AfDB Launches $1 Billion Climate Insurance Facility to Aid African Farmers

AfDB Launches $1 Billion Climate Insurance Facility to Aid African Farmers
AfDB Launches $1 Billion Climate Insurance Facility to Aid African Farmers
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The African Development Bank (AfDB) has introduced a new initiative known as the Africa Climate Risk Insurance Facility for Adaptation (Acrifa). This initiative’s primary goal is to raise an initial sum of $1 billion in funds to assist countries in Africa that are most vulnerable to the impacts of climate change.

The Acrifa program is designed to enhance the resilience of the agriculture sector in the face of challenges such as flooding and drought. It builds upon the AfDB’s existing disaster risk insurance program. The President of the AfDB group, Akinwumi Adesina, emphasized the importance of ensuring that farmers, especially women, have access to crop and livestock insurance, as extreme weather patterns negatively affect their livelihoods.

In addition to seeking $1 billion in concessionary high-risk capital and grants, Acrifa will offer credit insurance for investment portfolios related to climate and agri-food systems. The program also aims to involve primary insurers in Africa to facilitate business opportunities with continental and international reinsurers, while assisting national governments in more effectively managing climate-related disasters.

Azali Assoumani, Chair of the African Union and President of Comoros, noted the significance of Acrifa in strengthening adaptation and resilience capacities in African countries facing challenges like floods and droughts. Ibrahima Diong, Director-General of the African Risk Capacity Group and United Nations Assistant Secretary-General, highlighted how the initiative would contribute to building data for early warning systems in Africa.

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Beth Dunford, AfDB Vice-President for Agriculture, Human, and Social Development, emphasized the potential life-saving impact of a thriving climate insurance industry in Africa.

Despite contributing less than 3% of the world’s energy-related carbon dioxide emissions, Africa is projected to suffer disproportionately from climate change, as reported by the International Energy Agency in 2022. Agricultural insurance has been a long-standing issue across the continent, with low adoption rates and increasing risks of livestock mortality and crop damage due to the advancing climate crisis.

The Africa Climate Summit witnessed various announcements, with the Nairobi Declaration for Climate Change being a prominent one. This declaration calls for a global tax regime to finance climate action on a large scale by attracting and reducing risks for private capital, including the implementation of a financial transactions tax.

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