s parametric insurance policies.

ARC’s Africa RiskView model performed as it was designed to and, when informed by accurate data, was able to correctly capture the situation on the ground.

ARC has since worked with the Government of Malawi to ensure that the best possible crop and other critical data is available in order to properly reflect the reality on the ground in order to assess risk in the most precise way.

With each season that ARC is active, there are invaluable lessons learned. As an example, ARC now is taking extra steps with each participating country to verify inputs provided to the Africa RiskView model prior to completion of the customisation process.

ARC Ltd’s insurance policies, which are legally binding contracts between the Member State and ARC, do not include a negotiation component with respect to payouts as the policies are based on an objective index that captures the severity of an event. If the index reaches a pre-defined threshold, a payout is triggered (the amount of which grows as the severity of the event, captured by the index, increases); if it is not reached, there is no payout. The index is monitored by both ARC and Member States, as well as by external parties.

As is the case with all ARC payouts, the payout to Malawi was not the result of negotiations, nor was it done on an ex gratia basis. The payout was parametrically triggered and occurred as the result of a correction of erroneous data, which allowed for the AfricaRisk View model to function as intended under the terms of the contract.

The funds resulting from the USD 8.1 million payout were instrumental in plugging a gap in the response activities already being implemented by the Government of Malawi. This included cash transfers to affected households and replenishment of the country’s strategic grain reserves, and is estimated to impact 810,000 people once completed

ARC’s ValuePrint

As the effects of climate change continue to expand, Africa is increasingly facing the devastating impact of extreme weather events. When populations are in dire need of support, too often a government’s only choice is to turn to international aid, which involves a cumbersome mobilisation process and, by the time resources and assistance arrive, too often lives have been lost, assets depleted, and development gains have suffered major setbacks – forcing more people into poverty and food insecurity. ARC offers an important addition to the options available and enables a government to be proactive in dealing with its disaster risk.

ARC’s offering covers three critical areas: financing, early warning, and planning. Not only does ARC provide sovereign disaster risk insurance, including rapid access to funds when climate disasters strike, ARC’s technology and capacity-building efforts also enable countries to monitor climate indicators and forecast response costs, while its disaster preparedness efforts help governments plan for and mitigate the devastating effects of drought and other climate disasters.

When ARC was being developed, several detailed economic cost-benefit analyses were completed by international experts, which helped guide its final operating model. It was recognised that ARC’s value proposition could be maximised only through the integration of risk assessment, early warning, risk reduction through contingency planning, and risk financing through parametric insurance. This crucial combination allows for early, pre-planned response, which has been shown to be greater than four times more cost-effective than the appeals-based drought response historically used to address Africa’s food security shocks.

ARC’s offering enables African countries to be equipped to manage climate-related disasters to a greater extent than previously experienced, while providing access to funding that is much more immediate. 

Despite the many benefits, ARC’s product is not designed to cover every aspect of a Member State’s response to natural disasters and weather events or the entirety of the costs involved. It is one part of a suite of services Member States should rely on to be fully prepared. It is not intended to be, nor does it claim to be, a replacement for large-scale international humanitarian interventions.

The pricing of ARC’s insurance must allow for the sustainability of the mutual insurance company underwriting the risk. All premium-paying countries are members and effective owners of the mutual insurance company (ARC Ltd) and benefit from being part of a diversified risk pool and from the remarkably cost-effective access to global risk markets made possible through ARC Ltd.

Following the drought in the Sahel in 2014, ARC insurance policies triggered payouts in the amount of USD 26.3 million to the governments of Senegal, Niger and Mauritania. Collectively, the three governments had paid USD 8 million in premiums. The payout funds supported response efforts to assist more than 1.3 million people and over 900,000 cattle and were used toward scaling up targeted food distribution activities, subsidising the purchase of cattle feed, scaling up cash transfer programmes and replenishing strategic grain reserves. For each of these countries, the impact assessments of the Africa RiskView model were very much in line with seasonal outcomes – as documented by both governments and external organisations.

Contrary to ActionAid’s recommendation, Member States and others with expertise have indicated that a budget allocation is not a feasible alternative to ARC’s offering for many governments in the region, as their budget deficits and needs are too serious to commit to “rainy day” savings plans even if the funds are available. Further, it’s more beneficial for governments to pool their collective funds, rather than each setting them aside independently. The aggregate funding needed to cover all the countries in the pool will be less than the sum of the countries’ individual funding needs. This is because each country in the pool is geographically and climatically different, so the chance that all countries in the pool would need funds at the same time is very low and the funding and risk can therefore be shared across countries. Therefore, a government can leverage its funding through a risk pool like ARC’s and ensure that when disaster strikes, a needs-based, lump-sum payout will be made to it, eliminating the need for the government to put aside such a large amount of savings.

Transparency at ARC

ARC_Training (52)
An example of an Africa RiskView training session

With Africa RiskView, ARC has the most transparent and accessible risk assessment model in current use for parametric insurance.

ARC works hand in hand with Member States. It provides contingency planning and risk financing support, as well as the unique customisation of Africa RiskView, with full transparency and in full cooperation with governments, in order to build the best possible solution for a nation’s needs. Each country-specific ‘model’ used to underpin a parametric insurance contract undergoes a lengthy customisation process annually, led by the Member State in conjunction with ARC, so that the prior year’s outcome and any new data can be taken into account. This is unique in the insurance context; no other risk assessment model is updated as frequently or with such substantial input from the client.

ARC works hard to make sure governments understand the disaster risk they face. This is an open, collaborative process between ARC and the Member States.

ARC provides ongoing Africa RiskView training to Member States and external parties, and access to the software is provided to all Member States as well as other key partners and stakeholders. ARC works to ensure that representatives from Member States are well-trained in the operation and understanding of Africa RiskView, in order to take full advantage of it, including using the platform as an early-warning tool.

ARC’s insurance vehicle, ARC Ltd, is a mutual insurance entity with policy holders (African governments) and international partners KfW Development Bank and the UK Department for International Development (DFID) forming the membership of the company. A rules-based approach to the issuance of insurance contracts is included in the bye laws of the company to ensure fairness and transparency for all participating countries. In the case of Malawi, once the model customisation was corrected, the change to the insurance policy was reviewed and unanimously approved by the members of ARC Ltd – African governments/policyholders, KfW, and DFID. Only then was a payout made to Malawi, again demonstrating the transparency with which ARC operates.

