African Risk Capacity

The African Risk Capacity (ARC) operates as a mutual insurance company and agency to help African Union members manage climate shocks through weather-index insurance. Since 2014, ARC Ltd has provided USD 720 million in coverage and paid USD 65 million in claims, primarily targeting the agriculture sector. Participation requires the use of Africa RiskView (ARV) software to define payout thresholds based on rainfall deviation. The program's viability depends on robust subnational climate data, government technical expertise in sovereign insurance, and high-level political awareness.

• The African Risk Capacity (ARC) provides insurance to African Union members to protect food security, utilizing the Africa RiskView (ARV) software to trigger payouts when rainfall deviation crosses a pre-defined threshold.
• As of 2020, 34 African Union member states are part of ARC, with 24 having active MOUs and 13 designated as Class A Members who have purchased policies. Seven countries have received payouts.
• Between 2014 and the reporting period, ARC Ltd collected over USD 100 million in premiums, provided USD 720 million in insurance coverage for 72 million people, and issued USD 65 million in payouts.
• Payouts have primarily supported the agriculture sector, including the replenishment of strategic grain reserves in Malawi (2017) and drought responses in Mauritania (2018) and Madagascar (2020).
• The program is supported by interest-free capital from the UK FCDO (GBP 30 million) and KfW on behalf of BMZ (USD 48 million) with maximum terms of 20 years.
• Successful implementation of ARC requires subnational weather data for software customization, government technical expertise in weather index insurance, and high-level stakeholder awareness.

APA

Climate Policy Initiative (2021). African Risk Capacity. https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/african-risk-capacity-2/

Chicago

Climate Policy Initiative. African Risk Capacity. 2021. https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/african-risk-capacity-2/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=African Risk Capacity |date=16 September 2021 |url=https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/african-risk-capacity-2/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2021african, author = {{Climate Policy Initiative}}, title = {{African Risk Capacity}}, institution = {Climate Policy Initiative}, year = {2021}, month = sep, url = {https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/african-risk-capacity-2/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }