From Joseph Inokotong, Abuja
The Government of the Federal Republic of Germany has announced the sum of €18 million to subsidize the cost of disaster risk insurance for qualifying African Risk Capacity (ARC) Group Member States.
This was made known yesterday on the margins of the ongoing 2021 United Nations Climate Change Conference (COP26) in Glasgow, Scotland.
The fund would enable cash-strapped African governments and humanitarian agencies to prepare for disasters by funding insurance coverage for droughts and tropical cyclones, thereby mitigates the impacts of climate change for the poorest and most vulnerable communities.
In her statement, the Parliamentary State Secretary to the Federal Ministry for Economic Cooperation and Development (BMZ), Dr.
Maria Flachsbarth, stated that the commitment will help establish a Premium Support Facility for African governments and humanitarian agencies wishing to purchase climate related insurance.
United Nations Assistant Secretary-General/Director-
“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”.
Member of the Management Committee at KfW Development Bank, Christian Krämer, 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.”
CEO, Start Network, Christina Bennett, said “We are delighted to hear of Germany’s increase in support to ARC. By funding premiums for drought and tropical cyclone insurance in African countries, Germany is helping to ensure that vulnerable communities are better protected from the escalating risks that they face as a result of the climate crisis.”
ARC, an African Union initiative that is led by 35 AU Member States, provides insurance for droughts and tropical cyclones.
The ARC said the standard approach to pay for climate disasters is slow and unpredictable, using humanitarian appeals or loans arranged after a disaster strikes, therefore, ARC replaces these outdated approaches by offering governments and humanitarian actors the opportunity to plan and purchase insurance that can provide fast payouts, quickly reaching people who need support.
This prevents humanitarian needs from escalating, ultimately saving lives, protecting livelihoods and assets, and safeguarding development gains.
About 62 policies have been signed by Member States for cumulative insurance coverage of $720 million for the protection of 72 million vulnerable populations in participating countries since 2014.
Given that climate change is threatening to bring more frequent and severe extreme weather events, the Premium Support Facility will be crucial for the most vulnerable African countries.
Following the Covid-19 pandemic, many African governments have severely constrained budgets and humanitarian agencies are struggling to meet unprecedented levels of need.
This 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.
Germany’s support will catalyze effective risk management and help protect the poorest and most vulnerable people across the continent.