The ARC Group makes US$13,3 million climate insurance payouts to the Government of the Republic of the Zambia
Lusaka, Zambia - The African Risk Capacity (ARC) Group has made a climate risk insurance payout to the Government of the Republic of Zambia amounting to nine million nine hundred seventy-nine thousand one hundred forty US dollars (US$9,979,140).
following severe drought conditions during the 2023/2024 agricultural season to support communities' recovery from food insecurity and loss of livelihoods.
According to Africa RiskView, ARC’s technical software for early warning and monitoring, 3,564,241 people in districts in Agro-ecological zones I and II were affected by this drought, triggering the payouts.
Zambia will use cash distribution to reach the affected populations. Based on the Final Implementation Plan, the government will implement emergency cash transfers for a period of six months to assist 92,515 households in14 affected districts.
The United Nations World Food Programme (WFP), member of the ARC Replica Programme, an innovative risk financing tool that improves the effectiveness of emergency response after climate disasters, received three million three hundred twenty-six thousand three hundred twenty (US$3,326,320) in payout after taking out a climate disaster insurance policy to support the Government of Zambia with ongoing market monitoring and assessments. Furthermore, WFP established a call centre at the Zambian Disaster Management and Mitigation Unit (DMMU) to support vulnerability assessments during the intervention and collect information and perceptions of market functionality and any changes to market dynamics.
“As recipients of WFP’s insurance payouts recover from the impact of climate shocks, WFP will continue monitoring how the climate insurance programme improves household resilience and food security, " said Ms. Lola Castro, acting WFP Regional Director, Southern Africa. “This will inform WFP’s strategy to manage climate risk with the appropriate combination of risk financing tools that support vulnerable households before, during and after climate hazards.”
Hon. Dr. Situmbeko Musokotwane, the Minister of Finance and National Planning of Zambia stated, “The payout we are receiving today from African Risk Capacity (ARC) Group will help the government meet the relief and livelihood reconstruction requirements of the most vulnerable households impacted by the 2023/2024 drought. Further, the technical capacity for effective preparedness provided through ARC is an innovation that Zambia supports“.
The success of this second payout underscores our collective efforts, and we look forward to ongoing collaboration with ARC. We also aim to engage additional development partners to expand this programme and extend protection to more vulnerable populations, underscore Mr. Nathaniel Elucch Agola, AfDB-Chief Country Economist.
The devastation from this drought in the Southern Africa region is extensive and might drive extreme food insecurity and increase the vulnerability of farming communities,’ said Mr. Lesley Ndlovu, CEO of ARC Ltd. ‘Together with partners, we stand with the Government of Zambia and its people during this difficult period. The Final Implementation Plan developed by the government with the support of ARC ensures that payouts will have a significant impact’, he continued.
“This payout is yet another testament of the role of parametric insurance in facilitating risk pooling and transfer towards effective Disaster Risk Management”, said Mr. Ibrahima Cheikh Diong, UN Assistant Secretary General and ARC Group Director General. “Our goal is to partner with governments in the protection of lives and livelihoods during difficult periods such as this one. We will continue to work to strengthen ARC’s partnership with the Government of Zambia towards strengthening the country’s preparedness to respond to such catastrophes.’
“Today’s payout showcases the tangible benefits of the ARC insurance scheme. Switzerland firmly believes that this kind of support will help integrate disaster risk financing into Zambia’s regular government programming! ” stressed Mr. Stefano Berti, Deputy Head of Mission and Head of Cooperation at Swiss Embassy to Zimbabwe, Zambia, and Malawi.
In addition to the government’s contribution, the country’s participation in ARC’s risk pools is enabled by premium subsidies from the Swiss Agency for Development and Corporation (SDC), the KfW Premium Support Facility, and the Africa Disaster Risk Financing (ADRiFi) programme The ADRiFi programme is a framework developed as a collaboration between the African Development Bank and the ARC Group and is currently funded by United Kingdom, Switzerland, Netherlands, Canada, USA, and Norway.