African Risk Capacity Ltd. CEO Lesley Ndlovu on the 2024 TIME100 Climate List
JOHANNESBURG, 15 November 2024 – TIME has named African Risk Capacity Limited (ARC Ltd.) CEO Lesley Ndlovu on its 2024 TIME100 Climate List, recognising him as one of the 100 most influential climate leaders in business. Lesley was selected for his leadership of the innovative hybrid mutual insurer and financial affiliate of the ARC Group, which has been pioneering parametric insurance in Africa to build climate resilience. Over the past decade, amid escalating climate-driven disasters across Africa, ARC Ltd. has disbursed $230 million in claims payouts to member states and provided coverage to 50 million people. Under Ndlovu’s leadership, ARC Ltd. has expanded its network of members, donors and partners, increasing access to affordable insurance across the continent and extending protection to marginalised communities, such as refugees, for the first time. According to TIME, the selection process was influenced by the prominent 2024 theme of climate finance and a focus on candidates demonstrating measurable, scalable achievements and recent action. Ndlovu was recognised in the ‘Defenders’ category, highlighting his leadership in protecting vulnerable African communities from climate risks. His membership on the Board of Directors of the UN Principles for Sustainable Insurance and his involvement with the Glasgow Financial Alliance for Net Zero further reflects his commitment to sustainable practices and addressing climate change. Says Ndlovu: “It is an honour to be included in the prestigious TIME100 Climate list of changemakers. This recognition underscores the critical role of innovative financial solutions, like parametric insurance, in protecting lives and livelihoods from the escalating impacts of climate change. We remain committed to building climate resilience, and our goal is to expand coverage to all 55 African Union States by 2034.” See Lesley Ndlovu’s #TIME100Climate list profile here: https://time.com/7172504/lesley-ndlovu/ For the full list click here: https://time.com/time100-climate
Ghana purchases its first drought insurance policy from ARC
Johannesburg, Frankfurt, Bonn, October 17 2024 – The Government of Ghana has purchased its first-ever sovereign drought insurance policy, taking a significant step towards safeguarding its vulnerable communities and agricultural sector from potential drought. Through an inclusive, country-led process coordinated by the Global Shield Secretariat, the African Risk Capacity (ARC) Ltd. issued the policy for the benefit of the Government of Ghana, financed with US$1 million by KfW Development Bank on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the Global Shield Solutions Platform (GSSP), managed by Frankfurt School of Finance & Management. This collaboration underscores the government’s commitment to building resilience in agriculture and protecting livelihoods in the face of climate-related risks. The Government of Ghana has taken proactive steps to better protect its agricultural sector against the risk of drought. The policy, designed to provide financial relief in the event of a drought, will enable the government to respond quickly and efficiently to support affected farmers and communities. Funds from the insurance payout will be directed towards safeguarding food security and stabilizing the agricultural sector. Ghana’s investment in the financial resilience of vulnerable livelihoods marks the culmination of a truly collaborative process, set in place by the Global Shield against Climate Risks Initiative. The convening of relevant stakeholders, and a tailor-made, demand-driven and inclusive approach to identify key climate risks and viable pre-arranged finance mechanisms paved the way for this first drought insurance policy. Ghana’s proactive approach, in collaboration with ARC, sets a strong example for other African nations facing similar climate-related challenges. As the continent confronts the realities of climate change, risk transfer mechanisms, such as drought insurance, will play a crucial role in protecting lives, securing livelihoods, and strengthening climate resilience across Africa. “The Government of Ghana has shown foresight and initiative by implementing this first-ever drought policy,” says Malvern Chirume, Chief Underwriting Officer, ARC Ltd. “Within the context of climate change where drought events will increase in frequency and severity, the country is now protected against a potential crisis.” Furthermore, Chirume emphasises that the policy extends beyond financial protection: “It ensures that vulnerable communities in Ghana can continue to thrive despite increasingly erratic weather patterns due to the early warning tools available to the government. This policy is also a key component of our broader efforts to enhance climate resilience across Africa.” “We are delighted to see the implementation of the Global Shield process come to fruition in Ghana, through multi-stakeholder, collective action, marking the completion of the first in-country process. We know that disasters don’t wait to happen – they strike with little warning, so the importance of pre-arranged finance mechanisms cannot be stressed enough. With the ARC policy in place, we are assuring the resilience of vulnerable livelihoods amid the ever-growing threats posed by climate change”, says Nilesh Prakash, Co-Director of the Global Shield Secretariat. “The GSSP is very pleased to financially support the purchase of ARC drought insurance by the Government of Ghana for the benefit of vulnerable populations”, says Karsten Löffler, Co-Head of GSSP. “It is a good example of what pooling funds for pre-agreed risk financing solutions and international coordination can achieve.” “KfW Development Bank is very happy that Ghana is becoming an active member of the ARC family”, states Malte Marek, Senior Portfolio Manager at KfW. “Being the second largest economy in western Africa, Ghana can set the scene for other countries joining ARC in the future.” “Ghana’s participation in the ARC risk pool is evidence of the proactive approach that the government is taking to protect the lives and livelihoods of the population that relies on agriculture as a source of livelihoods” according to Charlotte Norman, Government Coordinator for the ARC Programme. “This protection is one of many initiatives that the Government of Ghana is taking to boost its capacity to respond to various climatic shocks that affect its population”.
