JOHANNESBURG, 11 AUG 2021 – It seems almost incongruous to talk about the opportunity that exists to ensure global food security by boosting Africa’s agricultural production when the very urgent and public crisis of climate change could be its downfall.
Particularly with the approach of COP26 and the “reality check” that accompanied the publication this week of the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), it is clear that the entire African continent is “highly exposed” to climatic extremes, at a “relatively high level of vulnerability”.
With more than two-thirds of Africans deriving their livelihoods from agriculture, climate change-related crises such as droughts, floods and cyclones continue to threaten the continent’s economic growth, jobs and food security. And yet ensuring Africa’s agricultural resilience would not only help Africa. This is essential to ensure global food security.
Additionally, these climate-induced natural disasters have the largest and most disproportionate impact on small and medium-sized farmers, accounting for up to 80% of Africa’s agricultural production, from maize and wheat to rice. , cassava and sorghum.
“The UN report confirmed that climate change is intensifying the water cycle and affecting rainfall patterns, resulting in more intense rainfall and associated flooding, as well as more intense drought in many regions,” said Malvern Chirume, Underwriting Director of African Risk Capacity Limited.
“These African farmers are at the heart of the continent’s agriculture and are at the mercy of climate change events totally out of their control,” adds Chirume.
Established in 2014, ARC Limited provides natural disaster insurance relief to African countries that have joined the sovereign risk pool.
Along with its partners, who provide premium support, the insurer has already paid more than US $ 65 million to seven African countries to provide drought relief and address economic issues facing the most vulnerable citizens of those countries. are faced.
Respond to the climate crisis
Traditionally, countries have responded to climate change-related disasters such as droughts or floods by raising funds for emergency relief. This approach is time consuming and inefficient.
“It is taking far too long for African countries to mobilize the immediate resources they need for relief efforts, to save lives and livelihoods. Our role at ARC Limited is to work with countries to prepare them for the risks they are exposed to and how to respond quickly to climate-related food security emergencies. This includes helping them establish a rainy day fund that pays off quickly, before the problem gets worse and additional funding is needed. ”
The ARC Limited model, built on parametric insurance (pre-defined payments based on a triggering event), has been very successful, says Chirume.
“To date, we have paid close to $ 65 million in claims. If you consider that every dollar of insurance reimbursement saves US $ 4, this makes the cumulative economic impact to be approximately US $ 240 million. With these funds, we have helped more than 5.9 million people whose livelihoods have been affected by the impacts of climate change, ”explains Chirume.
While parametric insurance against natural disasters has enormous potential for the agricultural sector, it has an additional economic impact. Because agriculture is such an important part of the continent’s economy, a downturn caused by a climate shock will spill over into the wider economy of any affected country.
This can lead to an economic slowdown, a lack of funding for key infrastructure and services at the government level, and loss of jobs as farmers struggle to recover. There is also evidence of migration out of drought-affected areas, which may have a long-term impact on the regional economy.
Organizations such as ARC Limited thus have a vital role to play in protecting agricultural value chains and economies and jobs in Africa. “Our role is to help mitigate and manage risk, building resilience and ensuring that the African country is able to bounce back sooner after a natural disaster,” said Chirume.
With the increasing negative impacts of climate change and their potential to devastate the agricultural and food security sectors of African countries, it has become more important than ever to place sustainability at the heart of interventions.
“Creating an environment that limits the impact of climate shocks on the agricultural sector goes beyond ensuring economic transformation. At the heart of this investment is the need to ensure basic food security for the continent and the world, ”said Chirume.
In its series on sustainable development, the World Bank says the African continent could play a leading role in ensuring food security for the planet’s roughly 9 billion people by 2050.
According to McKinsey, Africa’s full agricultural potential remains untapped. It determines that Africa could produce two to three times as many grains and grains, which would add 20% more grains and grains to the current global production of 2.6 billion tonnes.
Given Africa’s productive potential, the continent could be a key contributor to feeding the world in the future. But to fully realize this potential will require overcoming many hurdles, including how it deals with the impact of climate change on agriculture and food security.
“We need broader collaboration between the private and public sectors to address the climate change disaster response issue facing our continent. The problem is so big that we all have a role to play, ”says Lesley Ndlovu, CEO of ARC Limited.
With support from the UK and the German government, ARC Limited has been equipped to help African Union member states reduce the risk of loss and damage from extreme weather events affecting people in Africa.
“But there is still a lot of work to be done to reach as many people as possible to help build the resilience of local communities and ensure they have the means to bounce back whenever they are affected by a natural disaster.” , concludes Ndlovu.
For more information on ARC Limited, or to interview Lesley Ndlovu, contact Claire Lathe at [email protected] or +27 (0) 84 245 2189.
About ARC Limited
African Risk Capacity Limited (ARC Ltd) is a financial affiliate of African Risk Capacity (ARC), a specialized agency of the African Union (AU), an initiative designed to improve current responses to food security emergencies related to to the climate.
ARC Ltd is a mutual insurance company made up of its members, including Burkina Faso, Mali, Mauritania, Niger, Senegal, Gambia, Malawi and Kenya.
The members also include its contributors to the capital. KfW on its own behalf and on behalf of the Federal Republic of Germany acting through the Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (“BMZ”) and the United Kingdom (“DFID”) have provided the first installments of their 50 million euros respectively and 90 million pounds sterling in commitments.