African Risk Capacity commends AfDB for creating disaster risk financing facility

05 Nov 2018
Financial Nigeria

Summary

The ADRiFi will support countries in developing climate risk profiles, strengthen contingency plans and support risk transfer through premium subsidies of up to 50 percent over a five-year period.

Mohammed Beavogui, Director-General, African Risk Capacity

The African Risk Capacity (ARC), a specialized agency of the African Union, has applauded the establishment of the Africa Disaster Risk Financing (ADRiFi) programme by the African Development Bank (AfDB).

According to a statement released by ARC on Monday, the AfDB approved the ADRiFi programme by signing a Memorandum of Understanding with ARC in March 2017. Under the collaboration agreement, the two organisations will cooperate in preparing, developing and implementing projects and programmes to support member-countries in building resilience against climate shocks.

The ADRiFi programme is a timely response to the request from a number of regional member-countries (RMCs) for a premium financing support to bridge the resource gap impeding the necessary participation in the ARC insurance pool.

The programme will focus on national institutional strengthening, policy development, risk profiling, and contingency planning for disasters for participating RMCs. Nine countries have expressed interest in the programme. These countries are Burkina Faso, Chad, Gambia, Madagascar, Malawi, Mali, Mauritania, Niger and Senegal.

In line with the agreed structure, the programme will support countries in developing climate risk profiles, strengthen contingency plans and support risk transfer through premium subsidies of up to 50 percent over a five-year period. By the fifth year of the programme, the country will be paying the full premium.

“The faithfulness and commitment of President Adesina and his team to the realisation of this initiative begs for emulation by other regional and multilateral partners,” said Mohammed Beavogui, Director-General of ARC. “This is critical for us to achieve food security in the continent through ensuring that Africa’s vulnerable populations are insured against the often-overwhelming impacts of climate-induced natural disasters.”

Since March 2017 when the discussion was formalised to establish ADRiFi, the AfDB and the ARC have been working to enhance risk management infrastructure and policy across Africa as well as supporting countries in building resilience against climate shocks.

During the AfDB Annual Meetings 2018 in Busan, South Korea, a special session on “Climate and Disaster Risk Financing” gave a fresh impetus to the realisation of the set objectives.

According to the Board Chairperson of ARC, Ngozi Okonjo-Iweala, the disaster-risk financing landscape in Africa has received an empowering shot in the arm. She said, “Let us now move quickly to extend our disaster risk insurance coverage to more member-countries which, before now, could not join the ARC pool owing to fiscal constraints.”

The CEO of ARC, Dolika Banda, said, “We now know that collaborative partnerships work when there is good fidelity. ARC will leverage on the crest of this great achievement to connect with other institutions towards a more inclusive disaster insurance coverage for Africa.”

ARC consists of ARC Agency and ARC Insurance Company Limited (ARC Ltd). Established in 2012, the agency helps member-states improve their capacities to better plan, prepare and respond to weather-related disasters. ARC Ltd is a mutual insurance facility providing risk transfer services to member-states through risk pooling and access to reinsurance markets.


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