Drought Insurance for Africa (ARC)

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The African Risk Capacity (ARC) is a specialised agency of the African Union. It supports African governments in improving their capacity to plan, prepare for and respond to extreme weather events and natural disasters. Through cooperation and innovative financing, ARC enables countries to strengthen their disaster risk management systems and to gain rapid and reliable access to finance in the event of a disaster. The aim is to maintain food security and the livelihoods of the vulnerable population. In this context, the BMZ, through KfW, supported the establishment of ARC's insurance arm, ARC Limited, by providing a subordinated loan similar to equity. Since 2014, ARC has been offering participating countries insurance against drought damage and since 2020 against tropical cyclones. There is also an insurance product against epidemics and floods. In order to achieve broader population coverage in African countries, the Replica programme was developed in 2016 with German support. As part of this program, humanitarian partners - previously the World Food Programme (WFP), Start Network and UNHCR - can replicate state insurance and thus expand insurance coverage. In addition, the BMZ has been providing funds for premium subsidies through grants since 2020. KfW has set up a Premium Support Facility for this purpose, through which the funds are implemented (in close cooperation with other donors).