Malawi Receives $11.2M Insurance Payout from African Risk Capacity and AfDB for Drought Recovery

The funds will be used to provide food assistance to approximately 235,000 households in Malawi’s Lower Shire and Southern regions and cash transfers to 118,000 households in the Central region.

Representatives from the African Risk Capacity (ARC) Group and the African Development Bank have presented a $11.2 million insurance payout to the government of Malawi, aimed at aiding the country's recovery from a severe drought caused by El Niño. The cheque was handed over during a ceremony presided over by President Dr. Lazarus McCarthy Chakwera in Lilongwe on August 2.

This insurance payment, part of Malawi’s drought insurance policy, was financed by the African Development Bank through its African Development Fund and the Africa Disaster Risk Financing (ADRiFi) Programme Multi-Donor Trust Fund. The ADRiFi Trust Fund is a joint effort between the Bank and the ARC Group, an agency of the African Union dedicated to enhancing African nations' ability to plan, prepare, and respond to extreme weather events and natural disasters.

The funds will be used to provide food assistance to approximately 235,000 households in Malawi’s Lower Shire and Southern regions and cash transfers to 118,000 households in the Central region.

President Chakwera expressed the importance of the payout, describing it as "a lifeline for our vulnerable populations" and highlighting its role in enabling swift and effective responses to the nation’s drought-affected communities.

The 2024 El Niño, one of the strongest on record according to the World Meteorological Organization, has caused severe drought conditions in Southern Africa, including Malawi, leading to widespread food shortages. In response, Malawi declared a state of disaster in March and launched a National El Niño Response Appeal in April to mobilize resources for humanitarian aid and boost food production.

Ibrahima Cheikh Diong, UN Assistant Secretary-General and ARC Group Director General, emphasized the importance of preparedness in the face of escalating weather-related disasters and praised the support from the African Development Bank in facilitating timely interventions.

The African Development Bank's Transition Support Facility (TSF) will continue to support Malawi in strengthening its resilience against climatic shocks. The Bank has also contributed to drought insurance payments for other Southern African countries impacted by El Niño, including Madagascar, Mozambique, Zambia, and Zimbabwe.

By September 2024, the ARC Group is expected to have disbursed a total of $62 million in disaster risk insurance payouts to El Niño-affected countries in Southern Africa.