The African Development Bank’s board of directors have approved grants worth $9.25 million to implement the Africa Disaster Risk Financing Programme in Malawi.
The first grant, of $4.9 million, will come from the African Development Fund. The second, valued at $4.35 million, will be provided by the ADRiFi Multi-Donor Trust Fund.
These grants will support the government of Malawi in developing climate risk management solutions and paying its sovereign risk premium for the transfer of drought risks under the Africa Disaster Risk Financing Programme.
The ability to purchase parametric insurance is invaluable in a country like Malawi, which has experienced an increased frequency of climate shocks in the last few decades.
The African Risk Capacity Group (ARC) was founded in 2014 with the goal of providing natural disaster insurance relief to countries in Africa.
The Africa Disaster Risk Financing Programme aims to increase participation in ARC’s sovereign risk pool, a mechanism designed to shield the country’s farmers from the financial impact of drought and other climate shocks.
The ARC’s wider mission is to help members of the African Union protect the food security of their vulnerable populations.
Dr. Beth Dunford, the Bank’s Vice President for Agriculture, Human and Social Development, said: “Africa is the world’s region most vulnerable to climate change-related weather extremes like flooding, droughts and tropical cyclones. We welcome Malawi into the Africa Disaster Risk Financing Programme, which boosts participating countries’ ability to respond rapidly to the aftermath of climate-related disasters, arrange finance before shocks and better serve their most vulnerable populations impacted by the effects of climate shocks.”
