SOCIAL PROTECTION
Climate-related disasters such as droughts, floods, and cyclones can cause sudden and severe disruptions to livelihoods, pushing vulnerable households into deeper poverty. In many African countries, social protection systems, including cash transfers, subsidies, and social safety nets, lack the resources or agility to respond quickly to these shocks. Delays in funding can force families to adopt negative coping mechanisms, such as selling productive assets or withdrawing children from school.
How ARC Ltd’s Parametric Risk Transfer Works
ARC Ltd supports shock-responsive social protection by enabling governments to integrate rapid disaster response into their national safety nets:
- Sovereign policy integration – Governments can design contingency plans that channel ARC payouts directly into existing social protection programmes, such as cash transfers or food subsidies.
- Trigger-linked delivery – Payouts are activated based on pre-agreed climate or disaster thresholds, allowing early assistance to reach affected households before crisis conditions worsen.
- Targeted coverage – Plans can prioritise the most vulnerable populations, including women-headed households, people with disabilities, and the poorest income quintiles.
Concrete Use Cases
Shock-Responsive Cash Transfers
In several ARC member states, sovereign payouts have been used to scale up existing cash transfer programmes during droughts, enabling timely assistance to hundreds of thousands of vulnerable people.
Part of Malawi’s US $3.07 million drought payout was allocated to social protection measures, reaching over 311,000 people (~69,000 households) through food distribution and cash support.