Closing the insurance gap and continuous improvement are critical in addressing Africa’s increasing climate impacts, ARC Ltd. Members’ Retreat reveals
JOHANNESBURG, 18 September 2024 – With Africa facing increasing climate impacts, closing the disaster risk insurance gap has become more critical than ever, as revealed at the recent African Risk Capacity (ARC) Ltd.’s Members’ Retreat. Held at the Park Plaza Westminster Bridge Hotel in London, the event brought together ARC Ltd. staff, members, partners, and other stakeholders to discuss challenges and solutions. Luis Alton, Senior Financial Sector Specialist at the World Bank’s Disaster Risk Financing and Insurance Program highlighted the inefficiencies in current resource allocation for mitigating climate shocks. “While many countries have multiple instruments to help them with this, they’re not joined up strategically, which can lead to inefficiencies,” he said. “For example, where insurance should be used for extreme events, it is used to cover less extreme events instead.” The retreat also addressed the rising number of displaced persons due to climate events. In 2010, there were 44 million globally displaced persons worldwide, including those internally displaced, refugees, those who have crossed borders, and those looking for protection. In 2024, this number has spiked to 120 million people. “Many of these refugees come from areas where there are other conflicts, like war and violence. They also live in climate disaster risk areas and will be further displaced as extreme weather events increase. So, the numbers are only going to rise. It’s clear that the models in place are not enough,” said UNHCR Climate Insurance Lead and Strategic Risk Advisor Mojisola Terry. “We need to disrupt the way institutions respond to, utilise resources, and fund their climate interventions,” Terry added, explaining that it should no longer be a debate. “We want to demonstrate that investing in risk mitigation will lead to more resilient communities, better assistance, better targeting, and hopefully address the humanitarian landscape.” Phil Stevens, International Finance Director at the UK Foreign Commonwealth and Development Office (FCDO), who also serves on the ARC Group Board, referred to key climate discussions, including those at COP29 this year, saying: “ARC Ltd. is going to be instrumental to these conversations, as well as the broader conversations we’re hearing around the Bridgetown 3.0 initiative and the call to action from President Biden, to name a few.” The Bridgetown initiative calls for urgent action to reform the international financial architecture, while President Joe Biden has called on global leaders to catalyse climate action through the Major Economies Forum on Energy and Climate. Increasing impact through innovation The ARC Group’s innovative approach to climate resilience was highlighted by Group Governing Board Chairperson Dr Mothae Anthony Maruping. He explained that, in the 12 years of its existence, the group has expanded its products beyond drought to include outbreaks and epidemics, tropical cyclones and floods, and brought humanitarian donor partners on board. “We will keep challenging ourselves to come up with new and creative solutions by actively listening and engaging fully in new dialogues that will define our path,” he said. Terry noted that climate resilience must be looked at holistically. “That’s why the partnership between the UNHCR and ARC Ltd. to increase protection to those who need it the most through the Replica programme is logical and timely,” she explained. The Replica programme extends ARC Ltd.’s parametric insurance to humanitarian organisations. Through the programme, humanitarian organisations can take out insurance on behalf of a country against climate-induced threats and disease outbreaks. The UNHCR took out a modest Replica premium for drought insurance in the central region of Malawi for 2024. In April, the release of funds was triggered, resulting in a payout which assisted 20,000 people – 60% of Malawi’s refugee community. “When it comes to implementing these resources, we always look at how we can reach out to the most vulnerable,” said Doshanie Kadokera, Malawi Government coordinator. Other partners and donors have also been inspired. “Humanity Insure has agreed to supplement the premium subsidy for Malawi for 2024/25,” Terry explained. The UK, through FCDO, has been a donor partner of ARC Ltd. since its inception in 2014. This long-term commitment demonstrates FCDO’s support for the company’s work on the continent. “Since then, we have provided coverage to 130 million African people,” shared Stevens. Continuous improvement for climate resilience Terry pointed out that no perfect climate resilience model exists, only opportunities to improve. “The UNHCR is committed to continuing to work with ARC Ltd., as well as other partners, to make sure we have access to the best possible data so we can plan and prepare better in the event of disasters.” Kadokera added that there is a need for ownership among governments when it comes to building climate resilience in African countries. “Malawi’s risk management strategies and policies with ARC Ltd. and partners like the UNHCR, reflect our commitment