The Government of Senegal yesterday received symbolic cheques of US$23.1 (equivalent of FCFA 13.9 Billion) from the leadership of African Risk Capacity Insurance Limited. The cheques, given in two parts of US$12.5million (FCFA7,494,937,500) and US$10.6million (FCFA6,355,707,009) to the Government and StartNetwork assist in providing early action to support the people affected by drought during the 2019 agricultural season.
Earlier in September, ARC had announced that the Government of Senegal will receive a minimum of US$22m to cover losses from crop failures caused by the severe rainfall deficits in the 2019 agricultural season. The US$23.1 being paid signifies a five percent (5%) or US$1.1m (FCFA 200, 000, 000) increase from the amount earlier announced.
The Government meteorological agency, the Agence Nationale de l’Aviation Civile et de la Météorologie (ANACIM), corroborated the outputs of ARC’s bespoke tool, Africa RiskView. According to Africa RiskView, at least 975, 000 people will be directly affected by the drought.
“We are extremely committed to the African Risk Capacity, said Mr. Aly Ngouille Ndiaye, Honourable Minister of Interior of the Republic of Senegal. ARC is an African institution which uses innovative financing to protect the resilience of our populations. We also welcome the involvement of StartNetwork, while we appreciate all that is being done by ARC in Senegal.’’
The Republic of Senegal was one of the founding Member States of the ARC and has been a member of the institution since its creation in 2012. Also, the country was one of the first to take out a drought insurance policy with the ARC Insurance Limited in 2014. Since then, the Republic of Senegal has annually renewed its insurance coverage by paying an estimated premium of CFAF 1.5 billion per year. This amount is charged to the budget of the country’s Ministry of the Interior. The current payout of US$23.1 has triggered from the country’s 2019 policy takeout in which the Government and its partner Replica, Start Network, subscribed to a drought insurance policy for a premium of FCFA 1.9 billion and FCFA 1.6 billion respectively.
“The payout, once again, validates our concept and value proposition and the unwavering commitment of the Government of Senegal. Climateinduced disasters cannot be prevented; but we have consistently proven that we can work with African Governments to enable a more timely and reliable post-disaster response”, said UN-ASG Mohamed Beavogui, Director-General of ARC Agency.
“Our early response will be critical to how the vulnerable populations will cope within the first three months after harvest. It will ensure quicker recovery, increase local adaptive capacity and strengthen resilience”, added Ms. Dolika Banda, the CEO of ARC Insurance Limited.
ARC was established on the principle that investing in preparedness and early warning through an innovative financing approach is highly cost-effective and can save upward of four dollars for every dollar invested ex ante.
In her message, Christina Bennett, the CEO of Start Network’s CEO expressed her satisfaction with the payout. “We are delighted that our work to put this policy in place, will now mean an early release of funding, so we can work alongside the Government to help people who may suffer during this major drought. This way of working is a potential game-changer for the sector. Slow aid funding is one of the biggest structural problems in disaster response efforts, and this costs lives. Studies show that early action means more lives saved. And that’ s exactly what we will be able to do”, she said.
In line with processes agreed with the Government of Senegal, the Final Implementation Plan (FIP) for the payout is awaiting the approval of the Peer Review Mechanism (PRM) for the rollout of response activities. This will take place in the next few days.
With the support of the United Kingdom, Germany, Sweden, Switzerland, Canada, France, The Rockefeller Foundation and the United States, ARC assists AU Member States in reducing the risk of loss and damage caused by extreme weather events affecting Africa’s populations by providing, through sovereign disaster risk insurance, targeted responses to natural disasters in a more timely, cost-effective, objective and transparent manner. ARC is now using its expertise to help tackle some of the other greatest threats faced by the continent, including outbreaks and epidemics.
Since 2014, 37 policies have been signed by Member States with US$74million paid in premiums for a cumulative insurance coverage of US$544million for the protection of 54million vulnerable population in participating countries.