African Risk Capacity Limited (ARC Ltd.) and the United States Government (USG) have entered into a $11.7 million partnership to increase access to parametric insurance in Africa and safeguard food security.
According to ARC Ltd., this newly announced project aims to protect vulnerable smallholder farmers facing increasing climate change-related disasters while assisting African governments to better respond to climate risks.
ARC Ltd. explained that this partnership has strengthened its strategic interests in disaster risk financing in Africa while signalling its commitment to investing in locally-led climate solutions.
“For ARC Ltd., this project aligns with its mission to safeguard more nations and create effective pan-African climate response systems,” the firm added.
ARC Ltd. COO, Ange Chitate, who is set to head up the project, commented, “ARC Ltd. is committed to protecting the livelihoods of farmers and pastoralists across our African Union member states.
“Our priority with this grant is to provide coverage to 19 states, and with the support of the USG, we will refine and develop innovative products that will meet the evolving needs of these countries.”
As per ARC Ltd., the project has two primary objectives. Firstly, governments will be assisted with capacity building to manage climate change-induced disasters through the effective use of parametric insurance.
“To this end, ARC Ltd. will work closely with governments to customise risk models for each country, establish contingency plans and integrate parametric insurance into policy frameworks. This localisation helps ensure that the insurance payouts will meet the real needs on the ground,” the firm said.
The project will additionally seek to increase the uptake of parametric insurance through close cooperation with the African Union and regional economic communities to encourage adoption.
“It will also focus on aligning domestic policy frameworks with regional policies to embed parametric insurance in existing climate adaption frameworks, ARC Ltd noted.
ARC Ltd. CEO, Lesley Ndlovu, said, “ARC Ltd. has set an ambitious goal of protecting the lives and livelihoods of 700 million vulnerable people in Africa by 2034.
“The partnership with the United States Government, and others, will help us achieve this goal. It also demonstrates the commitment of developed nations to building the resilience of the global south to withstand climate disasters.”
