Africa Risk Capacity (ARC) is set to receive a share of $120 million from the United States government to support its Africa Disaster Risk Financing Programme (ADRiFi). The programme is set to help African governments respond to food system shocks by increasing access to risk insurance products. This announcement was made by President Biden during the G7’s Leaders’ Summit 2022 in Germany

This announcement comes at a time when ARC delivered a symbolic $14.2 million insurance payout cheque to the Malawi Government. The Government of Malawi had a drought insurance policy, supported by the African Development Bank through its Africa Disaster Risk Financing (ADRiFi) Programme Multi-Donor Trust Fund. 

The Central and Southern regions of Malawi have been experiencing severe food insecurity caused by drought-related events like erratic rainfall and crop failure and this pay-out will go a long way in helping the farmers. During the 2020/21 season, the country experienced an unprecedented dry start to the production season, leading to higher rates of sowing failure in significant parts of the two regions.

The Governments of the United Kingdom, through the Foreign, Commonwealth and Development Office, and Switzerland, through the Swiss Agency for Development and Corporation contributed to the ADRiFi trust fund. The Government of Germany, through KFW Development Bank/Federal Ministry for Economic Cooperation and Development, as well as the International Fund for Agricultural Development subsidized Malawi’s insurance policy premiums.

“ARC’s drought insurance mechanism is an innovative pan-African tool that provides our member states with the funds needed to better plan, prepare and respond to climate-related disasters,” said ARC Group Board Chairperson, Dr. Anthony Mothae Maruping. 

The payout to the Government of Malawi will not only release pressure on public finances but it will also bring nutritional and financial support to those that have been affected by the droughts caused by an increasingly variable and changing climate,” he added.

“Malawi is a signatory of the ARC Treaty and a key partner in the region. We have no doubt that the funds disbursed will support the country in scaling up its response to the drought-induced challenges,” said United Nations Assistant Secretary-General and ARC Group Director General, Ibrahima Cheikh Diong.

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