‘Use insurance to secure agric investments’
AFRICAN Risk Capacity Limited chief executive, Lesley Ndlovu, was in the country last week to make a presentation during the Financing Climate Change Adaptation Conference hosted by our sister publication Business Weekly in partnership with the Institute of Chartered Accountants Zimbabwe and Financial Markets Indaba in Harare. Founded in 2014, the African Risk Capacity Limited (ARC Ltd), is a hybrid mutual insurer and financial affiliate of the African Risk Capacity Group. The organisation provides parametric insurance services to African Union member states and farmer organisations, employing innovative financing mechanisms to pool disaster-related risk across Africa and transferring it to international risk markets. In so doing, it improves the continent’s response to climate-related disasters and contributes to resilience building and ultimately to food security. SUNDAY MAIL BUSINESS (SM) caught up with LESLEY NDLOVU (LN) after the summit and below are excerpts of the interview.
MK: Who is Lesley Ndlovu?
LN:
I am an international financial services executive with experience in corporate finance, investment management and insurance.
Over the course of my career, I have worked in Bermuda, Singapore, France, United Kingdom and South Africa. I was born in Zimbabwe, in Filabusi in Matabeleland South.
SM: Tell us about the African Risk Capacity.
LN:
ARC is the leading insurance and reinsurance company in Africa for weather related risks such as drought, tropical cyclones and floods. We are a mutual company that is owned and financed by African countries and development financial institutions, namely, KfW from Germany and FCDO from the United Kingdom. We have US$100 million to support our risk transfer.
We currently provide insurance in 14 countries in Africa, working with governments, humanitarian agencies such as the World Food Programme and Start Network and small-medium scale farmers in providing insurance solutions to farmers, we work with partners such as local insurance companies, farmers’ associations and aggregators.
SM: How is ARC relevant to Zimbabwe and tell us about your engagement with the country so far?
LN: Zimbabwe is mainly an agro-based economy, with agriculture contributing
significantly to the GDP and providing employment.
Zimbabwe is vulnerable to the impact of climate change as evidenced by the increasingly erratic rainfall patterns. ARC is currently providing drought insurance to the government of Zimbabwe, the World Food Programme and the Start Network. We are working with various partners, including local insurance companies to launch our insurance coverage for small-medium scale farmers.
SM: What facilities do you have in place at the moment that can be of benefit to Zimbabwe?
LN: At the COP26 in Glasgow, ARC mobilised close to US$100 million from KfW, FCDO, USAID and the Swiss Development Corporation. The funding will be used to provide subsidies for the payment of insurance premiums by African countries, including Zimbabwe.
Insurance is an important component of protecting communities from the impact of climate change that is causing extreme weather. ARC aims to increase the number of people in Africa that are covered by insurance and to strengthen the resilience of local communities.
SM: How can agriculture insurance be used to boost agriculture funding in Zimbabwe?
LN: Insurance is a de-risking mechanism for agriculture as the losses arising from extreme weather are paid for by insurance. Lowering the risk profile of the agriculture industry facilitates increased access to credit and finance.
Insurance provides security of agricultural sector investments. It is estimated that there will be over US$25 billion invested in agriculture over the next 5 years. Parametric insurance as provided by ARC, pays claims within 10 business days, which allows beneficiaries of the claims to quickly rebound after an extreme weather event.
SM: What are your future plans for Zimbabwe and Africa as a whole?
LN:
It is estimated that there are 700 million Africans whose economic activities are weather dependent. Currently, ARC provides insurance to about 20 to 30 million people per year.
Therefore, there is considerable room for ARC to grow its insurance coverage and close the protection gap. We will continue to introduce new products based on the needs and demands of our member states.