African Risk Capacity (ARC)


The African Risk Capacity is a disaster risk management pool and early response mechanism established by the African Union member states against natural disasters like drought, flood, and tropical cyclones, and the outbreak of highly contagious diseases. Its drought insurance and the new insurance products for flood and tropical cyclones enhance the safety nets of smallholder households and thus contributes to food security in Africa.

Country/region Topic Period Budget
Africa
Health
Humanitarian Assistance & DRR
Agriculture & food security
Climate change and environment

Infectious desease
Humanitarian efficiency
Agricultural financial services
Health systems strengthening
Disaster risk reduction DRR
10.12.2019 - 31.12.2022
CHF 4'000'000
Background Droughts, floods and cyclones are the most frequent natural disasters that impact on the food security of vulnerable communities in Africa. In case such disasters call for humanitarian aid, relief often only arrives 6 to 9 months later. An insurance scheme for governments based on satellite images allows for immediate pay-outs and promises relief to the affected communities before they start selling their productive assets.
Objectives African Risk Capacity's goal is to ensure that African Union member states are better equipped to manage the impacts of natural disasters and the outbreak of highly contagious epidemics on the livelihoods of vulnerable populations in a timely manner and to build resilience to climate related shocks.
Target groups

The immediate beneficiaries are the 41 AU member states as they receive technical assistance in financial disaster preparedness and weather risk management.

The indirect beneficiaries are smallholder households and the most vulnerable, food insecure populations of these countries, who receive more timely and effective assistance in the event of natural disasters.

Medium-term outcomes
  • Improved access to innovative tools and insurance products for AU member states to manage effectively their natural disaster and epidemics risks
  • Enhanced AU member state ability to anticipate, plan for, and respond to natural disasters and the outbreak of highly contagious epidemics in an efficient and effective manner.
  • Increased scale and sustainability in ARC operation and insurance coverage.
Results

Expected results:  

  • Around 20 insurance products with improved risk modelling and early warning platform developed.
  • Robust contingency plans are developed by and with member states through training and technical support.
  • Gender aspects are mainstreamed in disaster risk management systems.
  • ARC Ltd. performs as financially robust and sustainable entity
  • Insurance premium subsidies secured.


Results from previous phases:  

  • Since inception of the risk pool in 2014, ARC has issued 41 drought insurance policies to 10 AU member states, worth USD 580 million and covering 58 million vulnerable people with USD 59 million in pay-outs as of 30.1 1.19.
  • ARC has designed an Outbreak & Epidemics insurance product for launch by mid of 2020 and a flood insurance product in 2021.
  • ARC has proved its value as unique and innovative disaster management infrastructure in Africa that integrates early warning through risk modelling, contingency planning and risk transfer into one ecosystem.
  • •ARC Ltd could not yet break even, as its insurance portfolio growth is behind schedule and premium collections from AU member states remain challenging


Directorate/federal office responsible SDC
Credit area Development cooperation
Humanitarian aid
Project partners Contract partner
United Nations Organization (UNO)
  • World Food Programme


Other partners
World Food Programme (as mandated by the African Union and its Specialized Agency ARC).
Coordination with other projects and actors GPFS funded "Remote sensing-based information and insurance for crops in emerging economies" (RIICE). Various agricultural / and natural disaster insurance pilots of SDC with Syngenta Foundation in SSA and Asia and with MiCRO in Latin America.
Budget Current phase Swiss budget CHF   4'000'000 Swiss disbursement to date CHF   3'265'263 Budget inclusive project partner CHF   41'584'000
Project phases Phase 3 10.12.2019 - 31.12.2022   (Current phase) Phase 2 01.12.2016 - 31.08.2019   (Completed) Phase 1 01.12.2012 - 31.10.2016   (Completed)