The Board of Directors of the African Development Bank has approved two grants of $9.25 million to implement the Africa Disaster Risk Financing Programme (ADRiFi) in Malawi. The action will increase the country’s resilience against climate-related shocks and food shortages.
Under the Africa Disaster Risk Financing Program, the money will help Malawi’s government create climate risk management solutions and pay its sovereign risk premium for the transfer of drought risks.
By supporting countries’ participation in ARC’s sovereign risk pool, the program, which is a collaboration between the African Development Bank and the African Risk Capacity Group (ARC), improves preparedness and develops financial resilience against climate threats. The presence of ADRiFi in Malawi will aid in the protection of Malawi’s smallholder farming communities, notably women and children, from the harshest effects of drought.
The African Development Fund will provide the first grant, totaling $4.9 million. The second grant, worth $4.35 million, will be funded by the ADRiFi Multi-Donor Trust Fund. The grants will fund the first of two phases of the initiative, which will run from 2022 to 2023. Malawi’s government and ARC will each contribute $10.13 million toward Phase 1’s total costs of $10.13 million.
Dr. Beth Dunford, the Bank’s Vice President for Agriculture, Human and Social Development, said, “Africa is the world’s region most exposed to climate change-related weather extremes like flooding, droughts, and tropical cyclones.” “We are pleased to welcome Malawi to the Africa Disaster Risk Financing Program, which strengthens participating countries’ ability to respond quickly in the aftermath of climate-related disasters, plan for financing ahead of time, and better serve their most vulnerable populations affected by climate shocks.”
Agriculture accounts for over 30% of Malawi’s GDP and employs roughly 64% of the country’s workers. The agriculture sector of the country is heavily reliant on rainfall. Climate variability has made rainfall patterns more irregular and difficult to anticipate, and climate-induced shocks are expected to become more frequent and severe, especially in southern Africa. This has made rural residents, notably farmers, and the overall economy more vulnerable to weather-related shocks.
ADRiFi will protect investments and development gains in Malawi tied to five Bank agricultural projects, including infrastructure reconstruction in the event of a disaster. Grant funding will also be used to improve the capability of national disaster risk management agencies.
The disaster risk initiative is being launched in line with the country’s Disaster Risk Financing Strategy for 2019-2024, which recognizes insurance as a tool for addressing the risks of climate disasters. Malawi’s Vision 2063, which aspires to create a transformative agriculture sector that is smart and climate resilient, is also advanced.
Malawi has become the ninth country to sign up for the ADRiFi initiative. Gambia, Mauritania, Niger, Sudan, Madagascar, Mozambique, Zambia, and Zimbabwe are the other participants. Madagascar, Mauritania, and Niger have already received insurance reimbursements totaling $17 million as part of the plan. The monies were utilized to help people recover from drought and tropical cyclones.
The Africa Disaster Risk Financing Program improves African countries’ abilities to assess climate-related risks and costs, respond to disasters caused by climate change, and evaluate adaptation solutions. In addition, the effort provides initial funding to countries in need of assistance.
The African Union’s ARC is a specialized institution that assists African nations in better planning, preparing for, and responding to extreme weather events and natural disasters.
The ADRiFi Multi-Donor Trust Fund is managed by the Bank, with donations from the United Kingdom and Switzerland. Together with the African Development Fund, the fund makes resources available to support the payment of premiums by African countries to protect their vulnerable populations, grow the number of risk pool participants, and make the African Risk Capacity an effective pan-African program.
APO Group distributes on behalf of the African Development Bank Group (AfDB).
Contact: Olufemi Terry, African Development Bank’s Communication and External Relations Department
E-mail: media@afdb.org
The African Development Bank Group is comprised of the following institutions:
Africa’s premier development finance organization is the African Development Bank Group (AfDB). The African Development Bank (AfDB), the African Development Fund (ADF), and the Nigeria Trust Fund are its three independent institutions (NTF).
The AfDB helps to the economic development and social progress of its 54 regional member nations by operating in 44 African countries and having an external office in Japan. www.AfDB.org for further details.