By CIJM
The Government of Malawi has received a K6 billion (approximately USD $3.38 million) drought insurance payout from the African Risk Capacity (ARC), following dry conditions during the 2024/2025 agricultural season.
This payout includes K5.27 billion from Malawi’s traditional sovereign drought policy and K535 million from an anticipatory insurance policy.
Both policies are underwritten by ARC Ltd., the insurance branch of the ARC Group. They aim to strengthen Malawi’s disaster preparedness in response to growing climate threats.
According to ARC’s contingency planning framework, the traditional payout will support expanded social programs—such as food distribution and cash transfers—reaching over 311,000 people across 69,179 households.
The anticipatory payout will fund early recovery efforts by providing drought-tolerant seeds and other farming inputs for winter cropping. This support will benefit around 3,255 households. The early intervention helped reduce the drought’s effects before they worsened.
Malawi’s participation in ARC’s insurance program is supported by international partners.
The African Development Bank (AfDB) paid the premium for the traditional policy through the Africa Disaster Risk Financing Programme (ADRiFi), while Germany’s KfW financed the anticipatory coverage on behalf of the German government.
Simplex Chityola Banda, Malawi’s Minister of Finance and Economic Affairs, expressed gratitude: “ARC’s support arrives when we need it most. The Government of Malawi remains committed to increasing our premium contributions and deepening this partnership to ensure long-term resilience.”
On November 15, 2024, Malawi officially ratified the ARC Establishment Agreement, marking an important step in its climate resilience efforts. This agreement confirms Malawi’s membership in ARC and its commitment to proactive disaster management.
ARC, a specialised agency of the African Union, helps African countries prepare for and respond to climate-related shocks through innovative insurance solutions.
“ARC’s drought insurance model complements our government’s strategy to fight hunger and improve food security,” said Ambassador Kester Kaphaizi, Malawi’s Permanent Representative to the African Union, during the ratification ceremony in Addis Ababa.
David Maslo, CEO of ARC Ltd., praised Malawi’s proactive approach: “We commend Malawi for its foresight in embracing climate risk insurance. This payout reflects our commitment to stand with communities suffering from the drought.”
This latest dry spell follows an El Niño-induced drought in the previous season, further impacting Malawi’s smallholder farmers. With a farming-based economy, the country remains highly vulnerable to extreme weather events, as climate change continues to threaten food systems and livelihoods.
Albert Mafusire, AfDB’s Principal Country Economist, emphasised the importance of timely support: “Rapid and predictable funding is vital for protecting vulnerable populations and sustaining economic growth.”
While Malawi has shown strong leadership in disaster readiness, challenges remain. Ensuring sustainable premium financing and improving coordination between national institutions and ARC will be key to expanding the reach and impact of these insurance programs.
Collins Mtika produced this story for the Centre for Investigative Journalism Malawi (CIJM), as part of the Centre’s aim to expose corruption, hold power accountable, and amplify marginalised voices. CIJM: ‘Uncovering the Truth. Empowering change’.