to protecting our citizens and their livelihoods.” ARC Ltd. believes in looking internally to constantly improve. “Looking ahead, it’s clear that we still have a lot of work to do. Our focus remains on three priorities: expanding coverage to all 55 African Union countries, managing capital funding and reinsurance to maintain an A- credit rating, and strengthening its team and processes for greater efficiency,” explained CEO Lesley Ndlovu. Unified action the key The retreat was also an opportunity to celebrate ARC Ltd.’s 10th anniversary and reflect on its achievements while charting a forward-looking strategy for sustainable climate risk management across the continent. “It was truly moving to hear from so many of our partners and members who shared their experiences and congratulatory messages. These testimonials are a testament to our shared success,” said Ndlovu. Since its inception in 2014, ARC Ltd has paid out $229.8 million in claims, provided 1.2 billion insurance coverage and protected 30 million Africans per year. ARC Ltd. Board Chair Dr Maxwell Mkwezalamba lauded ARC Ltd.’s pivotal role within the broader ARC ecosystem. “Over the past decade, ARC Ltd. has translated visionary goals into actionable financial solutions for member states, delivering critical insurance coverage that protects them from the devastating impact of climate disasters.” Dr Maruping emphasised the importance of
ARC Ltd. releases 2023 Annual Report
African Risk Capacity (ARC) Ltd. celebrates a decade of innovation with record growth and ambitious plans for future expansion. JOHANNESBURG, 12 August 2024 – ARC Ltd. celebrates several milestones in its newly released 2023 integrated annual report. The company commemorates its 10th anniversary and outlines a decade of impact, which saw it paying out over $170 million in claims and underwriting a record $25 million in premiums for Pool 10A – the highest since its inception. “From covering 12.9 million people in 2014, we protected 26.4 million in 2023. We have also expanded our footprint to 39 member states,” says ARC Ltd. CEO Lesley Ndlovu. “We are pleased that behind the figures are communities that have benefited. We are also encouraged to see an increase in the number of countries utilising insurance as part of their disaster risk financing matrix.” The company returned to profitability in 2023, achieving a net profit of $13 million from a $29 million loss over the last two years. This was largely due to expansion and diversification efforts across Africa. ARC Ltd.’s gross written premiums amounted to $56.1 million; gross earned premiums were $46.8 million, and it achieved a net income of $14.2 million. A notable growth driver was the expansion of ARC Ltd.’s non-sovereign business segment, which saw gross written premiums amounting to $14.78 million. This growth can be attributed to the addition of policies such as: ARC Ltd. strengthened strategic partnerships throughout 2023, increasing its capacity to support African nations in managing climate and health risks. A key aspect of this expansion has been securing, renewing and enhancing critical insurance policies including: These policies ensure that vital resources remain available to support Africa’s agricultural sector and food security, particularly in times of climate-induced crises. At the same time, donor partners play a pivotal role in ARC Ltd.’s business model, enabling the company to cover more vulnerable communities, and in 2023, it welcomed the US Government in an ambitious partnership to expand parametric insurance in Africa and protect smallholder famers. Customisation and diversification ARC Ltd.’s initial focus was drought insurance, one of the most prevalent hazards in Africa. Over the past decade, it has expanded its coverage to include both crops and livestock, and additional perils like floods, outbreaks and epidemics, and tropical cyclones. “Pioneering innovative products and risk transfer solutions tailored to individual countries’ changing needs are central to our activities,” explains ARC Ltd.’s COO Ange Chitate. “With the increasing severity and frequency of natural disasters, this phenomenon highlights the importance of having multiple financial instruments to complement the insurance we provide.” In 2023, the company introduced several pioneering products, including Africa’s first flood risk insurance. This product, developed in collaboration with JBA Risk Management, offers customised flood risk policies for six countries – Madagascar, Mozambique, Malawi, Côte d’Ivoire, Ghana, and Togo – enabling these nations to better manage and respond to flood risks. A multi-year, multi-peril insurance product was also launched in Djibouti, covering the country’s primary risks of drought and excess rainfall. This groundbreaking five-year agreement is the first of its kind on the continent, providing ongoing capacity building and disaster risk insurance. ARC Ltd.’s focus on innovative insurance solutions extended to social protection, with the development of a novel insurance mechanism for Malawi. This shock-responsive policy is triggered when rainfall levels predict drought, releasing funds for cash transfers to assist additional beneficiaries. In terms of corporate social