As wave after stormy wave hits the island nation, an ARC Limited policy payout will assist Madagascar to build back better
Madagascar has been dealt wave after wave of devastating weather events in recent months: First tropical storm Ana, then cyclone Batsirai, followed by tropical storm Dumako and most recently another storm, Emnati, which was set to hit last month (22 February), making it the fourth major storm to hit the island nation this year.
Ana killed 55 people and displaced over 70,000 when it hit the Indian Ocean island nation last month, making landfall near the south-eastern city of Mananjary, 530km from the capital Antananarivo.
Then Batsirai arrived, killing at least 121 people and displacing more than 75,000 – including 37,500 children – in central and southern Madagascar.
Some of the displaced were moved to evacuation centres where victims of January’s tropical storm Ana were also still staying.
Besides the loss of life, these storms bring flooding, wind damage, destruction to property and infrastructure, and landslides. Villages and towns are cut off, people displaced, schools destroyed, and access to clean drinking water, electricity and supplies severely hampered.
In the wake of the catastrophic events brought about by cyclone Batsirai, this week African Risk Capacity Limited (ARC Ltd) will make a payout of $10.7-million to support the government of Madagascar and its people to build back better.
Based on ARC Ltd’s tropical cyclone model, more than six million people were identified as exposed to cyclone Batsirai. More than 61,500 people were displaced and 19,000 homes and 4,005 classrooms were damaged, according to reports from the country’s disaster agency Bureau National de Gestion des Risques et des Catastrophes (BNGRC).
Says Lesley Ndlovu, CEO ARC Ltd: “The payout will provide a much-needed cushion for the country, as it has suffered not only a loss of life and infrastructure, but also faces food shortages, water shortages and looming water-borne diseases.”
Ndlovu explains that Madagascar is covered within ARC Ltd’s parametric insurance risk-pooling facility, which is its first such payout for tropical cyclone insurance since it launched the cyclone product in the second-half of 2020.
The island nation is also the first African country to take up the sovereign parametric cyclone insurance protection, in 2020. “Providing funding support for this policy are the Foreign, Commonwealth & Development Office, Swiss Agency for Development and Cooperation and KfW Development Bank to which we are grateful,” adds Ndlovu.
Batsirai was the strongest tropical cyclone to hit Madagascar since cyclone Enawo in 2017.
ARC Ltd’s parametric triggers are designed for rapid deployment. The policy enables a swift response that reduces the cost to lives and livelihoods as it reaches those who need the support most urgently.
Unlike traditional insurance policies, intended to return the insured back into the position they were in prior to an insured event, parametric insurance covers the probability of a predefined event happening instead of indemnifying actual loss incurred.
Madagascar has previously received a $2.13-million ARC Ltd payout after its parametric drought insurance policy, covering crop failure in the south of the country, was triggered in July 2020.
The country had taken out drought insurance with the support of the African Development Bank, which financed 100% of the 2019/2020 insurance premium for sovereign drought risk transfer.
The payout assisted 600,000 vulnerable people affected by the drought and mitigated against the desperation that would otherwise have seen farmers eating their seeds, selling farm implements, becoming internally displaced and migrating.
Richard Randriamandrato,the Malagasy Minister of Economy and Finance, noted at the time: “The drought insurance of African Risk Capacity is one of the sustainable solutions to strengthen the efforts of the government and partners in the southern region of Madagascar. It demonstrates the mutual assistance between friendly African countries to respond efficiently to natural disasters, particularly drought.”
Due to its geographical position, Madagascar is highly vulnerable to climate shocks including cyclones, floods, and droughts, which are devastating to the country’s finances and development.
Parametric insurance, Randriamandrato said, enables them to improve the conditions of farmers and the livelihoods of vulnerable populations in the “Great South” that are victims of recurrent drought, as well as to preserve their production capital.
“Early interventions to be implemented with this fund will focus on unconditional cash transfer and cash for work for 15,000 vulnerable households, nutritional support for 2,000 children under five years of age, and water supply for 84,000 households.”
The BNGRC reported that most of the deaths from Batsirai were in Ikongo District of the Fitovinany region. Ikongo’s district deputy Jean-Brunelle Razafintsiandraofa told Associated Press: “Most of the houses are made of earth and when there are floods, the houses become like mud and they collapse. They collapsed on people and became like tombs for people who were asleep.”
Unicef’s representative in Madagascar, Jean François Basse said social services had been hard hit by the cyclone, with dozens of schools and medical centres either destroyed or damaged, which directly affects children’s lives. “In responding to this emergency, we need to address the immediate needs, but also plan for the long-term by building back better, including with more resilient buildings,” he noted in a Unicef statement.
Compounding the devastation of these severe weather events was tropical storm Dumako, which made landfall on February 15, killing another 14 people, displacing about 3,000 and destroying property.
The African continent is highly vulnerable to the impacts of global warming, with floods, droughts and cyclones. The World Food Programme (WFP) says the recent pattern of destructive storms caused by global warming and climate change has caused failed harvests, high food prices and increased food insecurity in the region.
“The people of Southern Africa have been on the front lines of climate extremes for many years now and each passing storm sets them back, resetting the progress made,” said senior WFP official Margaret Malu.
Without parametric insurance, vulnerable nations such as Madagascar would be unable to respond swiftly and effectively, to help build back better. ARC Ltd already has 35 African Union members that have access to its ARC Ltd risk transfer services. There are ongoing efforts to ensure that more countries sign up to support this mechanism and endorse it as Africa’s solution to the growing threats of natural disasters.