It’s been announced that drought-affected households in Malawi will receive a combined US $14.2 million of relief with an upcoming climate insurance pay-out by African Risk Capacity (ARC) Limited to the Malawian government in June.
Malawi is a signatory of the ARC Treaty established by African Risk Capacity, a specialised agency of the African Union, aimed at helping AU member states improve their capacities to plan, prepare and respond to extreme weather events and natural disasters.
ARC Limited’s parametric insurance covers against weather-related perils which are occurring in increasing frequency and severity as the impact of climate change increases.
The Malawi Government had selected sub-national triggering risk transfer to address localised drought spells and insured a total of four cluster policies which covered different regions in the country, explains Lesley Ndlovu, ARC Limited CEO.
“We expect the pay-out amount in June to be over US$14.2 million which will be used to provide food assistance (in kind or cash) to vulnerable households, as well as scaling up an existing social cash transfer programme,” he adds.
The $14.2 million will be disbursed to the World Food Programme, which works to advocate for better risk-management systems and funding related to climate-change effects.
In November last year, after drought and pests destroyed significant volumes of crops, up to 65,000 Malawian farming households received cash pay-outs – amounting to US $2.4 million in total – from a UN WFP agricultural insurance programme.
“With the changing climate, farming can be an uncertain business in Malawi, especially for smallholder farmers,” said Paul Turnbull, WFP Malawi country director and representative at the time.
“The pay-outs are a springboard for farmers to continue their efforts in adapting to increased weather-related shocks, and in fighting both food insecurity and poverty.”
