The United Nations World Food Programme (WFP) has signed its first climate risk insurance policy with the Africa Union’s African Risk Capacity (ARC), with €10 million of funding provided by the German Government.
Source: WFP/David Gross
The policy, called ARC Replica, is a unique climate risk financing mechanism that is supported by WFP and the Start Network, and was launched to complement ARC in offering reliable and predictable funding for early humanitarian response to extreme weather shocks.
Pay-outs from Arc Replica are triggered when certain indices such as low rainfall or reduced vegetation are confirmed by satellite data, and the first countries to benefit from the insurance coverage will be Mauritania and Mali, which are both prone to recurrent droughts.
The WFP will receive €5.8 million to purchase policies for Mauritania and Mali, allowing for maximum pay-outs of US $15.3 million that can provide early humanitarian assistance for up to 240,000 people.
“The Replica pilot is an excellent example of how WFP and Governments can pool expertise and innovative financing to provide early and coordinated response in the face of shocks, thereby contributing to national preparedness and response efforts,” said Jean-Noël Gentile, WFP Country Director in Mauritania.
“This is absolutely critical in the Sahel, where early interventions before the peak of the lean season have the potential to reduce the human and livelihood costs of droughts,” Gentile added.
Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) committed funding to the initiative via the German government-owned development bank, Kreditanstalt für Wiederaufbau (KfW).
“We support ARC Replica as an outstanding initiative which builds up capacities within international organizations to purchase ARC’s drought insurance to improve preparedness, coordination and financing in the case of a disaster,” said Thomas Duve, KfW Director of Southern Africa/Regional Funds.
“Through the German contribution, BMZ/KfW hopes to encourage other donors to provide funding to expand ARC Replica coverage to additional ARC member countries”.
“ARC builds on the diversification of weather patterns across Africa to help countries manage their disaster risk as a group in a financially efficient manner through risk pooling and risk transfer,” added Mohamed Beavogui, the Director-General of ARC.
“The ARC Replica initiative is an example of good solidarity where the international community complements national efforts to protect vulnerable populations.”
