FULL TEXT: US$1 465 602 African Risk Capacity Payout For Zimbabwe

1. The African Risk Capacity Insurance Company Limited (ARC Ltd) has paid US$1 465 602 to the Government of Zimbabwe and US$290 288 is being paid to UN World Food Programme (WFP), in parametric drought risk insurance payouts to support the extensive drought efforts in Zimbabwe.

2. The payouts are the result of drought insurance policies bought by Zimbabwe and UN World Food Programme to cover the 2019/20 rainfall season.


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3. These payouts will contribute in funding the early response measures put in place by Government and WFP. The Government objective during this pandemic is to save lives and save livelihoods. The payout will be used to support approximately 155 000 families in the highly vulnerable districts of Buhera, UMP, Chivi. Binga and Bulilima through unconditional cash disbursements.

4 Payouts received by WFP will also contribute to its early response through unconditional food/cash assistance to food-insecure, vulnerable communities in the month of September 2020.

5. Speaking after the official notification of the ARC payout the Minister of Finance and Economic Development, Honourable Prof, Mthuli Ncube said; “This is evidence that the Government of Zimbabwe is taking measures of cushioning its fiscus against natural disasters, in the country. The payout will complement existing social safety nets that Government has structured to counter droughts, end other emergencies like the COVID 19 pandemic.’

6. Zimbabwe is increasingly vulnerable to severe drought events and other calamities such as floods and tropical cyclones. Given the unpredictable nature of the occurrence of these disasters, Government has had to resort to budget reallocations, donations and development partners’ contributions to shield against the impacts.

7. In that sense, the Government of Zimbabwe has moved to revamp its disaster financing systems. The ARC parametric risk insurance facility has been identified as a low hanging opportunity, which can provide coverage against droughts, floods and outbreaks and epidemics at sovereign levels. This enables Government to better cushion its fiscus against natural disasters.

8. Speaking on the ARC payout to Zimbabwe, Mr Mohamed Beavogui, UN Assistant Secretary-General and outgoing ARC Director-General said; “Although we can never celebrate a disaster, it calls for a celebration when a Government is evidently taking steps of hedging its investments in food security against natural risk to broaden fiscus flexibility when a disaster strikes.’ The Director-General assured Government that ARC together with other partners will play its role to support Zimbabwe’s journey towards having a more comprehensive Disaster Risk Financing framework.

9. The Government has also called upon Development Partners to complement its efforts to increase insurance coverage at sovereign level. This support can either be direct or indirect. The ARC insurance products can be accessed by non-government entities such as UN Agencies, INGO’s and private sector entities.

10. Mr Niels Balzer, the UN World Food Programme Country Director and Representative for Zimbabwe said, “The ARC payout to the Government of Zimbabwe and WFP through the Replica initiative is proof that the concept works as an innovative instrument to humanitarian agencies to finance early response and lifesaving actions in the aftermath of extreme droughts. When combined with other instruments such as micro-insurance for smallholder farmers and Forecast-based Anticipatory Action, it provides powerful combined approach that has the potential to accelerate progress towards zero hunger in Zimbabwe. He urged other Governments and Development Partners especially in the SADC region to capitalise on this instrument for enhancing climate resilience and food security in the region.

11. NGOs running resilience projects in disaster-prone regions of Zimbabwe can directly secure their investments by purchasing insurance coverage from ARC. The ARC insurance products are highly competitive given that they capitalise on risk pooling across the risk diverse African continent, thus attracting favorable rates on the international re-insurance market.

12. Over and above insurance products, these entities can also capitalise on ARC early warning, risk analytics, operational planning for early response and knowledge on disaster risk financing products and capabilities.

13. The ARC Ltd CEO Mr Lesley Ndlovu said, “There is scope and opportunities for organisations such as the Zimbabwe Resilience Building Fund and private intro-insurance companies working in this space to capitalise on the parametric weather insurance products offered by ARC as well as its associated capacity-building benefits.

14. Looking forward the ARC programme supervisor in Zimbabwe, Permanent Secretary George Guvarnatanga, acknowledged the growth of the ARC across the African continent and the capacity that ARC has built towards revamping and strengthening disaster risk reduction of AU Member States. He urged the ARC to strengthen collaboration with private sector and the importance of Development Partners support in any form possible to African Governments particularly on the backdrop of the COVID 19 pandemic.

 

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