African Risk Capacity (ARC) Agency and African Development Bank (AFDB) increase accessibility to climate risk insurance for Africa

African Risk Capacity (ARC) Agency and African Development Bank (AFDB) increase accessibility to climate risk insurance for Africa

Through partnership and innovative financing, ARC and AfDB are tackling one of the biggest challenges in closing the protection gap in Africa: premium financing.

In January 2017, the ARC and AfDB partnered to improve disaster risk financing infrastructure, capacities, and policies across the continent by harnessing the financial expertise, in-country reach, and dedication to building a climate resilient Africa of both institutions

On 26 October 2018, AfDB approved the Africa Disaster Risk Financing Programme (ADRiFi), an initiative that will assist African governments in overcoming one of the largest impediments in fully benefitting from ARC’s risk management tools: premium financing.

The ADRiFi programme helps eligible countries access risk transfer services through premium support for parametric weather insurance offered by ARC. From 2019 to 2023, ADRiFi will support premium financing, until the 4th year of participation, a country will receive premium support of up to 50% of the country’s annual premium, and from the 5th year onward, countries will be in a better position to fully finance their premiums from their national budgets and maintain sustained domestic resource allocation for insurance premium.

In addition to premium financing support, ADRiFi will assist countries in improving the management of natural disaster risk by strengthening national capacities to evaluate climate-related risks and disaster contingency plans, elaborating mitigation measures at national and sub-national levels, helping countries to design disaster risk financing strategies, and providing funding for rapid responses to address climate disasters at national and local levels.

The ADRiFi facility allows countries to use allocations from the African Development Fund towards funding their premiums. The facility also has scope for other parties to contribute towards digressive premium support and closing the protection gap in Africa. To find out how you and your partners can work with ADRiFi, please get in touch with Ruvimbo Muchenje (ruvimbo.muchenje@africanriskcapacity.org) or Cecil Nartey (c.nartey@afdb.org).