In this story:
- African Risk Capacity (ARC) hands US32m drought insurance cheque
- 27 districts to benefit
- Patout compliments early drought response
By Conrad Mwanawashe
ZIMBABWE and its partners have received US$32 million drought insurance payout cheque from the African Risk Capacity (ARC) to be distributed to approximately 508,435 vulnerable households in 27 districts across the country.
The payout is a result of joint efforts by government, United Nations World Food Programme (WFP) and Start Network, who participated in the sovereign insurance risk pool for the 2023/2024 agricultural season.
Zimbabwe became a member of the ARC Agency in 2012 which offers innovative disaster risk financing solutions and assists member states develop contingent measures for natural disasters, thus enabling countries to strengthen their disaster risk management systems, and to access rapid and predictable financing in the event of a disaster, thereby, ensuring food security and livelihoods of vulnerable populations.
This motivated Zimbabwe’s participation in the ARC drought insurance risk pool for the 2019/20 agricultural season, where government paid a premium of US$1 million towards the ARC drought insurance cover.
Incidentally, the drought experienced during the 2019/20 agricultural season triggered a payout amount of $1.4 million which was extended to government, while the WFP replica policy received US$ 290 000. Over 180,000 households in the highly vulnerable districts benefitted from this payout.
“Since the 2019/20 agriculture season, we have not looked back. In collaboration with development partners namely KFW, Swiss Development Cooperation and Africa Development Bank, Government has been purchasing sovereign policies, complemented by Replica Policies from the WFP and Start Network,” Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube said while addressing the Drought Insurance Payout Ceremony.
Of the US$32m ARC drought insurance pay-out, government received US$16.8 million.
“The payout is complemented by payouts to our ARC replica partners amounting to $6.1 million to the WFP and $8.9 million to Start Network. Zimbabwe will therefore, receive a total payout of US$31.8 million. This payout will contribute immensely towards complementing the early drought response intervention measures which government has put in place,” said Ncube.
In his remarks at the same event, Edward Kallon, UN Resident and Humanitarian Coordinator said the payout will significantly complement the ongoing drought mitigation and response efforts of the Government of Zimbabwe, supported by the UN and Non-Governmental Organizations under the UN Flash Appeal.
“Going forward, the Africa Risk Insurance Facility exemplifies the pivotal role of insurance in nurturing climate adaptation, resilience, and sustainable development within Africa’s agricultural sector. The significant economic damage inflicted by climate change on Africa in 2022, exceeding US$8.5 billion according to recent reports, underscores the urgent need for targeted climate insurance solutions and anticipatory action plans,” said Kallon.
“By advocating for ARC’s innovative disaster risk management and financing strategies, there is scope to expand participation in ARC’s risk financing mechanisms, urge the ratification of the ARC Treaty by the Government of Zimbabwe and other governments, and showcase the efficacy of collaboration among all stakeholders involved,” he added.
President Emmerson Mnangagwa, recently approved a blitz food distribution to ensure no one goes hungry.
The blitz food distribution is targeting all food insecure vulnerable households in Zimbabwe and is currently supporting approximately 6 million people through grain distribution.
Acting WFP Country Director Lola Castro, said to address climate extremes, such as the El Niño-induced drought which has severely affect crop production, the agency has joined the national governments and partners to invest in programmes designed to help communities avert, minimize, and address the adverse effects of climate change.
“One of our fundamental approaches has been through sovereign, macro-level insurance. The ARC Replica initiative is a prime example of how WFP has matched the insurance policies of governments, enhancing financial protection for vulnerable populations,” said Castro.
“The US$6 million ARC payout is a vital lifeline for communities in Zimbabwe facing the devastating impacts of the El Niño-induced drought. This timely support will enable us to provide essential food assistance and prevent negative coping strategies, ensuring that vulnerable populations can withstand the difficult circumstances,” she added.
“In our fight against hunger, climate risk financing is essential. We aim to see instruments like ARC well integrated into government-led disaster risk management processes and social protection programmes.”
Lesley Ndlovu, CEO of ARC Ltd said his organisation was honoured to stand with Zimbabwe and other partner organisations during this time of crisis.
“The impact of such disaster events goes beyond the immediate socio-economic costs and compounds the vulnerability of many farming communities. The insurance payouts are testament of the value of the ARC instrument in facilitating early response,” he said.
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