ARC payout helps Madagascar with post-cyclone Batsirai reconstruction

The African Risk Capacity (ARC) has now presented the Government of Madagascar with a “symbolic” $10.7 million cheque after the impacts of tropical cyclone Batsirai triggered the country’s parametric tropical cyclone insurance coverage.

As we wrote previously, Madagascar was the first African nation to take up the sovereign parametric cyclone insurance protection in 2020.

The decision to take out parametric cyclone cover has proved a wise one as tropical cyclone Batsirai, which made landfall as a Category 3 storm on February 5th, 2022, caused significant impacts to Madagascar.

The storm packed sustained winds of 165 kilometers (105 miles) per hour and gusts up to 230 kilometers (145 miles) per hour, and battered the country soon after cyclone Ana brought deadly flooding to the country.

According to ARC, cyclone Batsirai brought damaging winds and rains which impacted homes, schools, health centres, and transport infrastructure, with some of the most hit areas inaccessible by road. ARC determined that the Mananjary, Nosy Varika, and Manakara districts were the most affected.

At the same time, the Malagasy National Disaster Management Agency reported over 124,000 people were affected by the cyclone, with at least 29,000 displaced, and at least 121 deaths.

ARC’s subsequent assessment of Batsirai shows that roughly six million people were exposed to the event.

The $10.7 million payout, first announced back in February, is a result of the insurance coverage taken out by Madagascar under the Africa Disaster Risk Financing Programme (ADRiFi), a partnership between the African Development Bank and ARC that strengthens the country’s resilience by supporting its involvement in the sovereign risk transfer mechanism.

ARC explains that the financing of the insurance premium was made possible by the contribution of the Governments of the UK and Switzerland via the ADRiFi Multi-Donor Trust Fund managed by AfDB, alongside the Government of Germany through ARC’s Premium Support Facility.

The Government of Madagascar has said that it will use the funds for recovery efforts, which includes things like building temporary shelters, rebuilding homes, as well as providing seed and fertiliser to flood-hit farmers and rural communities.

Additionally, the payout will help efforts to bolster food security by providing rations and supplements, with a focus on children, pregnant or breastfeeding women in vulnerable parts of the region.

Christian Ntsay, Madagascar’s Prime Minister and Head of Government, commented: “These funds will help the country, to a large extent, with post-cyclone reconstruction through activities considered to be priorities – particularly in the agricultural sector. Because of the floods, agriculture suffered a lot of damage, leading to the destruction of the means livelihood of smallholder farmers and rural communities.”

AfDB Vice President for Agriculture, Human and Social Development, Dr. Beth Dunford, added: “Africa is the most vulnerable continent to climate change, prone to natural disasters including drought, floods and tropical cyclones.

“Risk pools such as the African Risk Capacity are cost-effective vehicles to help countries like Madagascar access rapid financing for disaster response – especially through insurance. The ARC- ADRiFi partnership will enable Madagascar to implement programmes to assist the people impacted by cyclone BATSIRAI.”

“Our support goes to the Government of Madagascar and our hearts to the people of Madagascar who have experienced devastation and destruction caused by tropical cyclone BATSIRAI. Madagascar has been one of ARC’s most active and leading Member States, and the first country to subscribe to ARC’s offered insurance policy against tropical cyclones,” said Ibrahima Cheikh Diong, United Nations Assistant Secretary-General and ARC Group Director General.

This payout to Madagascar shows how ARC’s parametric triggers enable rapid assessment and payout once a catastrophe event takes place, something which is vital to the world’s most vulnerable as they look to rebuild their lives and livelihoods post-event.