Zimbabwe gets US$1.75mln payout from ARC for drought response efforts

By Almot Maqolo

The African Risk Capacity Insurance Company Limited (ARC Ltd) has paid US$1.46 million to the Government of Zimbabwe and US$290 288 to UN World Food Program (WFP) in parametric drought risk insurance payouts to support the extensive drought response efforts in Zimbabwe.

The payouts are the result of drought insurance policies brought by Zimbabwe and UN WFP to cover the 2019/20 rainfall season. Finance and Economic Development Minister Mthuli Ncube said the payouts will contribute in funding the early response measures put in place by government and WFP.

“The government objective during this pandemic, is to save lives and save livelihoods. The payout will b used to support approximately 155 000 families in the highly vulnerables districts of Buhera, UMP, Chivi, Binga, and Bulilima, through unconditional cash disbursements,” he said.

“Payouts received by WFP will also contribute to its early response through unconditional food or cash assistance to food insecure, vulnerable communities in the month of September and October 2020.” These payouts will complement existing social safety nets that government has structured to counter droughts and other emergencies like the Covid-19 pandemic.

Zimbabwe is increasingly vulnerable to severe drought events and other calamities such as floods and tropical cyclones. Given the unprecedented nature of the occurrence of these disasters, government has had to resort to budget relocations, donations and development partners’ contributions to shield against the impacts.

“In that sense the government of Zimbabwe has moved to revamp its disaster risk financing systems. The ARC parametric risk insurance facility has been identified as a low hanging opportunity, which can provide coverage against droughts, floods and outbreaks and epidemics at sovereign level,” Ncube said. Also this will enable the government to better cushion its fiscus against natural disasters.

Speaking on the ARC payout to Zimbabwe, UN Assistant Secretary General and outgoing ARC Director General said: “Although we can never celebrate a disaster, it calls for a celebration when a government is evidently taking steps of hedging its investments in food security against natural risk to broaden fiscus flexibility when a disaster strikes.”

UN WFP Country Director and Representative for Zimbabwe Niels Balzer said: “The ARC payout to the government of Zimbabwe and WFP through the Replica initiative is proof that the concept works as an innovative instrument to humanitarian agencies to finance early response and life saving actions in the aftermath of extreme droughts”.

“When combined with other instruments such as micro insurance for smallholder farmers and forecast-based anticipatory action, it provides powerful combined approach that has the potential to accelerate progress towards zero hunger in Zimbabwe.”

Balzer urged other governments and development partners especially in the SADC region to capitalise on this instrument for enhancing climate resilience and food security in the region.

ARC chief executive officer Lesley Ndlovu said, “There is scope and opportunities for organizations such as the Zimbabwe Resilience Building Fund and private microinsurance companies working in this space to capitalise on the parametric weather insurance products offered by ARC as well as its associated capacity building benefits.

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