African Risk Capacity (ARC) enables participating African governments to insure themselves against natural disasters and respond rapidly when their citizens experience harvest failure.
ARC uses satellite information to track rainfall during a country’s growing season, comparing this with the local crop’s water requirements. At the point of harvest, the model can predict whether the harvest is likely to have been successful, or failed, and the likely humanitarian response cost. When an insured event occurs, the insured government uses the ARC payout to launch early response activities as set out in their pre-agreed contingency plan. This should accelerate the receipt of aid by citizens by around 4 to 6 months.
Importantly, by pooling their risk – that is joining together to insure a group of drought risks from East and West Africa – participating African countries reduce the cost of insurance by about half as drought is very unlikely to affect the whole of Africa at any one time.