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Representatives from the African Risk Capacity (ARC) Group and the African Development Bank (AfDB) presented a symbolic US$797 049 (approximately R13 584 225) cheque to the Government of Madagascar following delayed rain during the 2021/2022 agricultural season, which resulted in drought conditions across the country, particularly in the Grand South.
The ARC payout is the result of drought insurance taken by the country under the AfDB’s flagship programme Africa Disaster Risks Financing (ADRiFi) Programme, which financed 50% of the 2021/2022 insurance premium for sovereign drought risk transfer for the Republic of Madagascar.
This payout will be specifically used to strengthen the resilience of part of the approximately 1 024 523 people affected by drought, according to the estimate of the Africa RiskView software, a tool used by ARC to estimate the number of people affected by disaster events and the associated response costs.
“I would like to thank the ARC Group, the AfDB, the German government, as well as multi-donor partners such as Switzerland and the United Kingdom, who provided premium support to the Government of Madagascar to enable insurance uptake. Your support to ARC and countries across the continent is crucial to enable us to sustain membership in this vital insurance mechanism,” said Tahina Razafindramalo, minister of digital development, digital transformation, posts and telecommunications.
In his remarks, United Nations assistant secretary-general and director-general of the ARC Group, Ibrahima Cheikh Diong, said: “The payout made today not only supports vulnerable communities affected by drought but also reaffirms the Government of Madagascar’s commitment to protecting its people against climate-induced shocks by actively participating in the ARC’s insurance mechanism.”
A country suffering from climate change
“Madagascar is, unfortunately, one of the African countries hardest hit by the impact of climate change. However, the government’s foresight to take out drought insurance meant that we were able to work together to develop a pre-emptive contingency plan, detailing how the payout would be used. The swift release of funds means the worst-affected communities can now be assisted as a matter of urgency,”said Lesley Ndlovu, CEO of ARC Limited, the insurance affiliate of the ARC Agency.
In establishing a framework for collaboration, ARC and the AfDB signed a Memorandum of Understanding in March 2017 to support African states to manage disaster risks, and to be better prepared to effectively respond to climate-related perils that seriously affect the continent. It is within this framework that the bank provided financial support to the Government of Madagascar for the payment of its insurance premium over a period of five years (2019 to 2023) through the ADRiFi Programme.
“This is the third insurance payout via the ADRiFi Programme and ARC to the Government of Madagascar. The combined total of more than US$13,5 million to boost the government’s ability to provide services that are keeping thousands of vulnerable people from food insecurity or migrating in search of food and work, demonstrates the bank’s sustained commitment to building African nations’ resilience to climate change,” said Dr Beth Dunford, the AfDB’s vice-president for agriculture, human and social development. – Press release, Big Ambitions