BrandArena: COP 28: AfDB Pledges $1 Billion Insurance Facility to Protect Millions of Farmers in Africa

Monday 4 December 2023

COP 28: AfDB Pledges $1 Billion Insurance Facility to Protect Millions of Farmers in Africa

The African Development Bank Group (AfDB) announced a $1 billion facility to insure more than 40 million farmers throughout the continent against the catastrophic effects of climate change.

During a side event during COP28 in Dubai, the World Food Programme (WFP), development agencies, insurance firms, and the private sector all lauded the facilities.

The Africa Climate Risk Insurance Facility for Adaptation (ACRIFA), according to Adesina, aims to mobilise $1 billion in concessionary finance, high-risk capital, and grants to boost the African insurance market.

The Facility is intended to protect farmers and countries from catastrophic weather catastrophes while also encouraging private sector investment in agriculture.

“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,” the Bank President said.

Adesina said 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. “The eyes of more than 40 million smallholder farmers in Africa are on us. Let us make ACRIFA the answer to their prayers,” the Bank President said.

Adesina said 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.” 

“The climate crisis is affecting agricultural communities across Africa. This programme will play an important role in protecting smallholder [farmers], pastoralists and small businesses from climate shocks,” said Cindy McCain, Executive Director of the World Food Programme. “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.

During the presentation, the United Nations Assistant Secretary General and Director General of the African Risk Capacity Group, Ibrahima Diong and Bogolo Kenewendo, the Special Advisor to the United Nations Climate Change High-Level Champion, said ACRIFA will boost investment and resilience in the continent’s agri-food systems.

The presentation was followed by a panel discussion on how large-scale deployment and use of quality, climate risk-related insurance solutions can boost Africa’s food security, and open business opportunities for the global insurance sector. It was moderated by Dr Victor Oladokun the Senior Communication and Stakeholder Engagement Advisor to the Bank President.

The Head of Government Relations at the One Acre Fund Michelle Kigari said, “Insurance is absolutely critical in building resilience, meaningful resilience, for Africa’s farmers,” and added, “Farmers are not able to bounce back from some shocks if they don’t have a safety net, and insurance helps build that safety net.”

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,” said Bashir.

“Once you have data, you have transparency, and transparency creates trust. If you can bring that transparency across the entire value chain, transparency, then you will be able to bring trust and better investors, better support for the farmers,” said Kate Kallot, CEO of Amini AI, an artificial intelligence startup focusing on Africa’s environmental data scarcity. 

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