Madagascar receives more than $ 2 million from ARC to cover drought risks

AfDB NEWS & EVENTS

04-Jul-2020

The government of Madagascar received, on July 2 in Antananarivo, a check for 2.13 million US dollars from the Insurance Company of the Pan African Risk Management Mutual (ARC Ltd) to cover the loss of livelihoods of its population caused by climatic disasters.
This ARC payment represents the premium for drought insurance taken out by Madagascar, with the support of the African Development Bank, through the African Disaster Risk Financing Initiative (ADRiFi), which financed the the entire premium for 2019-2020 for the sovereign transfer of drought risk to the Big Island.

The settlement is intended to protect 600,000 vulnerable people hit by climatic disasters, including the drought, which affected crops during the last season. 
"The ARC is a lasting solution to strengthen the efforts of the government and partners in the Great South of Madagascar and demonstrates the mutual aid between friendly African countries to cope with natural disasters, especially drought," said the minister. Madagascan of Economy and Finance, Richard Randriamandrato, during the ceremony of presentation of the check.   

Interventions will focus on cash transfer under the ACT (“cash for work”) scheme for 15,000 vulnerable households, nutritional support for 2,000 children under the age of 5 and water supply for 84,000 households. . Strengthening this insurance mechanism promotes the implementation of the national risk and disaster management policy and strategy in Madagascar. 

Madagascar is facing devastating climatic hazards, which are added to a general food insecurity. In addition to cyclones, the Indian Ocean island faces floods and droughts, which affect its public finances and economic growth.

According to the African Development Bank, natural disasters in Madagascar caused about 420 million U.S. dollars in damage in 2017. In 2019, Madagascar joined Group VI of countries insured by the ARC against the risks of drought for the 2019-2020 agricultural campaign, under the pilot countries of the ADRiFI program.

"The payment of compensation made by the ARC to support the population affected by the drought in the Great South of Madagascar was made possible by the leadership and commitment of the Government of Madagascar to protect its population," said the Deputy Secretary General of the United Nations and Director General of the Pan African Risk Management Mutual, Mohamed Beavogui. We also thank the African Development Bank for its commendable support through the ADRiFi program. This is a testament to the fact that collaboration between African governments and development partners can preserve development gains on the continent. "

The ARC and the African Development Bank signed, in March 2017, a memorandum of understanding to help African states manage the risks of natural disasters and provide an effective response. The Bank thus supported Madagascar for the payment of its insurance premium between 2019 and 2023 through the ADRiFi program.

“The payment of compensation is timely, Madagascar is also facing the challenge of the Covid-19. This shows that risk transfer programs can help countries manage climate-related disasters and reduce pressure on public finances during multiple crises, "said Jennifer Blanke, Vice President of Agriculture, of human and social development at the African Development Bank.

With the United Kingdom, Germany, Sweden, Switzerland, Canada, France, the Rockefeller Foundation and the United States, the ARC helps African Union member states to reduce their risks in the face of events extreme climate affecting the African populations, by providing, by sovereign insurance, targeted responses in a more timely, economical, objective and transparent manner. The CRA is now using its expertise to help fight other major threats such as outbreaks.
Since 2014, 45 insurance contracts have been signed by CRA member states for $ 83 million in premiums paid out of total insurance coverage of $ 602 million, in support of 54 million vulnerable people.