Following the ongoing 2021 United Nations Climate Change Conference (COP26), Germany is committing a sum of €18 million to subsidize the cost of disaster risk insurance for qualifying Africa Risk Capacity (ARC) Group member states. This is according to a press statement seen by Nairametrics
In recent years, climate change has threatened to bring more frequent and severe extreme weather events. The Covid-19 pandemic also worsened this causing many African governments to severely constrain budgets with humanitarian agencies struggling to meet unprecedented levels of need. The Premium Support Facility is therefore crucial for the most vulnerable African countries to cushion the effects of the virus.
Expectedly, the new funding will subsidize insurance premiums, decreasing in future years as countries and organisations are able to take over the costs using their national budgets and long-term sustainable financing. Also, Germany’s support will catalyze effective risk management and help protect the poorest and most vulnerable people across the continent.
What they are saying
Christian Kramer, member of the management committee at KfW Development Bank said that the funding will support African nations to lessen the impact of the pandemic.
She said, “Germany has been a long-standing supporter of the African Risk Capacity. Earlier this year, in Germany we were affected by devastating floods – we have experienced ourselves, the importance of preparedness and the vital role that insurance can play in recovery. We are therefore delighted to be able to extend support to African nations who have been so badly affected by the covid-19 pandemic, so that they can take steps to prepare well to face the rising challenges of climate change.”
Also, Ibrahima Cheikh Diong, United Nations Assistant Secretary-General/Director-General of the African Risk Capacity Group expressed delight about the consistent support of the German Government to disaster risk reduction and mitigation in member states.
He said, “The grant is a clear testimony of the value of smart partnerships for smart disaster risk management and financing for early action. Through this assistance, we are optimistic that other partners will embrace our pitch for a Continental Premium Support Facility to help institutionalize sovereign parametric insurance culture in the region.”
What you should know about ARC
- African Risk Capacity, ARC is an African Union initiative led by 35 AU member states and provides insurance for droughts and tropical cyclones to replace the slow, unpredictable and outdated approaches of paying for climate disaster relying on humanitarian appeals or loans arranged after a disaster strikes.
- It offers governments and humanitarian actors the opportunity to plan and purchase insurance that can provide fast payouts, quickly reaching people who need support.
- Within the space of seven years, 62 policies have been signed by member states for cumulative insurance coverage totaling $720 million for the protection of 72 million vulnerable populations who are participant countries and are helping to prevent humanitarian needs from escalating, ultimately saving lives, protecting livelihoods and assets, and safeguarding development gains.
- ARC assists the AU member states in reducing the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign disaster risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective, and transparent manner with the support of the United Kingdom, Germany, Sweden, Switzerland, Canada, France, the European Union, the Rockefeller Foundation, and the United States.