This step, which followed the necessary measure of undertaking an investigation with partners in Malawi regarding the discrepancy in the Africa RiskView output, required an investment of time and resources on ARC’s part and – crucially – patience on Malawi’s part, all of which ensured that this important process was handled properly and transparently.

Additionally, ARC regularly collaborates with other institutions. In fact, the core methodology for ARC’s drought risk module is that most frequently and commonly used by agro-meteorologists and other specialists across Africa. It is the view of ARC that it is in the best interests of the entire continent to widely build skills, know-how and commitment in the field of climate risk preparedness.

Moving Forward

ARC maintains a strong relationship with all Member States, including the Government of Malawi, and discussions continue regarding ARC’s critical role in strengthening Malawi’s risk management and financing system. While not a participant in the current ARC risk pool, the Government of Malawi has publicly spoken about the benefits of ARC and has expressed interest in participation in future ARC pools.

ARC continues working with its partners, including its valued Member States, to develop the most effective approaches to building African resilience, preparedness and self-sufficiency in the face of climate-related disasters.

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Download a PDF version of the statement: African Risk Capacity – Action Aid Response Statement

ARC @ 29th African Union Summit

The 29th African Union Summit is taking place in Addis Ababa, Ethiopia from 29 June to 4 July 2017. African Heads of State, African Union Commissioners, and African governments officials across the continent are convening to discuss pressing issues on the continent and African-led solutions to address them.

As a Specialized Agency of the African Union, African Risk Capacity is attending the AU Summit and presenting our comprehensive solution to detecting, funding, and responding to climate risks. You can follow us throughout the summit on Twitter as we forge a path towards a climate resilient and food secure Africa, together with our partners in African governments and the African Union Commission, by building awareness of and action upon the synergies between ARC and the AU’s missions. Here, we will publish some of the highlights.

ARC Press Briefing at 29th African Union Summit
Solidarity and Innovation for Disaster Risk Financing in Africa

ARC held a press briefing on Sunday, 2 July 2017 featuring a high-level panel discussion on the topic “Solidarity and Innovation for Disaster Risk Financing in Africa”.  The panel included the Deputy Chairperson of the African Union, H.E. Thomas Kwesi Quartley; Permanent Representative to the AU and Ambassador to Ethiopia of Guinea, H.E. Sidibe Fatoumata Kaba; the Head of Aid of Global Affairs Canada, Kati Csaba; and ARC Director-General Mohamed Beavogui.

The press briefing aimed to enhance the understanding of ARC’s mission, work, successes, and potential to improve the social, economic, and environmental conditions of Africa through a sustainable African-owned, African-led initiative. Mr. Beavogui and Ms. Csaba also announced the grant of 40 million Canadian dollars from the Government of Canada to ARC, with a special focus on implementing a gender strategy in ARC’s work to help protect and empower women and girls who too often suffer disproportionately when disaster strikes.

With the participation of our partners from country, AU, and international levels, the press briefing demonstrated the support for ARC’s innovative work across borders. As H.E. Quartley said, “We believe that working in tandem, together, we can build an African institution to meet the needs of our member states, and even more importantly, to affect positively the lives of our most vulnerable who are disproportionally affected by climate change and natural disasters, very often manmade. It is no longer enough to talk about these situations and lament. We must act in the interest of the most vulnerable.”

To see the full webcast of the press briefing, click here.

Chairperson of the African Union

AU Chairperson H.E. Moussa Faki Mahamat and ARC Director General Mohamed Beavogui

ARC met with the Chairperson of the African Union, H.E. Moussa Faki Mahamat, to introduce ARC’s work, impact on African disaster response systems, and relevance in the African Union reform process.

“There is a need for the continent to forecast and anticipate disasters before they occur, in order to be able to respond effectively. There is no sustainability in entrusting the continent’s future to humanitarian aid. A tool like the ARC can help address this in a very relevant way.”
– H.E. Moussa Faki Mahamat

Deputy Chairperson of the African Union

ARC Agency Director General, Mohamed Beavogui and H.E Ambassador Thomas Kwesi Quartey, AU Deputy Chairperson

ARC met with the Deputy Chairperson of the African Union, H.E. Amabassador Kwesi Quartey, to discuss how ARC serves to enable African governments to manage their climate risks before disaster strikes by ensuring financial resources are available when its people needs them most.

African Union Commissioner for Rural Economy and Agriculture

Mohamed Beavogui and H.E. Correa Leonel Josefa Sacko, AU Commissioner for Rural Economy and Agriculture

ARC met with AU Commissioner for Rural Economy and Agriculture, H.E. Correa Leonel Josefa Sacko, to elaborate on the ways ARC and the Department of Rural Economy and Agriculture (DREA) can work together strategically on environmental and disaster risk reduction issues.

“Be assured that we will support you. This is our institution”.
– H.E. Correa Leonel Josefa Sacko

African Union Commissioner for Political Affairs

Mohamed Beavogui and Minata Samate-Cessouma, AU Commissioner for Political Affairs

ARC met with the African Union Commissioner for Political Affairs, H.E. Minata Samate-Cessouma, to highlight how ARC creates faster, more efficient, and more sustainable responses to humanitarian crises across the continent.

“We do not want to remain in response mode. We want to go beyond and build resilience and ARC is a key instrument to support this”
– H.E. Minata Samate-Cessouma

African Union Commissioner for Social Affairs

Mohamed Beavogui and H.E. Dr. Amira El Fadil, AU Commissioner for Social Affairs

ARC met with the AU Commissioner for Social Affairs, H.E. Dr. Amira El Fadil, to explore opportunities for closer collaboration between ARC and the AU’s social protection efforts, including aligned advances of ARC’s Outbreaks and Epidemics programme with the Africa Centre for Disease Control (Africa CDC).

“Africa needs your work, and also Social Affairs and the Centre for Disease Control. Let us ensure that the partnerships between Africa CDC and ARC is enlarged.”
– H.E. Dr. Amira El Fadil

African Union Commissioner for Peace and Security

ARC and Ambassador Smail Chergui, AU Commissioner for Peace and Security

ARC met with AU Commissioner for Peace and Security, Ambassador Smail Chergui, to discuss ways to work together to build peace in the continent through ensuring that food security neither leads to nor escalates conflict through early intervention.

“We must collaborate. It is not just about early warning. It is also about early action.”
– H.E. Ambassador Smail Chergui

Mohamed Beavogui Interviewed on BBC

ARC Director-General Mohamed Beavogui interviewed by BBC

ARC Director-General Mohamed Beavogui was interviewed by BBC on the sidelines of the AU Summit. The video interview will be included in an upcoming BBC series on drought in Africa.

