African Development Bank first vice president and chief cooperating Officer Leautier Frannie says climate disaster has negatively impacted on a number of countries in eastern and southern Africa.
Ms Frannie said Zambia has not been spared from the natural re occurrences, stating that the Kariba dam which is the main source of hydro power for the national economies for Zambia and Zimbabwe has been severely impacted with obvious results in power disruptions.
She added that the drought significantly threatens gross domestic products (GDP) growth in sub-Sahara Africa, pointing out that in Malawi the drought could have an estimated adverse effect of four percent on annual GDP.
Ms Frannie was speaking during a high level panel meeting on climate and disaster risk financing at the on-going African Development Bank (AfDB) annual meeting in Lusaka.
Ms. Frannie said such decrease in productivity destructs economic growth adding that it also erodes development gains and breaks the resilience of the economies that have been managed in the last two decades.
“To deal with such risks it requires additional emergency aid from the international community” she said.
Ms. Frannie said the ARC protects micro economy disruptions that will be occasioned such as the one Zambia is facing due to inadequate rainfall.
She revealed that in 2014 ARC made pay outs to three African countries with Senegal getting 17 million dollars, Mauritania 6.3 million and Niger got 3.5 to finance the recovery programs.
Meanwhile Kenyan cabinet secretary for the national treasury Henry Rotich said risk management is key to African countries.
Mr. Rotich added that Kenya has to prepare for the ARC premiums in every financial year due to the country’s vulnerability to shocks such as drought.
“We decided to start buying the premiums because of the experience we had in the past with tackling risks that come about when we implement budget.” said Rotich.
Mr. Rotich said besides the ARC, the country has also passed a national drought management law which requires setting up funds for risk purposes.
And Ms Leautier Frannie, the first vice president said such risks cause major budgetary reallocation which disrupts development planning citing Namibia which reallocated about 60 million dollars for a multi prone drought relief program to assist over 600,000 people.
She said that AfDB recognises that Africa can no longer be content with emergency response as it disrupts reallocation of scarce development resources.
And Senegal minister of Economy and Finance Amadou Ba said Senegal was one of the first countries to subscribe for insurance policy from African Risk Capacity (ARC).
Mr. Ba said countries that are prone to natural occurrences such as drought should be encouraged to subscribe to ARC as it helps to deal with many shocks.
He said Senegal has bought two premiums from ARC and is scheduled to buy the third one despite failing to trigger pay-out from ARC the time it experienced a risk, adding that his country will continue to support pay-out premiums.
“Senegal joined ARC after experiencing the first drought in 2011 which negatively impacted on the economic growth of the country.
And African Risk Capacity insurance board Lars Thunell said countries must ensure that they subscribe to the ARC policy adding that the most expensive thing is to wait for an event to occur and repair the damages.
Mr Thunell said that insurance companies are interested in preventing potential beneficiaries from using issuance payments.
He said it is important to scale up the initiative and expand the ARC to East Africa..
Chair of African Risk Capacity Agency’s governing board Ngozi Lweala said her organisation represents how African states are finding African led solutions to extreme weather conditions.
Dr. Lweala said some African countries namely Niger , Senegal , Gambia, Mali, Mauritania and Kenya have purchased insurance from ARC ltd adding the company expects 30 countries to be insured by 2020.
“African Risk Capacity (ARC) is also launching a tropical cyclone insurance product this year and a flood insurance product in 2017 as part of its effort to increase insurance coverage across Africa” she said.
African risk capacity signed a letter of intent and memorandum of understanding with African Development Bank (AfDB) and conference inter-Africaine des Marches d Assurance (CIMA) respectively after the high level panel meeting at the on-going AfDB annual meetings.
The letter of intent between ARC and AfDB marked an announcement of intentions to collaborate in the areas of planning, preparation and response to extreme weather events.