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News from 2020-04-24 / KfW Development Bank

Providing early assistance for drought victims

Feldarbeiterinnen auf einem Gemüsefeld

Farmers in Senegal are receiving support to help them and their livestock survive the coming drought. This preventive support is made possible by the African Risk Capacity (ARC), which is now paying USD 22 million to the country of Senegal and, via the ARC Replica Programme, to the NGO network Start. KfW finances ARC and ARC Replica on behalf of the German Federal Government.

All the signs are alarming: Senegal threatens a shortage of food and feed over the coming weeks because there has been far too little rain during the sowing season.

For some years now, a mechanism has been in place to protect the inhabitants of the affected region from the most serious consequences. ARC Replica is a programme of the World Food Programme and the Start Network, a network of non-governmental organisations, under which humanitarian actors can insure themselves against natural disasters through the "African Risk Capacity" (ARC). KfW is supporting the ARC Replica Programme on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ) with a total of EUR 10 million and has capitalised ARC Insurance ARC Ltd. with a total of USD 50 million.

The participating countries and humanitarian actors protect each other through ARC; this enables them to benefit from comparatively low insurance premiums. In the event of a disaster, ARC pays out insurance benefits to affected states and humanitarian actors, which then benefit the population.

Early assistance

In Senegal, the previously agreed threshold value has now been reached, which is measured by the amount of precipitation determined by NASA and other indices. ARC is thus providing a total of USD 22 million in emergency aid to the affected families, USD 10 million of which is being paid out via the Start network and a further USD 12 million through the Senegalese authorities. An estimated 400,000 people will receive preventive aid in the form of cash payments, nutritional advice and the distribution of nutrient-enriched flour.

It is the first time that humanitarian actors have taken out insurance and received a payment from it in order to be able to take early action. "This is a new way of working, unlike the previous model where people had to wait for help until the crisis had already occurred, although today we can predict many crises early on," praises ARC Replica Manager Aliou Diouf.

Emergency plan approved by other states

A special feature of the ARC is that, before governments and humanitarian actors can take out an insurance policy, they must draw up an emergency plan and determine in advance how the funds will be used in the event of a disaster. Each contingency plan is approved within a peer review process. Instead of waiting for a natural disaster to occur and hoping for ad hoc support from international donors, governments actively prepare for a disaster through the ARC and can thus respond more quickly and in a coordinated manner.

Work is now underway to use an insurance mechanism similar to the one used for climate protection also in the event of pandemics.