Insuring Against Climate Risk in Kenya – Vincent Mutie Nzau on African Risk Capacity and Climate Risk Financing Initiatives

In a recent blog from the International Institute for Environment and Development (IIED), ARC focal point and senior economist in the National Treasury of Kenya, Vincent Mutie Nzau, explains the importance of disaster risk financing in drought-prone countries like Kenya. With average annual costs for drought damage in Kenya estimated at some US$1.25 billion, access to funding before and after disaster strikes is fundamental for reducing the impact of shocks for the most vulnerable.

“Disaster risk finance takes many shapes in Kenya,” says Nzau – one of those shapes is ARC. Read about the various ways Kenya manages its disaster risk here.

Interviews with Mohamed Béavogui and Lars Thunell

In May 2017, ARC Agency and ARC Ltd attended the African Development Bank Annual Meetings to discuss the role of innovative finance in transforming agriculture into wealth creation in Africa. On the sidelines of panels and discussions, ARC Agency Director-General and Chairman of the Board of ARC Insurance Company Limited – Mr. Mohamed Béavogui and Mr. Lars Thunell, respectively – gave interviews on ARC’s work and the potential for insurance to increase food security in Africa.

Hear Mohamed Béavogui’s  interview on RFI (French), and read Lars Thunell’s interview in Development Finance (English).

Report from the Fifth Session of the Conference of Parties (CoP5)

The Conference of Parties is the supreme governing body of the African Risk Capacity (ARC) Agency, consistent of African Union member states that have signed the ARC Establishment Treaty and affirmed their belief in need for a pan-African solution to managing climate risk. The Conference of Parties hold sessions on an annual basis to collectively review the progress of ARC and determine the strategic direction of the agency.

16 ARC member states came together in March 2017 for the fifth session of the Conference of Parties, or CoP5, to adopt the ARC Programme of Work for 2017, elect members of the ARC Agency Governing Board, and review the activities and accomplishments from ARC’s 2015/2016 season

Highlights from CoP5 included:

  • An agreement signed between ARC and African Development Bank to develop a new facility assisting ARC Member States with premium financing and facilitate access to insurance coverage
  • The formation of a subcommittee to address the sustainability of funding sources for ARC insurance premiums;
  • The introduction of ARC’s Outbreak and Epidemic pilot programme, funded by the Rockefeller Foundation, that will develop an insurance product to address financing needs in containing outbreaks of pathogens and diseases common to Africa;
  • Madagascar’s signing of a partnersh
  • The attendance of a farmers’ group, the Network of Peasant Organizations and Producers in West Africa (ROPPA), for the first time to a session of the Conference of Parties

Updates about the activities of ARC, ARC Insurance Company Limited, and the ARC Agency Governing Board, as well as the ARC Programme of Work for 2017 can be found in the complete report from CoP5. Download the full report in English, French, Portuguese, or Arabic.

A tale of two droughts: one killed 260,000 people, the other none. Why?

Assia Sidibe, ARC Head of Goverment Services for West and Central Africa, published a piece in the Guardian illustrating how risk pools and insurance programmes like ARC can save hundreds of thousands of lives, especially as international aid funding grows uncertain and unsustainable. The text is reproduced below. Read the original article on the Guardian.

Drought is a slow and predictable natural disaster. We know it will happen again, and we know much of its effects are preventable if money is invested at the right time. So why do we wait for people to die from hunger induced by droughts before we start calling for emergency relief money?

The UN recently launched a $864m appeal to help 5 million Somalis in dire need of food assistance because of drought. But what if the Somali government could have taken out an insurance policy against such a disaster? They could have responded to their own crisis before a famine claimed lives and far less money would be needed. They would not now in a situation similar to six years ago, when a drought-induced famine killed 260,000 Somalis.

Senegal experienced a significant drought in 2014, but Senegalese children did not starve to death. In fact, there was little international media coverage of the drought because Senegal, Mauritania, Niger, and Kenya led the creation of African Risk Capacity (ARC), a mutual insurance company into which they pooled resources.

Catastrophe risk pools like the ARC have emerged over the last 10 years to protect vulnerable populations and national budgets in case of extreme weather events. And they’re working.

The risk pools use technology to assess losses and trigger payouts earlier than in the traditional response system. To date, 26 countries in Africa, the Caribbean, and Central America have pooled their risks. The Caribbean version, which provides insurance against hurricanes and earthquakes, paid out almost $30m to countries hit by Hurricane Matthew last year.

Meanwhile, in 2015, the ARC paid out more than $26m after lack of rains in the Sahel just south of the Sahara Desert. With that money, Senegal’s government say they distributed food assistance to 750,000 people, and 87,000 livestock herders benefited from the sale of subsidised food for their livestock.

While these insurance payouts can address urgent needs, it cannot replace international assistance in times of severe ongoing drought, such as the one in Somalia. But early cash assistance to families from insurance reduces the overall need for aid.

The International Organization for Migration is now also seeking $24.6m in an emergency aid appeal for Somalia, which is precisely the type of funding that ARC provides.Each dollar invested in ARC before the catastrophe saves $4.40 in the aftermath, according to research from Oxford University.

In Senegal, the response to the 2014 drought was led and funded by the government and targeted the most vulnerable populations, including children under five and lactating mothers. The rapid response meant that we did not see pictures of dying children and cattle on television. Witnessing its effectiveness, more countries have since joined the ARC: Malawi, Gambia, Mali, and Burkina Faso.

And it’s not just responding rapidly with cash that makes a difference in a disaster; countries must think about how that assistance will be deployed. Somalia, given its complex socio-political environment, would not have been able to deploy its assistance in the most efficient way, even if it was part of an insurance scheme. But the government of Somalia could have chosen to deploy any assistance covered by insurance payments through the World Food Programme (WFP) or other partners it has worked with before.

This was the case in Malawi this year. After receiving a $8.1m payout from ARC, the government is considering allocating a portion of the money to a cash transfer activity implemented by the WFP.

Drought insurance is still relatively new to countries in Africa, and Somalia’s government is probably not in a position to pay insurance premiums. But it would have been more cost-effective for Somalia’s donors to cover a $3m ARC insurance premium, instead of committing millions more in emergency aid after the onset of drought.

