The United Nations World Food Programme has inked its first climate risk insurance policy called ARC Replica with the African Union’s African Risk Capacity - an German government funded initiative that will be crucial in Africa's drought-prone Sahel region, WFP said on Wednesday.
“The Replica pilot is an excellent example of how WFP and Governments can pool expertise and innovative financing to provide early and coordinated response in the face of shocks, thereby contributing to national preparedness and response efforts,” said Jean-Noel Gentile, WFP country director in Mauritania.
“This is absolutely critical in the Sahel, where early interventions before the peak of the lean season have the potential to reduce the human and livelihood costs of droughts,” Gentile said.
Mali, which like Mauritanian is prone to recurrent droughts, will be the next country to benefit from WFP's climate risk insurance coverage, WFP said. The ARC Replica policy is designed to allow humanitarian organisations to purchase ‘complementary’ climate risk insurance policies, with pay-outs being triggered when certain indices such as low rainfall or reduced vegetation are confirmed by satellite data.
The innovative climate risk financing mechanism protects vulnerable households in the onset of a climatic shock, helping break the cycle of endemic poverty, WFP underlined..
Germany’s economic cooperation and development ministry (BMZ) has committed 10 million through 2019 to WFP and the Start Network (42 aid agencies across five continents, ranging from large international organisations to national NGOs), the agency said.
The funds will be channelled through the German government-owned development bank, WFP noted.
Of the total amount, WFP will receive 5.8 million euros to purchase ARC Replica insurance policies for Mali and Mauritania. In the case of a maximum pay-out, these policies will release 15.3 million dollars for early humanitarian assistance for up to 240,000 people, WFP said.
“ARC builds on the diversification of weather patterns across Africa to help countries manage their disaster risk as a group in a financially efficient manner through risk pooling and risk transfer,” said ARC director-general Mohamed Beavogui.
WFP's signing of is first ARC Replica policies comes after the publication last week the UN Food and Agriculture Organisation's 2018 'State of Food Security and Nutrition in the World' report which identifies climate variability and extremes weather, especially drought, as key drivers of hunger and malnutrition among vulnerable populations globally.
