African Development Bank Group and African Risk Capacity Group Issue $11.2 Million Insurance Payout to the Government of Malawi

Representatives of the African Risk Capacity (ARC) Group and the African Development Bank have presented a cheque to the government of Malawi for an insurance payout of $11.2 million, to support the country's recovery from a devastating drought arising from a weather condition known as El-Nino.

The presentation was made at a ceremony presided over by Malawi president Dr. Lazarus McCarthy Chakwera, in Lilongwe, the capital, on August 2.

The insurance payment, made in response to the government's drought insurance policy, was financed by the African Development Bank through its African Development Fund and its Africa Disaster Risk Financing (ADRiFi) Programme Multi-Donor Trust Fund. The ADRiFi Trust Fund is a collaboration between the Bank Group and the ARC Group, an Agency of the African Union that supports African governments to improve their capacities to better plan, prepare, and respond to extreme weather events and natural disasters.

The funds will support food assistance to an estimated 235,000 households in Malawi's Lower Shire and Southern regions and cash transfers to 118,000 households in the country's Central region.

Receiving the cheque, President Chakwera said, "The insurance payout we receive today is not just a financial transaction; it is a lifeline for our vulnerable populations. It is a testament to the power of foresight and planning, allowing us to respond swiftly and effectively to the needs of our people. This payout will enable us to provide immediate relief, ensuring that no Malawian suffers the worst forms of hunger due to the recent dry spell conditions."

El-Nino is characterized by an abnormal warming of the waters of the eastern Pacific Ocean, radiating heat into the air and causing dry conditions in Southern Africa and wet conditions in Eastern Africa. It has resulted in Southern Africa's worst drought in years in 2024.

According to the World Meteorological Organization, the 2024 El Niño is one of the five strongest on record, with high temperatures and below-average rainfall to Southern Africa from November 2023 to April 2024. El Niño conditions have hit many regions of Malawi hard, particularly the country's Lower Shire and Southern regions, worsening an already severe food shortage caused by lingering drought.

In March 2024, the government of Malawi declared a state of disaster in the worst-affected areas of the country, and in April launched a National El Niño Response Appeal to mobilize resources for humanitarian interventions, as well as to boost food production in the country.

"The devastating El-Nino-driven southern African drought underscores the critical need for preparedness in the face of escalating weather-related disasters", said Ibrahima Cheikh Diong, UN Assistant Secretary General and ARC Group Director General. "We have witnessed the role of the ARC mechanism in facilitating timely interventions, and we are grateful to partners such as the African Development Bank that make it possible for African governments to participate in ARC risk pools. Through your financial support, we can increase our reach and impact, and make a difference in the lives of the most vulnerable."

"There is a strong nexus between climate change and fragility given the rising negative impacts on food security and livelihoods. The African Development Bank, through the Transition Support Facility (TSF), will support Government efforts to strengthen capacities for prevention, preparedness, and resilience against climatic shocks in Malawi" said Dr. Yero Baldeh, Director of the Transition States Coordination Office of the African Development Bank Group.

The Bank Group, through the Africa Disaster Risk Financing (ADRiFi) Programme, has contributed to drought insurance policy payments for the governments of Madagascar, Malawi, Mozambique, Zambia, and Zimbabwe, as well as for disaster risk insurance premiums against tropical cyclones for the government of Madagascar.

By September 2024, the African Risk Capacity Group is expected to have paid a total of $62 million in disaster risk insurance payouts to El Niño-impacted countries in Southern Africa, including Malawi ($11.6 million), Mozambique ($5.5 million), Zambia ($13.3 million) and Zimbabwe ($31.8 million).

About ADRiFi

The ADRiFi programme has provided capacity building and sovereign insurance premium support to 16 Bank regional member countries, protecting more than 5 million people against severe drought and tropical cyclones, and facilitated the disbursement of $150 million in claims since 2014. The ADRiFi Multi-donor Trust Fund is supported by contributions from the Governments of Canada, Switzerland, the United Kingdom, the United States of America, and the Kingdom of Norway.