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Africa’s economic and social fabric is disproportionately affected by climate change. Over 95% of Africa's food production depends on rainfed agriculture, with over 70% of the continent's population relying on it for their livelihoods, making them highly vulnerable to erratic weather patterns. Disasters like droughts and floods exacerbate food insecurity, damage infrastructure, and erode decades of developmental progress. Current humanitarian aid systems are reactive, slow, and insufficient, and many African nations lack the financial and technical resources to respond effectively to such disasters, leaving countries to face delays that deepen human suffering and economic loss.
To help address this gap, Norway, through the Norwegian Agency for Development Cooperation (Norad) has provided NOK 50 million (about $4.5 million) to African Risk Capacity Limited (ARC Ltd.) to implement the Supporting Adaptation Capacity Through Increased Parametric Insurance Penetration in Africa (SACPIP-Africa) initiative. The partnership was made official during a signing ceremony in the CARICOM Pavillion at COP29 on 13 November 2024, marking the significant contribution this initiative will have in addressing climate change issues.
By aligning with global frameworks like the Sustainable Development Goals (SDGs), particularly SDG 13 (Climate Action), the initiative aims to create synergies with existing environmental policies and resilience strategies.
SACPIP-Africa is part of ARC Ltd.’s mission to expand disaster risk preparedness by strengthening governments’ ability to forecast, assess, and plan for crises. It was designed to equip African nations with the tools, knowledge, and financial support necessary to address the growing impact of climate change.
The initiative leverages parametric insurance to address Africa’s unique vulnerability to climate-related disasters. Unlike traditional insurance, parametric insurance provides pre-agreed payouts based on objective triggers, such as rainfall levels, rather than assessed losses. This ensures rapid disbursement of funds (often within 10 days) allowing countries to respond quickly and effectively to emergencies.
"The SACPIP-Africa initiative reflects a deep commitment to building a resilient and self-reliant Africa. By leveraging innovative tools like parametric insurance and developing local expertise, this program will protect livelihoods and ensure sustainable development in the face of climate challenges,” ARC Ltd. CEO Lesley Ndlovu says.
ARC Ltd. implements SACPIP-Africa with the highest standards of transparency and accountability. The program includes robust monitoring, evaluation, and learning mechanisms, as well as regular reporting to stakeholders. Semi-annual performance reviews and annual evaluations will measure progress against key indicators, ensuring that donor contributions deliver maximum impact.
SACPIP-Africa will be implemented over the next four years in Cameroon, Cape Verde, the Democratic Republic of Congo, Ghana, Kenya, Malawi, Mozambique, Rwanda, South Sudan, and Zambia.
By training government officials, civil society organisations, and local leaders through capacity-building workshops, SACPIP-Africa ensures that disaster risk management knowledge is embedded at the grassroots level. These efforts will focus on building institutional frameworks, establishing risk profiles, and creating contingency plans to ensure effective response mechanisms, which will result in additional coverage of $134 million and an additional 13.4 million vulnerable Africans covered over the next 3 years.
Gender inclusion is an important aspect of this contingency and operational planning and the ARC Group works with partner countries to strengthen women’s participation in disaster risk management. “We do this by actively leveraging our influence to encourage more women to be included in the working groups,” said Ndlovu. ARC also provides training to relevant government departments and country liaisons in gender inclusion and sensitivity.
“Climate change is having a devastating impact on communities in Africa, as we have witnessed this year with the drought affecting several countries in Sub-Saharan Africa,” commented the Norwegian Minister of International Development, Anne Beathe Tvinnereim. “We are excited to be partnering with ARC Ltd. Their work allows more countries in Africa and small-holder farmers to be insured against risks related to drought, flooding, or tropical cyclones.”
She said: “This project will also help countries assess the severity of risks and make sure that those most vulnerable in communities, including women and children, have their livelihoods protected.”
With an emphasis on scalability, SACPIP-Africa builds on ARC Ltd.’s ambitious vision to provide insurance coverage to over 150 million vulnerable Africans annually by 2025, scaling its current footprint of 17 insured countries to a majority of African Union member states. This is projected to deliver an economic multiplier effect, safeguarding agricultural productivity, stabilising local markets, and reducing post-disaster recovery costs.
