Together We Stand

[ 141 ] Image: WFP/Victoria Cavanagh Irrigation systems help improve agriculture and protect against drought coverage of nearly US$130 million, marking the launch of the inaugural ARC pool. This was facilitated by an initial US$95 million of a US$225 million commitment of returnable capital provided by the governments of Germany (through the Federal Ministry for Economic Cooperation and Development (BMZ) and KfWDevelopment Bank) and the United Kingdom (through the Department for International Development) to ARC Ltd. In January 2015, ARC Ltd made its first insurance payouts of just over US$26 million to Mauritania, Niger and Senegal as a result of drought conditions in these countries in 2014. The timely funds provided to these member states enabled them to implement an early response programme to their affected communities ahead of any humanitarian aid, spearheading efforts to help countries move from managing crises to managing risks in a timely manner. Three additional countries joined the pool in May 2015, increasing the drought coverage to almost US$180 million for the 2015/16 rainfall seasons for a total premium of US$26 million. To date almost all of these premiums have been paid by the participating governments themselves. In support of the G7 leaders’ pledge in June 2015 to provide climate risk insurance to an additional 400 million poor people globally by 2020, ARC aims to reach as many as 30 countries with US$1.5 billion of coverage against drought, flood and cyclones, indirectly insuring around 150 million Africans by 2020 and radically transforming the way weather risks are managed across the continent by embedding disaster prepar- edness and financing in sovereign risk management systems. Moreover, ARC is providing the infrastructure to ensure that these risk management investments, and ARC’s value to its members, is sustainable and resilient to future climate shifts through the creation of a climate adaptation financing facility. The Extreme Climate Facility (XCF) aims to provide an additional US$500 million in climate adaptation financing capacity by 2017. In response to member state demand in the aftermath of the Ebola epidemic, ARC has committed also to developing an outbreak and epidemic insurance product to support immedi- ate country-led action to manage infectious disease outbreaks before they become global threats. The two ARC entities form an innovative structure under international law: an international organization providing governmental services, and a nationally-regulated company conducting financial operations. This unique design facilitates intergovernmental capacity-building and peer review through the agency by setting and enforcing standards for early inter- vention, while allowing complex financial operations to be conducted by the company under an established and robust regulatory framework. However, while African states evidently are willing to allo- cate more domestic financial resources to disaster response — with ARC’s mutual nature and comprehensive approach providing an attractive value proposition — ARC member states will continue to need international support until they can fully manage their own risk. To date, the share of ARC coverage against total disaster funding requirements for T ogether W e S tand