Risk insurance offers a targeted, effective and sustainable way to address the impacts of climate change or natural disasters and could, over time, reduce the need for ad hoc humanitarian assistance, which has swelled to nearly $25bn internationally. This is simply not sustainable.

Instead, let’s support countries in their efforts to plan ahead and respond through African-owned and led initiatives. Had Somalia been insured, it could have received millions of dollars in immediate aid to combat famine instead of waiting months for international aid to arrive. The cash would have arrived in September and in February, immediately after its two devastating harvest seasons and several months prior to Britain’s decision last month to support the emergency relief response with £100m (much appreciated but a little late).

This cash could have been used to protect the 60% of the country’s livestock that has already died, or help prevent the 110 deaths recorded in just two days in March.

African countries can interrupt the cycle of drought, loss and death by banding together to insure against weather calamities. This translates into lives saved, and offers a new model for economic self-sufficiency.

ARC Ltd Wins Innovation Award for Second Consecutive Year

For the second year in a row, the African Risk Capacity Insurance Company Ltd (ARC Ltd) won the CFI.co award for Most Innovative ESG Risk Protection Provider for Africa. In 2016, ARC Ltd was recognized by CFI.co for “its proactive and solidly coordinated approach to risk management in Africa” that “not only saves money: it saves lives“.

ARC Ltd’s continued progress in providing unrivaled integrated, transparent, and efficient risk protection services to African governments has been recognized again. Through a dedication to capacity building, technological and financial innovation, and improving food security in Africa, ARC remains a leader in protecting against environmental, social and governance risks.

Read the full CFI.co judges’ report below.

Read More »

PRESS RELEASE – African Risk Capacity and the African Development Bank partner to strengthen African countries struggling with climate disasters

Click here to download the PDF version.

ABIDJAN, Côte d’Ivoire / JOHANNESBURG, South Africa / HAMILTON, Bermuda, 7 March 2017

The African Risk Capacity (ARC) has added a crucial partner to its portfolio by formally teaming up with the African Development Bank (AfDB) to strengthen mechanisms to manage weather-related risk on the continent. This partnership will formalize a technical collaboration to enhance risk management infrastructure and policy across Africa; it will also support African countries in building resilience against climate shocks and in taking ownership of their disaster response.

In concrete terms, AfDB and ARC Agency will work together to develop their Member states’ capacity in understanding the value of risk transfer tools.

The partnership is intended to result in ARC Member countries integrating risk management into their policy and development objectives, with a particular focus on recurrent disasters such as drought, floods and tropical cyclones as well as on improved resilience and speedier recovery after disasters.

ARC and AfDB signed the Memorandum of Understanding (MOU) on the margins of ARC’s Fifth Conference of Parties (CoP5) in Abidjan, Côte d’Ivoire on 7th March 2017.

Background

The signing of the MOU is subsequent to the Letter of Intent (LOI), which was signed between the two institutions in May 2016 during the AfDB’s Annual Meetings in Lusaka.  The MOU formalizes a technical partnership to collaborate on the enhancement of the risk management infrastructure and policy regime across Africa.

The aim of this partnership will be for the institutions to collaborate: in the development of capacity and services; providing capacity building to individual countries; to embed risk management in planning and to deepen the understanding of the value of risk transfer tools. This collaboration is in line with the support that the Bank should provide to Regional Member Countries (RMCs) pursuant to its Charter as well as its role in assisting RMCs to adapt to the growing hazards from climate change.

Signing the MOU on the behalf of the African Development Bank, the Senior Vice-President, Dr. Frannie Leautier, stated: In the context of this MOU, ARC and AFDB will partner to support Member States in key areas, which will lay the foundations for a robust approach at the national-level around disaster risk financing.”

Mr. Mohamed Béavogui, United Nations Assistant Secretary-General and the Director-General of ARC, views the MOU with AfDB a key milestone, stating: “this partnership with AfDB will complement ARC as we will jointly train and prepare countries to better manage weather-related risk and mainstream insurance into their disaster management plans.”

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About African Risk Capacity (ARC)

The African Risk Capacity Agency (ARC Agency) was established in 2012 as a Specialised Agency of the African Union (AU) by a Conference of Plenipotentiaries – consisting of 32 African nations – to help African Union Member States improve their capacities to better plan, prepare and respond to weather-related disasters. The objective of the ARC Agency is to assists AU Member States to reduce the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign disaster risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective and transparent manner.

The African Risk Capacity Insurance Company Limited (ARC Ltd) is a financial affiliate of the African Risk Capacity (ARC), a specialized agency of the African Union (AU), an initiative designed to improve current responses to climate-related food security emergencies. ARC Ltd is a mutual insurance facility comprised of its members, which included in 2016: Burkina Faso, Mali, Mauritania, Niger, Senegal, the Gambia. – The membership also includes its capital contributors. KfW on its own behalf, and for the account of the Federal Republic of Germany acting through its Federal Ministry for Economic Cooperation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung, BMZ) and the United Kingdom (Department for International Development, DfID) have contributed the first tranches of their respective EUR 50 million and GBP 90 million commitments.

For more information, please visit: www.africanriskcapacity.org

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About African Development Bank (AfDB)

The African Development Bank Group (AfDB) is a multilateral development finance institution established to contribute to the economic development and social progress of African countries. The AfDB was founded in 1964 and comprises three entities: The African Development Bank, the African Development Fund and the Nigeria Trust Fund. The AfDB’s mission is to fight poverty and improve living conditions on the continent through promoting the investment of public and private capital in projects and programs that are likely to contribute to the economic and social development of the region. The AfDB is a financial provider to African governments and private companies investing in the regional member countries (RMC).

Since 2016 and within the framework of its Ten Year Strategy (TYS 2013 – 2022) the Bank has stepped up its pace to Africa’s development by focusing on five priorities that are crucial for accelerating Africa’s economic transformation. The Bank calls them the “High 5s”: Light up and power Africa; Feed Africa; Industrialise Africa; Integrate Africa; and Improve the quality of life for the people of Africa. Within the context of the High 5s, the Bank has revamped the review its strategic focus to give greater attention to Africa’s fundamental challenges and how the Bank is addressing them.

For more information, please visit: www.afdb.org

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 For further Information, please contact:

info@africanriskcapacity.org – Tel: +27 11517 1640

https://www.afdb.org/en/contact-us/ – Tel: +225 2026 3900

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ARTICLE – African Risk Capacity: Insurance is vital, but no magic bullet to fight drought in Africa

Photo: REUTERS/Mike Hutchings
Photo: REUTERS/Mike Hutchings

Written by Alex Whiting for Thomson Reuters Foundation, republished on Zilient, PreventionWeb, and Braced.

