FINANCE minister Mthuli Ncube says Zimbabwe has been buying more sovereign insurance policies against natural disasters with the African Risk Capacity (ARC) Group since it took out a total payment of US$1,4 million against the 2019/20 drought.
ARC is a specialised agency of the African Union that was established to help governments on the continent to improve their capacities to better plan, prepare, and respond to extreme weather events and natural disasters.
Through collaboration and innovative financing, the ARC group 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.
Zimbabwe has lately seen an increase in the occurrence of extreme weather phenomena such as droughts and cyclones, which have resulted in huge financial losses.
IPEC commissioner, Gace Muradzikwa
“We see… a shift from a reactive disaster risk management response to a proactive approach as part of adoption (to climate change) and building of resilience. This is where our involvement as an ARC member state emerges as a key piece,” Ncube told a ARC members’ retreat in Victoria Falls this week.
“I must say it has indeed been gratifying for us to have participated in and benefited from ARC’s limited pool during the 2019/2020 agricultural season, which resulted in a US$1,4 million pay-out, complemented by US$290 000, which was extended to the WFP (World Food Programme) and supported over 180 000 households in the highly-vulnerable districts.
“Since then, we have not looked back. We have, in collaboration with partners including (German international development bank) KFW and DFID (British Department for International Development), been purchasing sovereign policies, complemented by replica policies (from WFP and Start Network along with their members) in Pools VI, VII and VIII,” he said.
Start Network is made up of more than 50 humanitarian agencies across five continents, ranging from large international organisations to national NGOs.
Ncube urged other African member states to participate in these policies.
“… this enhances resilience and response to climate shocks. Parametric insurance will deliver swift financial relief when natural disasters strike,” Ncube said.
Zimbabwe is also the first nation to have two replica partners who take out insurance cover with ARC for the country in tandem with the government.
“I am also pleased to advise that Zimbabwe will be the first ARC member country to have two replica partners for the next Pool VIII, thanks to the Start Network and WFP, who demonstrated the trust they have in Zimbabwe’s disaster risk management approach with the ARC Group,” Ncube added.
Insurance and Pensions Commission commissioner Grace Muradzikwa said participating in ARC products had enhanced Zimbabwe’s resilience and response to climate shocks.
“We have experienced first-hand the value of having parametric insurance in place to deliver swift financial relief when natural disasters strike, as we have experienced in Zimbabwe with the drought disaster over the past few years,” Muradzikwa said.
“While we recognise the importance of the ARC programme and are committed to embedding the practice of budgeting for parametric insurance in the future, Zimbabwe is cognisant of the fiscal challenges that still limit the insurance coverage levels we need to protect more people”. ARC has also invited the Zimbabwean insurance industry to partner in developing climate and weather-related risk insurance products.
“As the insurance sector regulator in Zimbabwe, we are grateful to the ARC for extending an invitation to the local insurance industry to partner the ARC in the development of drought risk insurance products.
“We also welcome the development of flood risk insurance and epidemics insurance cover by the ARC, and are looking forward to more initiatives that support our vulnerable population and important sectors such as agriculture,” Muradzikwa said.
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