The African Development Bank Group has unveiled its proposed $1 billion initiative aimed at offering insurance coverage to over 40 million farmers across Africa, protecting them from the severe impacts of climate change.
According to an AfDB statement, the facility received extensive acclaim from the World Food Programme (WFP), development agencies, insurance companies, and the private sector at a side event held during COP28 in Dubai. Akinwumi Adesina, President of the African Development Bank, announced that the Africa Climate Risk Insurance Facility for Adaptation (ACRIFA) is designed to mobilize $1 billion in concessional financing, high-risk capital, and grants to bolster the African insurance industry in addressing climate-related risks and adaptation efforts.
This aligns with AfDB’s $25 billion food security goal of achieving a $25 billion food security target, having already produced $12 billion worth of food. AfDB aims to eliminate food insecurity in Africa within five years. What the AfDB president said: “We have to support farmers, not abandon them, in the face of rising frequency and intensity of extreme weather events like drought, floods and pest infestation…
We need to ensure that farmers and actors along the agricultural value chain are covered by insurance at scale,” Adeshina noted that over 97% of farmers in Africa do not have agricultural insurance. “Their only insurance is to pray… when they plant that it will rain. Pray when they harvest that there will not be rains or pest devastation and pray when they market their crops that prices will not collapse,” he said. “The eyes of more than 40 million smallholder farmers in Africa are on us. Let us make ACRIFA the answer to their prayer. ACRIFA will systematically support the African insurance industry to unlock financing for investments in climate-smart and green technologies. It will strengthen local insurers and foster integration with national and international reinsurers,” he stated. Introduced at the Africa Climate Summit in Nairobi in September, ACRIFA is a collaborative effort involving governments, development agencies, the insurance sector, and the private sector.
The implementation of the facility hinges significantly on partnerships, such as with the World Food Programme, to ensure the delivery of services to clients. According to Cindy McCain, Executive Director of the World Food Programme, the climate crisis is affecting agricultural communities across Africa, and will play an important role in protecting smallholder [farmers], pastoralists and small businesses from climate shocks. “We are excited about our growing partnership with the African Development Bank, which is allowing us to offer more support to governments, as they respond to the climate crisis,” she added.
The Founder of Takaful Insurance Group of Africa and ACRIFA Senior Advisor Hassan Bashir urged insurance companies to consider taking on large-scale group clusters of farmers for insurance cover. “Africa is fed and employed by the agriculture sector, yet we define it as a risky business. Agriculture is not risky—life depends on it,” Bashir said.