London – More developing countries urgently need insurance to cushion their farmers against weather extremes that can worsen poverty, but it is no magic bullet to ward off the escalating impacts of climate change, experts say.

The burning question of how to stop drought becoming a major crisis – especially in Africa – has caused many to eye insurance as a possible answer.

“People think sometimes that insurance is the solution for everything. It is not correct,” said Mohamed Beavogui, director general of the African Risk Capacity, an African Union agency that helps states plan for natural disasters and climate change, and provides them with insurance through its company, ARC Limited.

“Insurance is … (for) when you have done everything you can and there is still a risk you cannot cover,” said Beavogui.

Planning for those risks – such as the number of people a government would be unable to help in a crisis – is vital, he told the Thomson Reuters Foundation.

As climate change bites harder, bringing with it worse droughts and floods, demands on donors’ purse strings are likely to grow, and experts say development gains – especially in Africa – are at risk of being rolled back.

Last year, southern African states appealed for $2.9 billion in aid when the region was hit with its worst drought in 35 years, affecting 39 million people. Now, drought in the continent’s east is pushing millions into hunger.

Insurance can be triggered more quickly than international aid, which can take months to fund. ARC’s cover is based on a pre-agreed plan for how the government will use the payout.

Since ARC Ltd began issuing policies in 2014, eight nations have taken out insurance and four – Senegal, Mauritania, Niger and Malawi – have received payouts totalling $34 million.

The index-based insurance offers maximum coverage of $30 million per country per season for drought events that occur with a frequency of one in five years or less.

But while drought last year left 6.5 million people in Malawi in need of food aid, Malawi did not receive an ARC payout until January.

Malawi took out insurance based on a crop – long-cycle maize – that, as it turned out, most farmers did not grow in the 2015/2016 season. Long-cycle maize survived the drought, while the short-cycle maize most farmers grew did not.

In the end, ARC’s member states agreed to an $8.1 million payout for Malawi – the amount it would have received had the government requested short-cycle maize as the base.

“It means that we shouldn’t rely only on data the government gives us,” Beavogui said. ARC will now also check what farmers are growing with research centres and extension services, among others, he added.

Jury still out

Insurance companies that pay out directly to farmers are still few and far between in many developing countries, and they offer limited services.

Where they do exist, they mainly serve commercial farmers because the poorest cannot afford to pay premiums without help from a donor or government, said Andrew Shepherd, director of the Chronic Poverty Advisory Network, based at the Overseas Development Institute, a London-based thinktank.

“The jury is still out” on whether insurance can make the poorest farmers more resilient to drought, but it can play an important role in preventing wealthier farmers from becoming impoverished, he said.

“All the focus by governments, and often donors, is on getting people out of poverty, and not on preventing people from falling into poverty,” he said.

India is one of the few developing countries with a national insurance scheme for farmers, including those with as little as one cow or buffalo, which works through local agents, said Shepherd.

Senegal has two kinds of insurance – macro-insurance through ARC, and micro-insurance – both of which paid out when bad drought hit in 2014.

The Compagnie Nationale d’Assurance Agricole du Senegal (CNAAS) – set up by the government, insurance companies and international agencies – targets most farmers in rain-fed crop areas with index-based insurance products.

In 2014, Senegal’s ARC payout reached people and livestock with aid, getting help to herders within three months, said Mathieu Dubreuil, micro-insurance advisor at the World Food Programme (WFP).

“It was a good match” between ARC which pays out in a crisis and micro-insurance schemes that pay out more often, he said.

WFP, which offers small-scale insurance for farmers, is also exploring taking out ARC insurance, which would give an additional payout to countries, disbursed either by WFP or through the government.

Vicious cycle of hunger

In Malawi, farmers are waiting for the April maize harvest to bring an end to months of food shortages.

“If we are not careful, we will have a vicious cycle of hunger,” said Wycliffe Kumwenda of the National Smallholder Farmers’ Association of Malawi, representing more than 100,000 farmers.

Uninsured farmers are condemned to queue up for food aid – time taken away from cultivating their fields – while hunger saps their energy, he said.

There is some insurance for Malawian tobacco farmers, but many do not know about it. Premiums are a problem too, as is the ability to make a claim, Kumwenda said.

“We need to install proper instruments that can capture weather parameters like rainfall (and) temperature,” he said. “Most of the met stations are not reliable.”

That makes claims hard to justify, putting off potential insurance providers, he added.

As climate impacts are expected to worsen in the coming years, potentially pushing up the cost of premiums, ARC is developing an Extreme Climate Facility (XCF) which will give countries access to finance for climate change adaptation.

“You have to insure what you cannot cover, and at the same time you have to prepare and adapt,” said Beavogui. “My real fear is we don’t do it quickly enough.”

The African Risk Capacity Insurance Company Limited (ARC Ltd) appoints former IFC Director Dolika Banda as CEO

She will take the reins from Dr Simon Young, who was appointed CEO in 2014 after playing a leading role in the development of the ARC programme.

JOHANNESBURG, South Africa, July 11, 2016/APO/ —

The African Risk Capacity Insurance Company Limited (ARC Ltd) (http://ltd.ARC.int) has announced the appointment of former IFC Director Ms Dolika Banda as Chief Executive Officer, effective from 7 September 2016.

She will take the reins from Dr Simon Young, who was appointed CEO in 2014 after playing a leading role in the development of the ARC programme. He will continue to serve in an advisory capacity.

ARC Ltd is an insurance mutual and financial affiliate of the ARC Agency (www.AfricanRiskCapacity.org), a Specialised Agency of the African Union. As Africa’s first catastrophe risk pool, ARC Ltd provides parametric natural disaster insurance to African governments.

A Zambian economist and advisor, Ms Banda has more than 25 years of international banking and financial management experience with a focus on economic development in sub-Saharan Africa.

Most recently, Ms Banda was Regional Director for Africa at the UK’s Commonwealth Development Corporation (CDC) since 2013.

Ms Banda worked at the World Bank Group’s International Finance Corporation for 16 years within its financial markets, credit, accounting and treasury departments. As Director of Financial Markets, she managed the IFC’s financial markets activities across sub-Saharan Africa, Latin America and the Caribbean.

Ms Banda has also held senior corporate and merchant banking positions at Barclays and Citibank in Zambia.

