Drought Insurance: Federal Republic of Germany To Help African Countries With Premium Payments Of About EUR 19Million.


Chairperson of the ARC Governing Board, Ngozi Okonjo-Iweala.


By Barnabas Esiet.

In response to the ravaging effect of COVID-19 pandemic on the African continent, the German government has taken up premium payments of around EUR 19 million for the drought insurance offered by the African Risk Capacity (ARC).

ARC is a specialized agency of the African Union launched in 2012 as an initiative of African countries to improve their disaster and risk management and thus increase their resilience to climate change and disasters.

According to a joint statement by the ARC and the German Government, this will reliably protect up to 20 million poor and vulnerable people in Africa against drought in the coming agricultural season and mitigate the risk of a compound crisis.

Parliamentary State Secretary at the German Federal Ministry for Economic Cooperation and Development (BMZ) and Co-Chair of the InsuResilience Global Partnership, Maria Flachsbarth, said Germany will provide its partners in Africa with fast and uncomplicated assistance, following unprecedented social, economic and financial challenges confronting them in view of the ongoing pandemic.

Parliamentary State Secretary, BMZ / Co-Chair InsuResilience Global Partnership, Maria Flachsbarth.

For her part, Chairperson of the ARC Governing Board, Ngozi Okonjo-Iweala, noted that Germany’s assistance to insure African countries against the risk of drought “could not have come at a better time.” It will “help avert a situation of compounded effect of the Coronavirus pandemic and drought in any of the beneficiary countries thereby saving the continent from extended negative health and socioeconomic problems.”

According to the statement, ARC is offering its members an index-based drought insurance that guarantees payouts if precipitation falls below certain levels as financial support is reaching affected small-scale farmers already before the end of the agricultural season.

“ Also, ARC is offering governments comprehensive technical support for disaster preparedness and disaster risk management, under the umbrella of the InsuResilience Global Partnership, working to expand climate risk transfer solutions for poor and vulnerable people, to date Germany has supported ARC with around EUR 62 million.” The statement read..

By signing an ARC insurance policy, countries can cushion the negative consequences of a drought and thus avert a more far-reaching economic, food and health crisis. However, African governments are often faced with the challenge of providing solid financing for the annual insurance premiums, with the COVID-19 pandemic; this problem has become even more acute in the current year.

Zimbabwe and five West African countries, which have taken out insurance cover already in June, will be provided with EUR 8.5 million for premium payments under ARC Replica. This will enable the World Food Programme and the START Network – an association of 40 humanitarian aid organizations – to take out ARC policies for Burkina Faso, The Gambia, Mali, Mauritania, Senegal, and Zimbabwe.

BMZ is further providing EUR 10.5 million for premium subsidies to countries in the south and east of the continent, where the insurance policy will not be taken out until the second half of the year due to the later planting season.


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