Africa's Climate Insurance Scheme Expands, Eyes Aid Agency Clients

Africa's fledgling insurance scheme covering governments against drought expects to add five countries this year, expanding its client base to nine nations, and plans to offer insurance for tropical cyclones and floods from next May.

In its first year of operation, African Risk Capacity (ARC), an African Union agency, insured Niger, Senegal, Mauritania and Kenya for $129 million in total losses, and paid out $26.3 million after three West African states suffered low rainfall.

Senegal, Niger and Mauritania are using the money to distribute food and transfer cash to more than 1.3 million people, and subsidize animal feed for some 570,000 livestock.
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ARC is targeting total membership of 20 to 30 African countries over the next four years.

Simon Young, CEO of ARC Ltd, the mutual that sells the insurance products to participating countries, said the scheme was gearing up gradually because it requires "a lot of heavy lifting" to develop rigorous government plans that ensure any payouts quickly reach people in need.

"The flaw ... is getting countries to buy something they have not thought they needed to buy in the past," he told the Thomson Reuters Foundation by phone from Washington DC on Wednesday.

Until now African nations have totally relied on donors to provide a rapid humanitarian response to food crises caused by extreme weather events such as drought, he added.

But insurance schemes can offer payouts that are faster than waiting for rich governments to respond to aid appeals, Young said.

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