Towards a new model for natural disaster response
The world is at a critical juncture.
We are experiencing the highest level of humanitarian need since the Second World War brought on by conflict, climate change, rapid urbanisation and, in part, the legacy of a rigid development model.
In this interconnected world, our problems are shared and so must our solutions be. In that spirit Ban Ki-moon, the United Nations secretary-general, is convening the first World Humanitarian Summit on 23 and 24 May in Istanbul.
During this seminal meeting, 5000 leaders from government, business and humanitarian organisations will gather to map a way forward.
In our respective roles at the African Risk Capacity (ARC) and the World Food Programme (WFP), the Secretary General’s main call to action – to work differently towards ending need – is at the heart of what we do.
We are working to support the African continent as the region finds ways to manage the effects of extreme climate events and competing demands for limited humanitarian dollars.
ARC was established as a specialised agency of the African Union (AU) to help African states develop risk management systems to cope better with natural disasters including drought, floods and tropical cyclones. The concept was to establish the first sovereign insurance pool on the continent.
This new approach has challenged the status quo of how natural disaster response should be managed.
Countries that previously had been forced to seek outside help in the face of a disaster now receive dedicated resources in the event of a payout. They put the funds into action through pre-certified plans.
There are many advantages. Assistance can be delivered more quickly through ARC than waiting for the international donor system to react. At the same time, the reliance of African governments’ on external emergency aid is reduced, and their self-sufficiency increased.
ARC is a prime example of how donors, African governments, humanitarian organisations and the private sector can cooperate to move the continent away from the traditional system of handouts.
First envisaged and then nurtured by the World Food Programme, the ARC was quickly embraced by the AU, which saw a chance for the continent to help itself manage climate risk in a cost effective manner.
The Rockefeller Foundation provided initial funding to research and assess the concept, before other donors, including Sweden, Switzerland, the US, Saudi Arabia, IFAD and Rockefeller provided ongoing financial support for ARC's operations. The United Kingdom and Germany have committed more than $200m in returnable risk capital to ARC Ltd – the scheme’s mutual insurance company – to ensure its commercial viability.
The first couple of years have been very encouraging.
To date, 32 African countries have become members of ARC, and seven have joined the insurance pool. Those seven have paid premiums of $42m, demonstrating the commitment by sovereign treasuries towards managing their climate risk.
ARC is demonstrating that reacting rapidly to extreme weather situations saves lives and protects livelihoods.
In 2014, payouts totaling $26.3m were made within weeks to Mauritania, Niger and Senegal following poor rainfall in the Sahel. Those funds were used to support the livelihoods of more than 1.3 million people through delivery of livestock fodder, food and cash to affected populations based on pre-approved contingency plans.
But the coverage supplied by ARC has so far only provided 10 percent to 30 percent of total disaster funding requirements. Now, ARC is working with humanitarian partners to launch Replica Coverage.
This will see international organisations and NGOs replicate ARC member states’ insurance policies, thereby effectively doubling coverage available for vulnerable populations.
WFP and the Start Network – a global coalition of NGOs – have agreed to act as replica partners for ARC members. At a stroke this could double the $180m of drought coverage that countries were able to purchase last year on their own.
Replica partners will receive matching payouts when the policy triggers. This is a win-win. In time the fund is intended to become self-sustaining.
We are bringing the Replica programme to the world’s attention in Istanbul, though we anticipate that full replication of ARC’s growing portfolio will take several years.
Transforming how aid is delivered will not happen overnight, but we must not shy away from taking bold steps. At the same time we can increase the power of humanitarian dollars allocated for natural disasters in Africa.
By 2020, ARC aims to reach 30 countries with $1.5bn in coverage. Including the Replica scheme, ARC will indirectly insure more than 150 million Africans. This represents half the G7’s global target under the InsuResilience initiative, which aims to generate coverage for 400 million vulnerable people.
ARC and the Replica initiative reflect the vision of the World Humanitarian Summit that the world needs to be bettered prepared for natural disaster and more resilient to climate shocks that impoverish vulnerable populations and distress their nations’ economies.
It is a model whose time has come. Through the ARC, African governments have chosen to help themselves. Through Replica, donors and humanitarian organisations can join these nations to see what a collaborative, innovative approach to humanitarian financing could mean for the world’s most vulnerable.
Ngozi Okonjo-Iweala is chair of the ARC Agency Governing Board
Ertharin Cousin is executive director of the World Food Programme
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