AGRICULTURE & FOOD SECURITY
Agriculture in Africa is highly vulnerable to climate shocks such as droughts, floods, and cyclones, which directly threaten food security and livelihoods. These shocks often lead to crop failure, loss of livestock, food price spikes, and disruption of national food systems. Governments struggle to respond, and households bear the brunt of the impact.
How ARC Ltd’s Parametric Risk Transfer Works
ARC Ltd offers parametric insurance designed to deliver rapid liquidity to governments and farmer organizations based on predetermined weather triggers, not post-disaster assessments:
- Early-warning modeling with Africa RiskView: Rainfall and crop models estimate the cost of a drought before and during the season. This platform translates rainfall deficits into response costs and helps governments calibrate their insurance parameters to local contexts
- Customization process: National risk teams work with ARC to tailor triggers and response plans, reducing basis risk and aligning payouts with real needs .
- Sovereign drought cover: African governments subscribe to seasonal drought insurance policies that pay out when model‑based thresholds are crossed.
- Inclusive solutions for farmers: Digital and micro‑insurance options like DAAI‑CI bundle protection directly to smallholders, enhancing resilience beyond national programmes.
- Contingency planning: Payouts are pre-allocated to food, cash transfers, and seeds before shocks materialize, enabling rapid deployment.
Concrete Use Cases
MOZAMBIQUE – CYCLONE RESPONSE THROUGH WFP REPLICA, 2025
In preparation for the 2024–25 agricultural season, the Government of Malawi purchased two ARC policies:
- A traditional sovereign drought policy
- A separate anticipatory insurance policy funded by KfW
When rainfall deviation triggered payouts totaling US $3.38 million:
- US $3.07 m went into food distribution and social protection, reaching over 311,000 people (~69,000 households).
- US $0.31 m funded livelihood recovery, drought-tolerant seeds and inputs, for 3,255 farming households
INDEX-BASED AGRICULTURAL INSURANCE DEVELOPMENT PROGRAMME IN CÔTE D’IVOIRE (DAAI-CI)
DAAI‑CI initiative provides smallholder rice farmers in Côte d’Ivoire with index-based agricultural insurance, designed as an agricultural input alongside seeds and fertiliser. The programme integrates climate-smart agriculture training and financial literacy, with payouts triggered transparently by climatic indices.
44,158 farmers insured in 2024
20,714 indemnified with payouts totalling over 299 million FCFA
Coverage spans 93 cooperatives across 9 regions
Targeting 125,000 farmers by 2026