ARC makes US$32m climate insurance payouts to assist people impacted by drought in Zimbabwe

The Government of the Republic of Zimbabwe has received an insurance payout of US$16. 8 million following its participation in the African Risk Capacity (ARC) Group disaster financing mechanism.

For those who are not aware, the mechanism is designed to help African Union (AU) Member States plan, prepare and better respond to extreme weather events.

At the same time, through the Replica programme, which is an initiative that allows humanitarian actors to purchase insurance policies on behalf of a country, Replica partners, the United Nations World Food Programme (WFP) and Start Network received payouts of US$6.1 million and USD$8.9 million, respectively.

It’s important to highlight, that these payouts come whilst the country is currently facing severe food insecurity following a prolonged dry spell largely triggered by the prevailing El Niño conditions in the region.

From what we understand, the funds will be used to support recovery efforts and help the government reach the most impacted populations.

A number of severe crop failures were experienced across the country due to the drought, and according to Africa RiskView, ARC’s technical software for early warning and monitoring, just over 4.7 million people were affected, triggering the payouts.

In addition, the combined payouts will complement in-country recovery efforts, as well as help communities and governments to better respond to and recover from climate-related shocks.

Hon. Prof. Mthuli Ncube, Zimbabwe’s Finance Minister, speaking during the payout ceremony, said: “This payout ceremonies marks a monumental occasion in our joint endeavours to mitigate the adverse impacts of climate change and solidify our nation’s resilience to this threat. The payout will help 509 000 vulnerable households in 27 districts, and our goal is to reach and cover even more people in the coming seasons.”

H.E. Dr Anthony Mothae Maruping, ARC Group Chairperson, commented: “I commend the Government of Zimbabwe for their prudent decision to collaborate with the ARC Group to mitigate the impacts of drought in the country. Today, we gather to showcase ARC’s interventions to this historic and unprecedented drought in the history of the country.”

Lesley Ndlovu, CEO of ARC Ltd, added: “We are honoured to stand with the Government of Zimbabwe and our partner organisations during this time of crisis. The impact of such disaster events goes beyond the immediate socio-economic costs and compounds the vulnerability of many farming communities. The insurance payouts are testament of the value of the ARC instrument in facilitating early response.”

Anna Farina, Start Network’s Head of Crisis Anticipation and Risk Financing, said: “We are deeply concerned by the severe drought that is affecting Zimbabwe and the suffering it is causing, we are grateful to our donors for enabling our support for the ARC Replica programme. We value the strong collaboration with ARC Ltd. and the Government of Zimbabwe in jointly tackling this emergency. Alongside Start Network members, we are committed to effectively serving the people of Zimbabwe through these challenging times.”

Lola Castro, acting WFP regional director for southern Africa, noted: “Communities who contribute the least to the climate crisis are suffering the most from its effects, with limited means to cope. ARC Replica is pre-arranged risk financing solution that enables timely humanitarian assistance, alleviating the burden on communities at the frontline of the climate crisis.”

Francesca Erdelmann, WFP Country Office and Representative for Zimbabwe, added: “The ARC payout is a vital lifeline for communities in Zimbabwe facing the devastating impacts of the El-Nino-induced drought. This time support will enable us to provide essential food assistance and prevent negative coping strategies, ensuring that vulnerable populations can withstand the difficult circumstances.”

Furthermore, the Final Implementation Plan, which is developed as part of the ARC contingency planning process, will guide the use of the payout, and assist millions of people across the affected regions.

Zimbabwe will reportedly use the payout to support relief efforts and rebuild livelihoods while WFP and Start Network will use the disbursement received to support this response.

Ibrahima Cheikh Diong, UN Assistant Secretary General and ARC Group Director General, commented: “The southern African region received less than 20% of its typical rainfall, resulting in one of the driest growing seasons. The impact on the agricultural sector has been devastating. The ARC Group stands with the Government of Zimbabwe that continues to demonstrate its willingness to strengthen its preparedness to respond to such catastrophes.”