She currently sits as a non-executive director on a number of boards including Ecobank Transnational Incorporated.

Chairman of the ARC Ltd Board of Directors, Dr Lars Thunell welcomed the incoming CEO: “Ms Banda’s incomparable experience across the continent, encompassing both the private and the public sectors, is a perfect fit for ARC, itself a private-public partnership. We look forward to her leadership taking the company to new horizons.”

Ms Banda said: “I’m honoured to join this unique and inspiring organisation which is providing an African-owned solution to the continent with an emphasis on solidarity. I’m excited to be part of such an important initiative which will help Africa take control and enhance its future development.”

Dr Thunell praised ARC Ltd’s current CEO for having headed up the company through its key start-up phase: “ARC Ltd is only what it is today because of Dr Young’s outstanding leadership. He has created a solid base for this innovative new instrument that is changing the way Africa takes on the climate challenge.”

Dr Young said: “I’m proud to have been a part of the team which has already and continues to push the boundaries of innovation in better managing natural disasters to build resilience and underpin economic growth for the most vulnerable across Africa. I am confident that Dolika will guide the company successfully through its next phase and towards ARC’s goal of insuring 30 countries by 2020 for $1.5bn, helping to protect 150 million vulnerable Africans.”

As the inaugural CEO, Dr Young has overseen the first critical years of ARC Ltd’s growth, including payouts of $26mn in the company’s first year when three countries in the Sahel were impacted by drought. He has also led development of a number of key initiatives within the company including the expansion to tropical cyclone and flood insurance as well as a the ‘Licensing for Development’ pilot project in which ARC licenses its modelling software to underwrite drought insurance across Africa.

He has been key in driving the Replica initiative which aims, through insurance, to shift the humanitarian sector to proactive financing. ARC Ltd plans to provide natural disaster insurance to the World Food Programme and Start Network, a consortium of NGOs, which will replicate African government’s policies.

Dr Young has also led the company’s underwriting and reinsurance activities as the acting Chief Underwriting Officer, a role he will continue to play until a second senior appointment is made later in 2016. During its first two years of operations, ARC Ltd has underwritten over $300mn of risk and transferred $130mn to the international risk markets, both of which are projected to double this year.

For more information and to set up an interview with Ms Banda, please contact Karina Whalley at kwhalley@arcinsltd.bm or +27(0)608844098/ +27(0)112368643

 

COMMUNIQUE DE PRESSE – Malawi reçoit un décaissement de 8M$ de L’ARC pour les ménages affectés

Télécharger en version PDF.

JOHANNESBURG, Afrique du Sud / LILONGWE, Malawi / HAMILTON, Bermudes, 14 novembre 2016

La société d’assurance mutuelle de l’ARC (ARC Ltd) traite actuellement un décaissement d’environ 8,1 millions de dollars au gouvernement du Malawi pour soutenir sa réponse à la sécheresse, suite à la mauvaise saison agricole de 2015/16.

Le ministre des Finances, de la Planification économique et du Développement du Malawi, l’honorable Goodall Gondwe, a déclaré: «Le Malawi se félicite du paiement de l’ARC Ltd, compte tenu des défis importants pour obtenir des financements pour venir en aide aux millions de ménages affectés dans le pays.»

Les fonds seront décaissés dès que le plan du gouvernement sur l’utilisation du versement de l’assurance – connu sous le nom de Plan final de mise en oeuvre – est approuvé par l’ARC. Il s’agit d’une procédure standard pour les décaissements de l’ARC, qui devrait avoir lieu à la fin du mois de Novembre.

Contexte

ARC Ltd émet des polices d’assurance pour le compte de ses États membres africains. Tout décaissement est fondé sur les résultats de son modèle de risque lié à la sécheresse, Africa RiskView. En étroite collaboration avec ARC, chaque État personnalise le modèle afin que celui-ci reflète son profil de risque historique lié à la sécheresse, ainsi que ses pratiques agricoles actuelles.

Le Malawi a souscrit à un contrat d’assurance paramétrique contre la sécheresse auprès de l’ARC Ltd pour la campagne agricole 2015/16. Dans un premier temps, aucun paiement n’a été déclenché car le modèle indiquait un faible nombre de personnes touchées par la sécheresse. Cependant, l’estimation de la population touchée par le gouvernement du Malawi était beaucoup plus élevée, suggérant une divergence avec les résultats du modèle.

L’ARC a donc lancé une étude technique approfondie. Elle a tout d’abord examiné la performance du modèle tel qu’il était initialement personnalisé par le Malawi et a constaté que le modèle avait fonctionné comme prévu, compte tenu de ses paramètres et des données de précipitations satellitaires utilisées. Les données satellitaires étaient conformes aux données sur les précipitations au Malawi.

Puis, l’ARC a mené des études sur le terrain, ainsi que des enquêtes sur les ménages en partenariat avec des techniciens malawiens, dont des chercheurs du Centre pour le développement agricole et rural (CARD) de l’Université d’agriculture et des ressources naturelles de Lilongwe (LUANAR).

Il résulte de cette analyse que les agriculteurs cultivent davantage un type de culture différent de celui qui avait été retenu dans le modèle. Les agriculteurs sont passés ces dernières années à la culture du maïs à court-cycle (nécessitant une période de croissance de 90 jours), alors que la personnalisation du modèle prenait en compte une variété de maïs nécessitant, pour sa part, une période de croissance de 120 à 140 jours. Les précipitations en 2015/16 étaient particulièrement défavorables au maïs à cycle court, de sorte que la modification de cette hypothèse de culture dans le modèle a donné un résultat très différent.

Lorsque l’ARC a corrigé cette hypothèse de culture dans le modèle Africa RiskView, les résultats ont donné lieu à un modèle qui offrait une représentation raisonnable de la situation sur le terrain. Cela a donc entraîné un décaissement au gouvernement du Malawi, selon le contrat d’assurance révisée.

Les travaux de l’ARC ont confirmé que le moteur technique Africa RiskView est une plateforme de modélisation robuste. Cependant, le fait de devoir modifier les données critiques dans le cas du Malawi met l’accent sur la nécessité de formuler des hypothèses appropriées et réalistes, basées sur les meilleures données récentes disponibles lors de la personnalisation du modèle.

