Last month, ICMIF member African Risk Capacity Ltd. (ARC Ltd.) received a USD 27 million contribution from the Dutch government to boost climate resilience in Africa. The funding will be channeled through the African Development Bank’s Africa Disaster Risk Financing Programme (ADRiFi) Multi-Donor Trust Fund. The Netherlands becomes the sixth contributor to the Fund, and its contribution will support the promotion of parametric insurance and other climate risk management instruments in Africa.
ARC Ltd. CEO Lesley Ndlovu said: “We are grateful for the generosity of the Netherlands, and we welcome the country as a new donor to the ADRiFi programme to help reduce the protection gap and assist us in making parametric insurance more accessible and affordable through premium support.”
The ADRiFi partnership, a collaborative effort between the Bank and ARC, was established in 2019 to increase risk insurance coverage across Africa and improve the continent’s ability to respond to climate shocks. Since its inception, this partnership has made significant strides, providing financial protection to over six million individuals across the continent.
The programme’s success is built on the robust support from various international donors, including the United Kingdom, Switzerland, the United States, Canada, Norway and now the Netherlands. The Bank, in turn, has invested more than USD 100 million and supported 16 African countries to access sovereign insurance and financial protection against climate hazards.
Parametric insurance is a critical tool in the fight against climate change. Unlike traditional insurance, which relies on lengthy claims processes, parametric insurance triggers payouts based on pre-agreed parameters, such as the intensity of a cyclone or excess rainfall. This mechanism allows for rapid disbursement of funds, ensuring that affected communities receive timely assistance to recover and rebuild. The swift response facilitated by parametric insurance is essential for mitigating the socioeconomic impacts of natural disasters, particularly among the most vulnerable communities.
For ARC Ltd, the ADRiFi programme continues to play a pivotal role in advancing the uptake of this innovative mechanism. At the same time, this collective effort underscores the global commitment to safeguard African nations from the escalating impacts of climate change.