responsibility, ARC Ltd. pioneered the first-ever postgraduate Africa Scholarship Programme in partnership with Milliman Inc. The programme will broaden the talent pool in Africa, particularly in studies relating to mitigating the impact of climate change. It is also assisting students who need help to afford postgraduate studies. Four scholarships were offered covering up to three years of full-time postgraduate study at select universities on the continent. Another cohort will be introduced in 2024. International recognition ARC Ltd. continues to be recognised as a leader in ESG, having been awarded the global insurance industry’s best scores for the third consecutive year by the international ESG research and evaluation authority, Sustainalytics. The company improved from low-risk last year at 10.2 to negligible risk this year at 5.7. ARC Ltd. also retained its top position in the diversified insurance sector, with the lowest exposure score among its peers at 24 and the strongest management score at 80.3. US credit rating agency Fitch also upgraded ARC Ltd.’s outlook to stable due to the progress on its development goals, product diversification and strong donor support. The company received an IFS Rating of “A-” and a Long-Term Issuer Default Rating (IDR) of “BBB+”. Fitch noted its excellent claims payout track record and “extremely strong” capital position. Building on the momentum ARC Ltd. has identified priority areas for 2024 with growth, innovation and increased impact top of the list. The company plans to expand its climate and health insurance solutions across all 55 African Union member states by 2034, providing each nation with customised products that address their unique risks. According to Ndlovu, reaching this level of scale and diversification will enable ARC Ltd. to become financially self-sufficient, fully deliver on its mandate from the African Union, and optimise its balance sheet. Next is capital funding and reinsurance. “As the global reinsurance market hardens, costs rise while capacity shrinks. Keeping reinsurance expenses in check will be crucial for maintaining affordable premiums for member states,” Ndlovu says. Third is strengthening ARC Ltd.’s people, processes and overall performance, he explains. The intention is to continue expanding teams to bring in more skills and talent to meet changing climate risks and client needs. “At the same time, we will automate and streamline processes to improve efficiency as our business volumes increase.” Lastly, the company plans to increase its focus on communication, engagement and advocacy. There are still many opportunities to tell the ARC Ltd. story on a global stage and draw greater awareness to its mission. ARC Ltd. is geared toward continued success by building on its 2023 achievements. “With concerted effort across
ARC Ltd. Receives $27 million from the Dutch Government to help build Africa’s climate resilience
JOHANNESBURG, 19 June 2024 – ARC Ltd. has received a $27 million contribution from the Dutch government to boost climate resilience in Africa. The funding will be channelled through the African Development Bank’s Africa Disaster Risk Financing Programme (ADRiFi) Multi-Donor Trust Fund. The Netherlands becomes the sixth contributor to the Fund, and its contribution will support the promotion of parametric insurance and other climate risk management instruments in Africa. Says ARC Ltd. Lesley Ndlovu: “We are grateful for the generosity of the Netherlands, and we welcome the country as a new donor to the ADRiFi programme to help reduce the protection gap and assist us in making parametric insurance more accessible and affordable through premium support.” The ADRiFi partnership, a collaborative effort between the Bank and ARC, was established in 2019 to increase risk insurance coverage across Africa and improve the continent’s ability to respond to climate shocks. Since its inception, this partnership has made significant strides, providing financial protection to over six million individuals across the continent. The programme’s success is built on the robust support from various international donors, including the United Kingdom, Switzerland, the United States, Canada, Norway and now the Netherlands. The Bank, in turn, has invested more than $100 million and supported 16 African countries to access sovereign insurance and financial protection against climate hazards. Parametric insurance is a critical tool in the fight against climate change. Unlike traditional insurance, which relies on lengthy claims processes, parametric insurance triggers payouts based on pre-agreed parameters, such as the intensity of a cyclone or excess rainfall. This mechanism allows for rapid disbursement of funds, ensuring that affected communities receive timely assistance to recover and rebuild. The swift response facilitated by parametric insurance is essential for mitigating the socioeconomic impacts of natural disasters, particularly among the most vulnerable communities. The ADRiFi programme continues to play a pivotal role in advancing the uptake of this innovative mechanism. At the same time, this collective effort underscores the global commitment to safeguard African nations from the escalating impacts of climate change.
