ARC rolls out disaster insurance for Zimbabwe & Madagascar

The African Risk Capacity (ARC) has recently disbursed significant amounts of financial aid to Zimbabwe and Madagascar to assist in their response to drought crises. ARC provided about $1.4 million to Zimbabwe and $290,288 to the United Nations World Food Programme through parametric drought risk insurance. This assistance is expected to reach approximately 500,000 beneficiaries who are at risk of being affected by drought this year. Additionally, Madagascar received a substantial amount of $2.13 million from ARC to support its drought response efforts. The CEO of ARC, Leslie Blowoo, highlighted the collaboration between ARC and the African Development Bank (AFDB) as a critical initiative to help African countries manage disaster risks effectively. This partnership has proven instrumental in providing insurance coverage to countries facing natural disasters, with the AFDB offering premium support to enable countries to join the sovereign risk pool. Since its establishment in 2014, ARC has made significant payouts to seven different countries, amounting to a total of $61 million for drought relief efforts. Blowoo emphasized the multiplier effect of insurance payouts, noting that for every dollar paid in claims, there is a fourfold impact on the economy. These payouts have had a profound impact on addressing economic concerns faced by vulnerable populations in affected countries. Notably, ARC's interventions in Madagascar and Zimbabwe were triggered by drought conditions in both countries. Blowoo explained that droughts often affect multiple countries in the same region due to shared climatic conditions. The financial assistance provided by ARC enables governments to respond rapidly to drought situations, preventing communities from falling into desperate conditions where they may be forced to sell livestock, consume seed stock, and withdraw children from school. This timely intervention is particularly crucial amidst the ongoing COVID-19 pandemic, which has further constrained livelihoods due to lockdown measures implemented to curb the virus's spread.