Senegal Receives Insurance Payout from the African Risk Capacity to Address Severe Drought

Senegal has received a payment of about USD 23 million under the African Risk Capacity’s (ARC) drought insurance product. Due to the early announcement of the disbursement and a prearranged contingency plan, measures could be taken promptly to support the people affected by this year’s drought.

ARC offers African countries index-based drought insurance linked to the Africa RiskView model. Payments are made on the basis of an under- or overrun of predefined index threshold values. For Senegal, insufficient rainfall was reported for the west of the country in August. As early as beginning of September, the government was promised that a payment would be made at the end of the agricultural season. This means that aid measures can already start before the damage caused by crop shortfalls occurs.

An innovative feature of ARC climate risk insurance is that policies cannot not only be bought by states but also by humanitarian actors under the ARC Replica program. This approach allows more people to be supported more effectively. Of the approximately USD 23 million that ARC is paying out in Senegal, approximately USD 12 million will go to the Senegalese government for cash payments to small farmers, food distribution and livestock feed subsidies. Another USD 11 million goes to the Start-Network, an international NGO network that also provides compensation and emergency care for infants and mothers. In total, more than 1.5 million people in need are to receive aid.

Contribution by the Federal Ministry of Economic Cooperation and Development Germany (BMZ)