Africa (Commonwealth) _ African Risk Capacity (ARC) has paid insurance benefits of little over $11.6 million to the Government of Malawi and its Replica partner, the United Nations High Commissioner for Refugees (UNHCR), in response to the El Niño-caused drought in 2023–2023.
In order to alleviate food insecurity and reach the most vulnerable people affected by the widespread crop failures, the payment will fund emergency humanitarian measures.
These came about as a result of an unprecedented dry period that the El Niño weather pattern made worse. The impact affected more than 2 million agricultural households, putting them in need of aid and facing food insecurity.
The Republic of Malawi obtained an anticipatory sovereign insurance coverage with ARC Ltd., the ARC Group’s insurance unit, prior to the 2023–2024 planting season.
The African Development Bank (AfDB)’s Africa Disaster Risk Financing Programme Multi-Donor Trust Fund (ADRiFi-MDTF) provided premium support in addition to the government’s partial payment of the insurance premium, enabling the government to participate in ARC climate risk insurance.
The Honourable Simplex-Chithyola Banda, Minister of Finance and Economic Affairs, stated that the government is witnessing benefits from its proactive and forward-thinking strategy to handling natural catastrophes; the resources will play a significant role in increasing the resilience of the impacted people.
Lesley Ndlovu, CEO of ARC Ltd., stated that times like these allow us to fully understand the role that sovereign insurance plays as a cutting-edge financial tool to support Africa’s resilience. The ARC idea has been put to the test by the drought in southern Africa, and we are happy to be facilitating early action and helping people in need.
The UNHCR, a Replica partner, obtained insurance on behalf of refugees in addition to the government’s coverage with ARC Ltd. This was accomplished using Replica’s ground-breaking initiative, which enables humanitarian actors to buy insurance on a nation’s behalf.
This cooperative strategy guarantees that more individuals in need—refugees included—can get vital aid. The number of people who were insured and protected increased when populations that had been forcefully evacuated and their hosts were included to the insurance for the first time.
UNHCR’s Country Representative, Kouame Cyr Modeste, declared: “We are honored that UNHCR has become the first organization in Malawi to join the ARC insurance risk pool. Our payment of somewhat more than $400 000 will be crucial in meeting the needs of refugees impacted by the current drought brought on by El Nino.
“The purpose of this funding is to improve the livelihoods of individuals who have been forcibly displaced as well as their host communities by increasing food security.”
The government will use this amount to purchase and distribute food aid in accordance with the Final Implementation Plan that was created as part of the ARC contingency planning process and which directs the use of the payment.
UNHCR, the replica partner, will utilize the money to supplement the same initiatives and expand their outreach. The current humanitarian response to the drought is anticipated to be significantly impacted by the joint payouts to the Republic of Malawi and Replica partner, UNHCR, according to ARC.
According to a World Weather Attribution study, the primary cause of the record-breaking drought was El Niño, a recurrent event that sends exceptionally warm waters to the Pacific Ocean and affects weather patterns worldwide. Southern Africa was ravaged by heat waves and temperatures nine degrees Fahrenheit (5 degrees Celsius) above average between January and March, when the rains typically fall on Chongani’s land.
Raising 70% of their income from rainfed agriculture, 70% of smallholder farmers in an area where crops failed caused Zambia, Zimbabwe, and Malawi to declare national disasters. Some drought-affected areas have seen an increase in food costs of up to 82%, while animals have suffered and cropland has been devastated due to water shortages. A UN assessment states that over 18 million people already require immediate humanitarian aid, and that during the annual lean season, which usually begins in October, food insecurity rates will rise sharply.
Due to the depletion of food, the lean season was started as early as July this year. The region’s primary grain, maize, is normally a net exporter from southern Africa, but analysts with the Famine Early Warning Systems Network predicted that the region would need to import 5 million tons to fulfill demand.
Although the Pacific Ocean cooled in April, El Niño terminated, yet this brings little relief. Southern Africa has reached its breaking point due to drought, and it won’t rain again until October. The current state of affairs in the region is almost unbearable, and there are grave worries that things will only get worse.
