Nairobi, Kenya – 21 March 2025 – The Federal Government of Somalia (FGS) received a $1,455,710 insurance payout from the African Risk Capacity (ARC) Group to support drought-affected communities. The country’s participation in ARC risk pools marks a significant milestone in Somalia’s commitment to proactive disaster risk management, ensuring the availability of financial resources to respond swiftly to climate-related shocks.
Somalia, a country that is highly vulnerable to drought, floods, and other climate risks, joined ARC’s sovereign drought insurance pool to secure coverage for the 2024/25 agricultural season. Somalia’s participation in ARC climate risk insurance was made possible by a premium support contribution from UK’s Foreign, Commonwealth and Development Office (FCDO), through the Africa Disaster Risk Financing Programme Multi-Donor Trust Fund (ADRiFi-MDTF). The ADRiFi-MDTF is a framework developed in collaboration between the African Development Bank and the ARC Group to support countries.
“Somalia’s commitment to risk financing is commendable,” said Eva Grace Kavuma, ARC Group Director-General (a.i.). “This payout reinforces the importance of anticipatory action in protecting vulnerable communities and strengthening resilience against climate shocks.”
In addition to the government payout, Start Network, the Replica partner, also received a payout of $727,855 through the ARC Replica programme. The Replica programme is an initiative that allows humanitarian partners to take out insurance on behalf of countries, thus expanding the reach of early response efforts.
The government payout will provide emergency food assistance to 35 000 households in two regions, while the payout to Start Network will be distributed as cash transfers to 10 500 households in one region, ensuring that the most affected communities receive timely relief. By securing parametric insurance coverage, Somalia is shifting from a reliance on humanitarian aid to a structured risk financing approach, enabling faster and more efficient crisis response.
This payout is not just financial relief for Somalia – it is proof that proactive risk financing works,” stated Lesley Ndlovu, CEO of ARC Ltd. ” By securing parametric insurance, Somalia has demonstrated that governments can move beyond reactive aid and instead, access rapid, predictable funding to protect their people when disaster strikes. This is the future of climate resilience in Africa.”
The partnership between ARC and Start Network has been crucial in expanding insurance access for humanitarian responses. ” Effective disaster risk finance is not just about managing risks but also about fostering sustainable development and protecting the most vulnerable in our society.,” Abdou Razack Alassane, Global Technical Lead, Crisis Anticipation and Risk Rinancing team.
The Government of Somalia is commitment to building it resilience against weather-induced disaster threats. “This payout demonstrates our dedication to proactive disaster risk management. Strengthening financial preparedness is key to protecting our people from recurring climate shocks.”,” said Hon Souleyman Omar, Director General for Minister of Finance, Somalia
This payout highlights the growing importance of innovative risk financing in Africa to complement other government strategies to ensure rapid financial relief when disasters strike. As climate risks intensify, ARC remains committed to supporting African nations in developing sustainable disaster preparedness and response solutions.