The ARC Model: Proactive Disaster Risk Financing For A More Resilient Africa

By Alison Kentish

The world faces multiple crises: climate change, extreme weather events, food security and biodiversity. For African nations, these issues are compounded by the COVID-19 pandemic and epidemic outbreaks that include Rift Valley Fever and Malaria. With 35 African Union Member States as signatories to its establishment Treaty, the African Risk Capacity (ARC) Group – comprising of ARC Agency and ARC Limited – works with Governments to help improve their capacities to better plan, prepare, and respond to extreme weather disasters and natural disasters.

By building smart partnerships and promoting an anticipatory financing approach, ARC enables countries to strengthen their disaster risk management systems and access rapid and predictable financing when disaster strikes to protect the food security and livelihoods of their vulnerable populations.

Since 2014, the Group, through its commercial affiliate, ARC Limited, has provided USD $720 million in risk coverage against drought and made over USD $65 million in payouts to enable an early response to these extreme weather events thereby protecting 65 million people in participating Member States. Being demand-driven in its products offering, the Group has recently diversified its offerings to include Tropical Cyclone and is currently finalizing the development of a Floods product. This is in addition to its ongoing work in Outbreaks and Epidemics targeting four pathogens including Ebola, Marburg, Meningitis and Lassa Fever. The development of a Flood Risk Model is in an advanced stage in collaboration with the International Business Machines Corporation (IBM) to ensure that it is offered as a world-class tool for building Member State resilience.

As the United Nations gears up for the September 23 Food Systems Summit – a crucial event that seeks to secure action to transform food production, packaging and distribution, as well as provide solutions to the climate, biodiversity and hunger crises, tackling the threat of drought will be a cornerstone of the discussions. 

In this regard, ARC is ahead of the curve. Using its cutting-edge tool, the Africa RiskView, the Group provides season monitoring, and early warning services to decision-makers on the likely impacts of natural hazards profiled for their countries. This software also estimates the impact of a disaster, estimating the number of people affected, and the associated response costs. It is, therefore, an important tool in enabling the ARC mandate of helping governments proactively manage disaster events and tackle food insecurity.

“The model ensures that governments, using data sets and information, are able to anticipate the probability of a drought or a tropical cyclone event, therefore enabling early-action to protect lives and livelihoods of communities at risk”, ARC Group Director-General and United Nations Assistant Secretary-General Ibrahima Cheikh Diong told IPS.

He also added that “we are also looking at extreme weather conditions and exploring the possibility of raising money from capital markets in order to avail additional financing for adaptation or mitigation as well”.

The ARC Group Director-General is scheduled to speak on food systems transformation during the United Nations General Assembly. He hopes to steer the discussion away from a singular focus on food reserves and urge the world to explore options to provide additional financial resources to African countries to help them directly address food security and sustainable livelihoods.

“If we look at African countries, many are heavily dependent on rain-fed agriculture – I’d say almost 80 percent. Some farmers tend to be quite exposed to the lack of rain, or too much rain in some cases, and this creates additional risk among smallholder farmers.”

“In addition to having some solid irrigation systems to ensure more controlled agriculture, it is equally important to consider parametric insurance, as an innovative risk transfer mechanism to help Africa to be more resilient.”

By participating in ARC risk pools, Member States have access to rapid liquidity in the immediate aftermath of a severe insured disaster. This is critical in not only enabling response but in complementing food reserves.

The ARC business model is multi-dimensional, providing technical assistance through early warning and contingency planning tools, as well as risk transfer services. Such an approach relies heavily on innovative science and research and development, enabling a tailored offering to meet the needs of member states and the climate realities of each.

“It’s not just about the product that we offer from a research and development perspective. It is also about making sure that once the offer is clearly defined, we are able to provide the necessary capacity building to our Member States, so they are empowered with the skills and knowledge required to deal with natural disasters,” Diong said.

“Given the fiscal constraints faced by many African governments, one of our key initiatives has been the mobilisation of resources to provide premium support to countries in need of financial assistance. Accessing this funding allows countries to increase their coverage and be able to reach more people in the event of a disaster.”

As the risk insurer prepares to launch its Outbreaks and Epidemics product to the market, it is excited to be able to provide African countries with disease outbreaks early warning systems and response. The continent continues to suffer from outbreaks such as the Ebola Virus, Meningitis and Malaria.

ARC is also supporting efforts towards the first COVID-19 vaccine manufactured in Africa.

“As an institution, we are not involved in the manufacturing of vaccines, but we are in advanced discussion with an institution in Senegal called the Institut Pasteur de Dakar, which is trying to manufacture vaccines, not only for Senegal but for Africa as a whole,” said Diong. “We are partnering with them by making sure that we can provide the necessary capacity building as they produce a vaccine which will go a long way in protecting the vulnerable communities in our Member States.”

Acutely aware that women are disproportionately impacted by climate change and disasters, Diong confirms that the Group’s activities are grounded on gender equality. As such, ARC has dedicated resources and training staff in gender mainstreaming and ensuring that the ARC programme always considers the gender perspective. Recently, the Group, together with the African Union, launched a Gender Disaster Risk Management platform that focuses on sustained advocacy and the importance of research & development, training, policy dialogue, resource mobilisation and knowledge management to advance gender in Disaster Risk Management in Africa.

Lastly, “I think the message I want to convey is that Africa is not lagging behind. Disasters do not discriminate. It is important to anticipate disasters as this allows each nation to come up with necessary measures and mechanisms to deal with disasters before they occur,” Diong told IPS. “As an organisation, together with partners, we are on a journey to ensure that we can make Africa more resilient, be able to adapt to the impacts of climate change and mitigate the damages caused.”

Scroll to Top

We are committed to Africa

Unlike many global publications, for nearly a decade we have been committed to showing a complete picture of Africa – not just a single story.  Offended by one-sided coverage of wars, disasters and disease, the founders of Africa.com created a website that provides a balanced view of Africa – current events, business, arts & culture, travel, fashion, sports, information, development, and more.

Will you support us?