The African Risk Capacity Group (ARC) and the African Development Bank have presented the Zambian government with the US $5.3 million cheques as payment for drought insurance purchased through the Africa Disaster Risk Financing Programme Multi-Donor Trust Fund.

The fund is maintained by the African Development Bank and is financed by the governments of the United Kingdom and Switzerland through the Foreign, Commonwealth and Development Office and the Swiss Agency for Development and Corporation, respectively (AfDB).

During the 2021/2022 agricultural season, the parametric insurance payout will help the country recover from extreme drought. According to a statement, this will enable timely emergency response efforts in drought-affected communities through the provision of cash transfers and food assistance to guarantee food is accessible for the targeted households during the lean season period.

The adverse impacts of climate change and climate variability caused droughts in Zambia in 2021 and 2022. Substantial lack of rain impacting crop production resulted in severe food insecurity in districts in the southern and western parts of the country.

The Government of Zambia had earlier signed a memorandum of understanding with the ARC to participate in the 2021/2022 drought risk pool to better deal with the drought and protect vulnerable populations from its adverse impacts.

The Zambian Government made a premium budgetary allocation from its national budget and sought additional premium financing support from the Swiss Agency for Development and Corporation and the AfDB to maintain the insurance policy for the 2021/22 agriculture season.

“ARC offers an African solution to one of the continent’s most pressing challenges, the shocks of climate change, transferring the burden of climate risks away from governments to ARC through sovereign insurance,” said Dr Abdoulie Janneh, ARC Group Deputy Board Chair and ARC Ltd Board Chair.

“The Government of Zambia is our privileged partner, and we stand with them to ensure their vulnerable population and livelihoods are protected against extreme weather-related disasters,” he added.

AfDB Vice President for Agriculture, Human and Social Development, Dr Beth Dunford commented: “The African Development Bank is pleased to see this African Risk Capacity Group payout to the Government of Zambia. We expect this to be the beginning of continued support to help the country enhance its resilience to the shocks of climate change. The Bank’s support has brought assistance to farming communities hit hard by drought and poor crop yields, by enabling Zambian authorities to provide them with cash payments and sustaining them by eating their seeds as food, quitting farming as a livelihood, or migrating in search of food and non-existent jobs.”

Zambia’s Acting President, Her Honour W.K Mutale Nalumango, welcomed the payout from ARC to the Republic of Zambia. She said: “With the national treasury experiencing unlimited demand for the provision of public goods and services, the government stands ready to support disaster risk transfer initiatives that lighten the burden on the government.

“I urge other organisations such as the World Food Programme and other international and local civil societies to come on board to help expand the ARC insurance coverage in Zambia by partnering with my government to take up a replica and micro-insurance.”