Le président de l’ARC Ltd, le Dr Lars Thunell a déclaré: « Le cas du Malawi a montré qu’une attention accrue est nécessaire pour valider les données d’entrée nationales fournies pour le modèle. La capacité d’un modèle à représenter la réalité dépend de l’exactitude des hypothèses de départ et des données. Sur la base d’une nouvelle personnalisation, fondée sur une hypothèse plus précise par rapport au type de culture de référence, un contrat d’assurance modifié a été émis pour le gouvernement du Malawi et un paiement a été déclenché. »

L’ARC est une organisation d’États membres dont l’objectif est de garder ses membres au cœur de son action. L’ARC Ltd n’est pas seulement une société d’assurance commerciale, mais fait partie d’une institution de développement établie sous le leadership des États membres de l’Union africaine, y compris le Malawi.

Le Dr Ngozi Okonjo-Iweala, Présidente du Conseil d’administration de l’Institution de la Mutuelle panafricaine de gestion des risques, a déclaré: «L’ARC a été créée par les gouvernements africains dans le but de leur fournir les outils et le soutien nécessaires pour mieux gérer les risques liés aux catastrophes naturelles. L’ARC soutient le Malawi et continue à aider le pays à élaborer une stratégie globale et efficace de gestion du risque de sécheresse.»

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A propos de la mutuelle panafricaine de gestion des risques (ARC)

L’Institution de la Mutuelle panafricaine de gestion des risques (Institution de l’ARC) a été créée en 2012 en tant qu’institution spécialisée de l’Union africaine (UA) par une Conférence de plénipotentiaires pour aider les États membres de l’Union africaine à améliorer leurs capacités à mieux planifier, préparer et répondre aux catastrophes naturelles. L’objectif de l’Institution de l’ARC est d’aider les États membres de l’UA à réduire le risque de pertes et dommages causés par des phénomènes météorologiques extrêmes touchant les populations africaines en fournissant, par une assurance contre le risque souverain, des réponses ciblées aux catastrophes naturelles, d’une manière plus rapide, rentable, objective et transparente.

Pour plus d’informations, visitez: www.africanriskcapacity.org

La société d’assurance de l’ARC (ARC Ltd), créée en 2013, est une filiale financière de la Mutuelle panafricaine de gestion des risques.

L’adhésion au groupe d’assurances 2015 de la société comprenait les pays qui ont souscrit des contrats d’assurance afin de couvrir les saisons agricoles au cours de l’année civile commençant le 1er mai 2015; le groupement 2015/2016 comprenait la Gambie, le Kenya, le Malawi, le Mali, la Mauritanie, le Niger et le Sénégal. Les membres de l’ARC Ltd incluent également ses contributeurs en capital, le Royaume-Uni (par le biais du Département du Développement International) et l’Allemagne (La KfW banque de développement au nom du ministère fédéral de la coopération économique et du développement BMZ).

Pour plus d’informations, visitez: http://ltd.arc.int

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Pour de plus amples informations, veuillez contacter: info@africanriskcapacity.org
Tél: +27 11517 1640; +27 11517 1535

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PRESS RELEASE – Malawi to receive USD 8M insurance payout to support drought-affected families

Click here to download the PDF version.

JOHANNESBURG, South Africa / LILONGWE, Malawi / HAMILTON, Bermuda, 14 November 2016

The African Risk Capacity Insurance Company Limited (ARC Ltd) is processing an insurance payout of approximately USD 8.1 million to the Government of Malawi to support its response to the drought which resulted from the poor 2015/16 agricultural season.

The Minister of Finance, Economic Planning and Development for Malawi, Honourable Goodall Gondwe, said: “Malawi welcomes the payout from ARC Ltd given the significant challenges in securing financing to support the millions of affected households in the country.”

The payout will be released to Malawi as soon as the Government’s plan on how the payout will be used to respond to those affected by drought – known as the Final Implementation Plan – is approved by ARC. This is standard practice for ARC payouts, and is expected to take place by the end of November.

Background

ARC Ltd issues insurance policies to its African Member governments; any payout thereof is based on results from its drought risk model, the Africa RiskView. In close consultation with ARC Ltd, the model is customised for and by each country to reflect the country’s historical drought risk profile and current farming practices.

Malawi bought a parametric drought insurance policy from ARC Ltd for the 2015/16 agricultural season. The policy did not initially trigger a payout, because the model indicated a low number of people affected by the drought. However, the Government’s estimate of the impacted population in Malawi was much higher, suggesting a discrepancy in the results of the model.

ARC investigated the discrepancy through extensive technical work. It first examined the performance of the model as it was originally customised by Malawi, and found that the model had performed as expected given its parameters and the satellite-based rainfall data used. The satellite data was in line with Malawi’s ground-based rainfall data.

Subsequently, ARC conducted extensive fieldwork and household surveys in partnership with Malawian technical experts, including researchers from the Centre for Agricultural and Rural Development (CARD) at the Lilongwe University of Agriculture and Natural Resources (LUANAR).

This work revealed that farmers had switched to a greater extent to growing a different type of crop than that assumed in the model. Farmers shifted in recent years to planting maize with a 90-day growing period, compared to the maize variety with a growing period of 120-140 days as assumed in the customisation of Malawi’s model. The rainfall pattern in 2015/16 was particularly unfavourable to the shorter cycle maize, such that correcting this crop assumption in the model resulted in a very different modelled outcome.

In fact, when ARC re-customised the Africa RiskView to correct this crop assumption, it resulted in the model outcome providing a reasonable representation of the situation on the ground. This in turn triggered a payout under the revised policy to the Government of Malawi.

ARC’s work confirmed that the Africa RiskView technical engine is a robust modelling platform. However, having to correct key data in the case of Malawi emphasises how critical it is to make appropriate and realistic assumptions based on the best-available and current data when customising the model.

The Chair of ARC Ltd Board, Dr. Lars Thunell stated: “The case of Malawi has showed that heightened attention is necessary in validating national input data provided for the model. Any model’s ability to represent reality depends on the accuracy of starting assumptions and data. Based on the re-customisation using a more accurate assumption on reference crop type, an amended insurance policy was issued to the Government of Malawi and a payout has been triggered.”

ARC is a Member State organisation, and its aim is to keep its Members at the centre of its work. ARC Ltd is not merely a commercial insurance company, but part of a development organisation established with the leadership of African Union Member States including Malawi.

Dr. Ngozi Okonjo-Iweala, Chair of the African Risk Capacity Agency Board, further stated: “ARC was founded by African Governments with the objective of providing them with the tools and capacity to better manage natural disaster risks. ARC Ltd stands by to support Malawi and to continue to help the country develop a comprehensive and effective drought risk management strategy.”