Financing farmers will help advance Africa’s agriculture industry
JOHANNESBURG, 30 May 2024 – The need to create innovative financing mechanisms for Africa’s farmers and revaluate existing ones is becoming increasingly critical as the continent faces compounded challenges, including climate change, low productivity, and conflict. This was highlighted during a session at the recent 10th African Regional Forum on Sustainable Development (ARFSD), where the industry called on policymakers to assess the needs of farmers and enhance access to funding if they expect Africa to meet the Malabo Commitment to end hunger by 2025, or the Sustainable Development Goals (SDGs) by 2030. Collaborative efforts, private sector engagement and strategic partnerships were identified as key to making an impact and advancing these goals. The agricultural sector is the economic backbone of Africa, where an estimated 33 million smallholder farms and the farmers who live on them contribute to 70% of the continent’s food supply. Africa produces all the principal grains and other diverse crops, including rubber and cocoa in the tropical regions; soya and sorghum on the plateaus; tea, coffee, and flowers in the high-altitude areas; as well as Mediterranean crops. However, climate phenomena such as El Niño and increasing extreme weather events, due to climate change, such as tropical cyclones, floods and droughts, are decimating crops, and the resilience of the land and its ability to adapt are being pushed to their limits. Meanwhile, the demands on this vital resource are reaching critical thresholds. Climate change also modifies the properties of soil, both chemically and physically leading to land degradation. Soils become less fertile, lowering crop yields and this impacts on agricultural production. Land degradation is already a major issue in Africa, due to poor soil health, and this is threatening the foundation of its citizens’ livelihoods – because they cannot afford to mitigate it. The president of the African agricultural transformation institution, AGRA, Dr Agnes Kalibata, estimates that land degradation costs farmers up to $1,400 per year. According to the global research partnership CGIAR, 65% (494 million hectares) of Africa’s soil is currently degraded. Eighty-three percent of sub-Saharan Africans rely on this land for their livelihood. As a result, yield gaps on the continent are wide, ranging from as little as 2% to over 50%. Substantial investment in Africa’s agricultural sector is needed, however, the visible impacts of climate change have caused investors to be wary. Other funding impediments include default risks and political risks. Giving farmers access to the right financial resources to address land degradation and climate change challenges would result in more progress being made towards achieving the objectives of the African Union Agenda 2063, which include the transformation of African agriculture and food security. Closing the gaps With the Russia-Ukraine war having increased global food insecurity by impacting production and crop exports out of the former agricultural powerhouse of Ukraine, a significant opportunity exists for Africa. By improving yields and insuring them against climate risks, African farmers could help close the gap, unlocking immense economic growth and development potential. Tapping into finance would also help farmers expand into the 60% of arable land that is still uncultivated on the continent. As part of the Comprehensive African Agricultural Development Programme (CAADP), an initiative that forms part of the African Union Agenda 2063, African governments have committed to allocating at least 10% of their national budgets to agriculture and rural development. But this might still not be enough. Another way in which governments could assist farmers is through subsidising climate insurance. Farmers with their limited resources are reluctant to take out premiums due to the cost, making derisking the industry not only the answer but also a huge economic opportunity. The reduction of risk would encourage investment. Private sector involvement is critical to driving investment, innovation and addressing the challenges in the industry. Making an impact The work of parametric insurer and financial affiliate of the ARC Group, African Risk Capacity Limited (ARC Ltd.), exemplifies the impact that is possible through addressing farmers’ specific needs and forging strategic partnerships. “There is no story that can be told about African development without taking into account agriculture and the need to protect investments in the sector,” says ARC Ltd. CEO Lesley Ndlovu. The company provides insurance to small- to medium-scale farmers in Africa through micro or meso products. With micro insurance, farmers’ assets are insured, and their income is protected, and with meso insurance, banks are insured against a portfolio of loans. “A severe drought in a region will result in a spike in defaults. These defaults can be protected by insurance to avoid the accumulation of risk,” says Ndlovu. As a result, banks can free up more lending than they would usually be comfortable with, helping enhance access to finance so that farmers can invest in improving productivity and income. ARC Ltd. has also been involved in several projects across Africa targeting farmers. In Côte d’Ivoire, the company, together with the Côte d’Ivoire Environment and Sustainable Development Ministry (MINEDD) and the United Nations Development Programme (UNDP), initiated a climate insurance pilot for agricultural value chains, run in collaboration with the FUSCOP RIZ CI “COOP-CA”, a federation of rice producers and their board of directors. Following the successful pilot, and with more partners on board, such as the World Food Programme, the project was expanded to include cocoa production with the aim of replicating it further across other agriculture value chains, such as cotton and maize. The project issued its first payout earlier this year of 16 million CFA francs to 3 594 rice and cocoa producers. In the Horn of Africa, ARC Ltd. is helping fight the impact of the dual hazards of drought and excess precipitation on farmers in Djibouti. The first-ever multi-year, multi-peril agreement on the continent was signed in 2023 between the government and the ARC Group. It has given the country access to five years of disaster risk management capacity building and disaster risk insurance coverage for drought and excess precipitation. ARC Ltd. has also partnered with the US Government (USG) on a
