Germany donates $5.9m to protect vulnerable African farmers with climate insurance
The German Ministry for Economic Cooperation and Development (BMZ) has provided $5.9 million for the UN World Food Programme (WFP) to continue protecting 1.2 million vulnerable African farmers with climate risk insurance.
“This donation comes at a crucial time. The COVID-19 pandemic keeps colliding with the climate crisis. While the immediate priority of many countries is to protect people and prevent the spread of COVID-19, it is essential to have safety nets in place that protect vulnerable people from the double threat of COVID and climate impacts. Heatwaves, floods, storms and droughts are compounding the economic and public health effects of the pandemic, putting an additional burden on overstretched health services,” says Gernot Laganda, WFP Chief of Climate and Disaster Risk Reduction Programmes. “Germany’s donation will enable these countries to strengthen their safety nets and manage two hazards at the same time.”
With funding from BMZ’s emergency COVID-19 response, WFP will be able to purchase policies for Burkina Faso, The Gambia, Mali, Mauritania and Zimbabwe for the 2020/21 agricultural season.
If these countries experience climate shocks that damage crops this year or the next, the impacts of the COVID-19 pandemic will be compounded and less food will be available in the markets, which could lead to food crises. This will create a situation where countries are faced with having to feed more people while at the same time trying to control the spread of COVID-19.
“This is why this insurance could support ‘double resilience’ for vulnerable people. It is protecting them from both hunger and the impacts of COVID-19 on market access,” said WFP Mauritania Country Director Nacer Benalleg. “We can act much faster to help our partner government at a difficult time, when the countries of the world need to support each other. If a drought occurs next season, having a payout from our climate risk insurance policy would free up budgetary resources that Mauritania would have otherwise needed to split between food security and health responses.”
This German donation will fund insurance coverage for around 108,000 people in Mauritania; 175,000 people in Burkina Faso; 45,000 people in the Gambia; 745,000 people in Mali and 266,000 people in Zimbabwe.
The insurance scheme is part of the African Union’s African Risk Capacity (ARC) - an innovative risk management and resilience building institution that helps African Union Member States manage climate and disaster risk and adapt to climate change. ARC Member States purchase an index-based drought insurance that guarantees payouts if rains fall below certain levels. Financial help can reach affected small-scale farmers immediately after the failed harvest. ARC is also offering governments comprehensive technical support for disaster preparedness and disaster risk management.
ARC Replica coverage is an insurance product offered by ARC Ltd to the World Food Programme (WFP) and the Start Network – a network of over 40 humanitarian aid organizations – to complement the insurance policies purchased by African states. As Replica partners, WFP and Start Network can increase the ARC insurance coverage of eligible ARC Member States by purchasing a ‘Replica Policy’.
As part of the InsuResilience Vision 2025, Germany and the other G7 countries have committed to ensuring 500 million poor and vulnerable people are covered against climate and disaster shocks by pre-arranged finance and insurance mechanisms by 2025. ARC Replica is a vehicle to support the achievement of this goal.
The funds will be channelled from BMZ through the government-owned development bank Kreditanstalt fuer Wiederaufbau (KfW).