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About African Risk Capacity (ARC)

The African Risk Capacity Agency (ARC Agency) was established in 2012 as a Specialised Agency of the African Union (AU) by a Conference of Plenipotentiaries to help African Union Member States improve their capacities to better plan, prepare and respond to weather-related disasters. The objective of the ARC Agency is to assists AU Member States to reduce the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective and transparent manner.

For more information, please visit: www.africanriskcapacity.org

The African Risk Capacity Insurance Company Limited (ARC Ltd) was established in 2013 is a financial affiliate of the African Risk Capacity.

Membership in the company’s 2015 insurance pool included the countries which took out insurance contracts to cover agricultural seasons during the calendar year starting 1 May 2015; this 2015/2016 pool consisted of The Gambia, Kenya, Malawi, Mali, Mauritania, Niger and Senegal. – The members of ARC Ltd also include its capital contributors, the United Kingdom (through DFID) and Germany (KfW on behalf of BMZ).

For more information, please visit: http://ltd.arc.int

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For further Information, please contact:

info@africanriskcapacity.org
Tel: +27 11517 1640; +27 11517 1535

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The world is at a critical juncture. An Op-Ed by Ngozi Okonjo Iweala and Etharin Cousin.

Reprinted from the original article in This Is Africa.

We are experiencing the highest level of humanitarian need since the Second World War brought on by conflict, climate change, rapid urbanisation and, in part, the legacy of a rigid development model.

In this interconnected world, our problems are shared and so must our solutions be. In that spirit Ban Ki-moon, the United Nations secretary-general, is convening the first World Humanitarian Summit on 23 and 24 May in Istanbul.

During this seminal meeting, 5000 leaders from government, business and humanitarian organisations will gather to map a way forward.

In our respective roles at the African Risk Capacity (ARC) and the World Food Programme (WFP), the Secretary General’s main call to action – to work differently towards ending need – is at the heart of what we do.

We are working to support the African continent as the region finds ways to manage the effects of extreme climate events and competing demands for limited humanitarian dollars.

ARC was established as a specialised agency of the African Union (AU) to help African states develop risk management systems to cope better with natural disasters including drought, floods and tropical cyclones. The concept was to establish the first sovereign insurance pool on the continent.

This new approach has challenged the status quo of how natural disaster response should be managed.

Countries that previously had been forced to seek outside help in the face of a disaster now receive dedicated resources in the event of a payout. They put the funds into action through pre-certified plans.

There are many advantages. Assistance can be delivered more quickly through ARC than waiting for the international donor system to react. At the same time, the reliance of African governments’ on external emergency aid is reduced, and their self-sufficiency increased.

ARC is a prime example of how donors, African governments, humanitarian organisations and the private sector can cooperate to move the continent away from the traditional system of handouts.

First envisaged and then nurtured by the World Food Programme, the ARC was quickly embraced by the AU, which saw a chance for the continent to help itself manage climate risk in a cost effective manner.

The Rockefeller Foundation provided initial funding to research and assess the concept, before other donors, including Sweden, Switzerland, the US, Saudi Arabia, IFAD and Rockefeller provided ongoing financial support for ARC’s operations. The United Kingdom and Germany have committed more than $200m in returnable risk capital to ARC Ltd – the scheme’s mutual insurance company – to ensure its commercial viability.

The first couple of years have been very encouraging.

To date, 32 African countries have become members of ARC, and seven have joined the insurance pool. Those seven have paid premiums of $42m, demonstrating the commitment by sovereign treasuries towards managing their climate risk.

ARC is demonstrating that reacting rapidly to extreme weather situations saves lives and protects livelihoods.

In 2014, payouts totaling $26.3m were made within weeks to Mauritania, Niger and Senegal following poor rainfall in the Sahel. Those funds were used to support the livelihoods of more than 1.3 million people through delivery of livestock fodder, food and cash to affected populations based on pre-approved contingency plans.

But the coverage supplied by ARC has so far only provided 10 percent to 30 percent of total disaster funding requirements. Now, ARC is working with humanitarian partners to launch Replica Coverage.

This will see international organisations and NGOs replicate ARC member states’ insurance policies, thereby effectively doubling coverage available for vulnerable populations.

WFP and the Start Network – a global coalition of NGOs – have agreed to act as replica partners for ARC members. At a stroke this could double the $180m of drought coverage that countries were able to purchase last year on their own.

Replica partners will receive matching payouts when the policy triggers. This is a win-win. In time the fund is intended to become self-sustaining.

We are bringing the Replica programme to the world’s attention in Istanbul, though we anticipate that full replication of ARC’s growing portfolio will take several years.

Transforming how aid is delivered will not happen overnight, but we must not shy away from taking bold steps. At the same time we can increase the power of humanitarian dollars allocated for natural disasters in Africa.

By 2020, ARC aims to reach 30 countries with $1.5bn in coverage. Including the Replica scheme, ARC will indirectly insure more than 150 million Africans. This represents half the G7’s global target under the InsuResilience initiative, which aims to generate coverage for 400 million vulnerable people.

ARC and the Replica initiative reflect the vision of the World Humanitarian Summit that the world needs to be bettered prepared for natural disaster and more resilient to climate shocks that impoverish vulnerable populations and distress their nations’ economies.

It is a model whose time has come. Through the ARC, African governments have chosen to help themselves. Through Replica, donors and humanitarian organisations can join these nations to see what a collaborative, innovative approach to humanitarian financing could mean for the world’s most vulnerable.

Ngozi Okonjo-Iweala is chair of the ARC Agency Governing Board

Ertharin Cousin is executive director of the World Food Programme

ARC receives “Most Innovative ESG Risk Protection Provider Africa 2016” award from CFI.co

African Risk Capacity has won yet another award, this time from Capital Finance International (CFI.co) the business, economics and finance journal focused on the convergence of developing and developed economies.

ARC was named Most Innovative ESG Risk Protection Provider in Africa for 2016 with the judging panel giving the below comments:

“The CFI.co judging panel commends ARC on its proactive and solidly coordinated approach to risk management in Africa. The company’s services replace the ad-hoc response hitherto given to natural disasters. That not only saves money: it saves lives.”

For more information about the award: https://issuu.com/cfi.co/docs/spring_2016/118

Access to the article on ARC: https://issuu.com/cfi.co/docs/spring_2016/136

Interview of ARC management by cfi.co: https://issuu.com/cfi.co/docs/spring_2016/138