African Risk Capacity Limited ranked first in ESG for the fourth consecutive year
African Risk Capacity Limited has been awarded first place among its insurance industry peers for ESG The ranking has been awarded by Sustainalytics The rating measures exposure to industry-specific ESG risks JOHANNESBURG, 15 March 2024 – For the fourth year in a row, specialist insurer African Risk Capacity (ARC) has secured the top ranking in the insurance industry for environmental, social and governance (ESG). After an assessment by leading independent research, ratings, and analytics company Sustainalytics, ARC Ltd. was accorded an ESG risk rating of 8.2, indicating an overall negligible risk, and outperforming 302 of its peers in the insurance industry. It also ranks first in the diversified insurance services subindustry category, and 118th in the global universe out of 15 974 as at the last update of 16 February 2024. Sustainalytics provides investors around the world with an assessment of how well companies are managing corporate governance and ESG factors. Companies are scored on a scale of 0 to 100, with 0 indicating the lowest possible risk. An unwavering commitment to sustainability Other highlights from the Sustainalytics report are the fact that ARC Ltd. achieved negligible risk ratings in three categories – business ethics, human capital, and ESG integration. It further received low risk ratings for corporate governance and data privacy and security. ARC Ltd.’s low risk exposure to material ESG issues demonstrates a strong risk management ethos and robust leadership. The company has an unwavering commitment to sustainability, social responsibility, and ethical governance – a fact that has cemented its partnerships with organisations that share its vision for Africa. “Economic, social and environmental sustainability has become crucial in the world today, and we are proud of our consistent top ranking by Sustainalytics,” says CEO of ARC Ltd. Lesley Ndlovu. Adds COO Ange Chitate, who heads up ESG at the company: “This achievement reflects our unwavering commitment to ESG principles. Our team has been instrumental in integrating sustainable practices into every facet of our operations and our No. 1 position is due to their hard work and dedication.” Promoting sustainable development When rating companies, Sustainalytics scrutinises business practices and policies, and also pays attention to critical factors, such as business model, financial strength, geography and incident history. ARC Ltd. consistently performs above its peers. The company is also a leader in ESG in Africa’s insurance sector and a signatory of the Nairobi Declaration on Climate Change, which urges African insurers to integrate ESG into their business models, in alignment with the goals envisioned by the Net Zero Insurance Alliance. “The insurance industry has an important role in promoting sustainable development in Africa and we continue to advocate for ESG integration on the continent,” concludes Ndlovu.
ARC Ltd. and Milliman Award Scholarships to Empower Africa’s Next Generation of Climate Change Leaders
Nairobi, 21 February 2024 – Five exceptional African students are set to become sustainability changemakers as the first recipients of fully funded climate change scholarships from African Risk Capacity (ARC) Limited and Milliman Inc. The Africa Scholarship Programme aims to empower the next generation of leaders to drive solutions to Africa’s climate threats. The recipients stood out among 15 finalists for their academic excellence, community activism, demonstrated leadership, and passion for sustainability. Ange-Emmanuelle Gblaka from Côte d’Ivoire, Sandrine Dorvale Bassong Bayegle from Cameroon, and Kossi Mose Doumassi from Togo began their studies at the Institut de Formation en Alternance pour les Générations Engagées (IFAGE) in Dakar, Senegal in January. Doreen Mulwa from Kenya and Maulid Seleman from Tanzania will embark on their academic journeys at the University of Cape Town in 2025, pending admission. “The scholarship recipients are an impressive group. With limited resources, they are already driving change and making a real impact as young changemakers in their communities. We are excited to be a part of their journey and watch how they take this educational opportunity to turn it into meaningful action,” says ARC Ltd. CEO Lesley Ndlovu. The comprehensive scholarships will fully cover tuition, housing, living stipends, and other essential expenses for up to three years of full-time study. This exceptional opportunity will allow the students to gain expertise in critical fields like actuarial science, risk management, and agricultural statistics. Since 2014, ARC Ltd. has delivered climate risk insurance to African Union member states. These scholarships seek to extend that mission by developing highly skilled talent to contribute to developing African solutions to African problems. Milliman Inc. lends its risk management and actuarial expertise to the scholarship programme. As ARC Ltd. CEO Lesley Ndlovu says: “The urgent need for Africa to develop leaders, including women leaders, well-versed in the complex challenges of climate change cannot be overstated. With threats like droughts, floods and extreme weather events, Africa remains one of the most vulnerable regions globally. These scholarships empower the next generation to gain the skills needed to drive climate resilience back home.” Milliman Inc. Principal Joy Schwartzman echoes the sentiment: “We hope to make a real impact on Africa’s ability to understand and address climate risk through the Africa Scholarship Programme. By investing in the next