The African Development Bank has approved US$34.8 million, (US$34,796,402.40) in grants to enhance resilience and adaptation to climate disaster risks for vulnerable communities in Malawi and Zimbabwe.
Under the bank group’s Africa Disaster Risk Financing (ADRiFi) initiative, the Mitigating Fragility through the Africa Disaster Risk Financing Programme in Southern Africa Project will bolster institutional capacity for climate risk preparedness and management.
The initiative also aims to increase financial protection against climate disaster risks through sovereign climate disaster risk transfer, and promote the adoption of index-based crop insurance to mitigate against drought and other production risks at the micro-level.
Malawi and Zimbabwe lack adequate mechanisms for climate risk management and adaptation against significant climate hazards, such as droughts, tropical cyclones, and flooding.
Strengthening disaster risk management, improving early warning systems, and enhancing institutional arrangements are crucial for effective preparedness and resilience in these countries, the Bank highlights.
Under the project, insurance payouts will provide timely and adequate financial protection to mitigate losses incurred from climate-related disasters, safeguarding households, and businesses from falling into poverty or bankruptcy.
The project hopes that climate risk insurance will lead to behavioural changes among beneficiaries, such as increased investment in climate-resilient livelihoods or savings for future insurance premiums.
Moreover, it will build on the successes of the ADRiFi program and contributions from the firm’s partners, which have significantly enhanced the financial resilience of both Malawi and Zimbabwe.
Notably, during the El Niño-induced drought season of 2024-25, African Risk Capacity, the Bank’s partner on ADRiFi, disbursed over $45 million to support farmers affected by the drought, which provided crucial food assistance and recovery interventions, helping communities facing adversity to rebuild and thrive.
The project is aligned with the Bank’s “High 5 Priorities”, especially Feed Africa and Improve the Quality of Life of Africans.
It also aligns with the Bank’s ten-year strategy (2024-2033) and will contribute to the Bank’s strategy for Malawi which focuses on supporting economic diversification through investments in agriculture infrastructure and value chains. – FinX
