African Risk Capacity Ltd. (ARC) has received a $27 million contribution from the Dutch government to help boost climate resilience in Africa, and further promote parametric insurance across the continent.
According to the announcement, the funding will be channelled through the African Development Bank’s Africa Disaster Risk Financing Programme (ADRiFi) Multi-Donor Trust Fund.
Following this, The Netherlands has now become the sixth contributor to the Fund.
It is important to highlight that parametric insurance is a key tool in the fight against climate change.
For those who are not aware, parametric insurance triggers payouts based on pre-agreed parameters, such as the intensity of a cyclone or excess rainfall.
As a result, this format allows for rapid disbursement of funds, which ultimately ensures that impacted communities are able to receive timely assistance to recover and rebuild.
Moreover, the ADRiFi partnership, a collaborative effort between the Bank and ARC, was established in 2019 in order to help increase risk insurance coverage across Africa, as well as improve the continent’s ability to respond to climate shocks.
Since 2019, the partnership has gone on to make significant steps, providing financial protection to over six million individuals across the continent.
Since its inception, the programme has received support from various international donors, including the United Kingdom, Switzerland, the United States, Canada, Norway and now the Netherlands.
The Bank, in turn, has invested more than $100 million and supported 16 African countries to access sovereign insurance and financial protection against climate hazards.
Lesley Ndlovu, CEO of ARC Ltd., commented: “We are grateful for the generosity of the Netherlands, and we welcome the country as a new donor to the ADRiFi programme to help reduce the protection gap and assist us in making parametric insurance more accessible and affordable through premium support.”