generation, we are investing in a more sustainable future.” The scholarships for Master’s programmes in Actuarial Science and Insurance at IFAGE play an essential role in working towards the goal of developing the insurance and risk management sectors across Africa. These scholarships enable talented students to access quality education by eliminating financial barriers. “Our collaboration with the Africa Scholarship Programme perfectly aligns with IFAGE’s mission to train a new generation of insurance and finance professionals who can provide the African insurance market with operational and competent professionals right after graduation. This scholarship represents much more than an opportunity. It is an invitation to explore, learn, and grow in the financial sector,” said Mrs. Kandji Rokhaya, General Manager of the Inter-African Institute for Training in Insurance and Business Management of IFAGE. Chantal Swartz of the University of Cape Town (UCT) added that the Africa Scholarship Programme would strengthen UCT’s transformation imperative and contribute to UCT’s efforts in promoting diversity and inclusion within its student body. Swartz added that UCT’s goal is to produce research that answers the complex problems of today and tomorrow. “In line with UCT’s Vision 2030, our dream is to draw from the extraordinary social and cultural diversity, creativity and capacity for innovation of all our staff and students to contribute to making the 21st century, the African century,” said Swartz. “These students carry the hope of Africa on their shoulders. We challenge them to make the most of this life-changing opportunity. The future needs their ideas, their passion, and their leadership,” Ndlovu concludes. The Africa Scholarship Programme was launched in 2023 and will soon release applications for the 2024 programme. Find out more at www.arcltd.org/scholarships.
ARC Ltd. And US Government partner to safeguard food security and expand parametric insurance in Africa
JOHANNESBURG, 13 February 2024 – African Risk Capacity Limited (ARC Ltd.) and the United States Government (USG) have entered into a landmark US$11.7 million partnership to safeguard food security and strengthen climate resilience in Africa by increasing access to parametric insurance. The project aims to protect vulnerable smallholder farmers facing increasing climate change-related disasters while assisting African governments to better respond to climate risks. Parametric insurance provides rapid payouts based on pre-agreed triggers, allowing timely responses to natural disasters. The USG funding will enable ARC Ltd. to scale up technical assistance in-country and increase coverage across Africa over the next three years. Says ARC Ltd. COO Ange Chitate, who heads up the project: “ARC Ltd. is committed to protecting the livelihoods of farmers and pastoralists across our African Union member states. Our priority with this grant is to provide coverage to 19 states, and with the support of the USG, we will refine and develop innovative products that will meet the evolving needs of these countries.” The project has two primary objectives. Firstly, governments will be assisted with capacity building to manage climate change-induced disasters through the effective use of parametric insurance. To this end, ARC Ltd. will work closely with governments to customise risk models for each country, establish contingency plans and integrate parametric insurance into policy frameworks. This localisation helps ensure that the insurance payouts will meet the real needs on the ground. Secondly, the project seeks to increase the uptake of parametric insurance through close cooperation with the African Union and regional economic communities to encourage adoption. It will also focus on aligning domestic policy frameworks with regional policies to embed parametric insurance in existing climate adaption frameworks. Increasing climate change impacts requires responsive diversification to ensure the project’s long-term sustainability and ARC Ltd. is committed to expanding its portfolio to cover more countries, hazards and people. Plans include developing demand-driven micro/meso insurance and diversifying beneficiaries, such as pastoral farmers locally and humanitarian organisations internationally. Various activities have been identified to achieve the objectives. On the technical side, ARC Ltd. will further refine and develop new products for member states with a focus on drought, flood and tropical cyclone models. ARC Ltd. will also work more extensively with technical and financial partners, UN agencies, international financing institutions and universities to identify how data can be used for increased evidence-based policy decision-making and impact measurement. To pave the way for more countries to participate in the risk pools, ARC Ltd. together with ARC Agency, will align technical, governance, and policy capacity with the risk pool requirements by hosting risk transfer workshops in select countries. Training local experts is also a key focus. ARC Ltd. will also complete policy underwriting for single and multiperil cover, having identified the countries that qualify for each. The USA aims to help more than half a billion people in developing countries to adapt to and manage the impacts of climate change through President Biden’s Emergency Plan for Adaptation and Resilience (PREPARE). With this partnership, it has strengthened its strategic interests in disaster risk financing in Africa while signalling its commitment to investing in locally led climate solutions. For ARC Ltd., this project aligns with its mission to safeguard more nations and create effective pan-African climate response systems. “ARC Ltd. has set an ambitious goal of protecting the lives and livelihoods of 700 million vulnerable people in Africa by 2034,” says ARC Ltd. CEO Lesley Ndlovu. “The partnership with the United States Government, and others, will help us achieve this goal. It also demonstrates the commitment of developed nations to building the resilience of the global south to withstand climate disasters.”
Rising climate death toll in Africa underscores urgency for COP28 action
JOHANNESBURG, 28 November 2023 – It’s been a year of climate carnage in Africa. At least 15 700 people have lost their lives to extreme weather disasters, according to the latest report from Carbon Brief, while another 34 million have been affected. From flooding to intense heatwaves and drought, these devastating statistics represent a human emergency on an unprecedented scale, which comes as the global community prepares for COP28. Even more sobering is that the bulk of the fatalities were in Libya alone. More than 11 300 people died in September when Storm Daniel caused two dams to overflow in the coastal city of Derna. In the catastrophic flooding that followed, people and buildings were washed out to sea. Researchers believe climate change was to blame for increasing the probability and intensity of this extreme weather event by as much as 50%. More than 20 other flood disasters occurred across the continent, affecting numerous countries. In early November, Kenya experienced torrential rains followed by flooding that forced 4 000 families to flee their homes. As many as 1 000 livestock died and 97 hectares of cropland were wiped out. In the aftermath of floods, communities face further challenges – the risk of waterborne diseases, food shortages, and the daunting task of rebuilding. Tropical cyclones are also happening with alarming regularity, battering coastlines, flattening villages, and wiping out the economic lifelines of many communities. Tropical Cyclone Freddy, which began its path of destruction in February, persisted for 34 days. Impacting Madagascar, Mozambique, Mauritius, Malawi, Réunion, and Zimbabwe, it left at least 860 people dead, destroyed homes and cropland, and caused cholera outbreaks in its wake. In contrast, the Horn of Africa has been gripped by persistent drought conditions, impacting more than 29 million people. The communities in the region are dependent on rain-fed agriculture and pastoralism, but the prolonged drought, said to be the worst in some 40 years, has turned arable land to dust, caused crop failure, water scarcity and decimated livestock herds. The ripple effect is huge – people are forced to leave their homes in search of pasture and water, resulting in mass population displacement. Malnutrition rates, especially among children, have soared and as many as 4 million people in the region are now acutely food insecure. Scientists weigh in A group of international scientists has concluded that human-induced climate change increased the severity of the drought in the southern part of the Horn of Africa, which includes southern Ethiopia, southern Somalia, and eastern Kenya. They say the likelihood of such droughts has increased 100-fold. “State fragility and conflict, as well as the length of the drought played a significant role in worsening outcomes, especially for people in Somalia. Further, the severity of impacts linked to the long duration of the drought also raises serious questions about the length of droughts that government drought management systems and the international aid infrastructure should be prepared to handle in the future,” they point out. This year has also seen heatwaves across Southern Africa and extreme heat in Northern Africa, especially Algeria, which led to deadly wildfires. While heatwaves are not officially categorised as disasters, their impact on populations is significant. Climate scientists explain that in addition to climate change, extreme events are also compounded by the El Niño weather phenomenon. The Carbon Brief report points out another critical issue – the lack of weather stations in Africa, which makes it difficult to track and record extreme weather events, thereby contributing to underreporting. This is particularly true for heatwaves, which are often not recorded due to the absence of observable impacts like those seen with floods or cyclones. The lack of data and reporting on these events makes it challenging to prepare for and mitigate their impacts. The scale of disasters The combination of climate change, poverty, and action (or in-action) in Africa paints a complex picture. Natural disasters push vulnerable communities to the limits of their resilience, while poverty hampers their capacity to recover. At the same time, a lack of in-country emergency preparedness and climate adaptation strategies leaves many nations on the back foot. This is where innovation and strategic public-private partnerships can make a significant difference. Recently, in Malawi, African Risk Capacity Ltd., a parametric insurer the financial affiliate of the ARC Group, launched an insurance innovation to help the government expand the World Bank’s Social Support for Resilient Livelihoods Project already underway in the country. “It incorporates a risk transfer instrument and a risk-layering approach that will enable Malawi to safeguard more vulnerable households from climate shocks and guarantee faster access to financing,” explains ARC Ltd. Head of Business Operations David Maslo. “This social protection insurance innovation has significant potential for replication across Africa, while encouraging other governments and global organisations to take a progressive, collaborative approach.” Action for Africa The devastating impact of several extreme weather events in one year in Africa serves as a grim reminder of the consequences of climate change. This continental crisis must catalyse a transformative climate agenda that prioritises the vulnerable, and COP28 presents an opportunity for actionable and results-oriented strategies to take centre stage. The time has come to move beyond vision and mission to actively shape a future where extreme weather does not dictate the fate of Africa.