Learning from ARC Replica in Senegal

African Risk Capacity (ARC) is a pioneering initiative designed to transform climate risk management across sub-Saharan Africa, transferring risk away from communities and governments through insurance. As a specialised agency of the African Union, ARC sets standards for disaster risk management by providing early warning systems, contingency planning and climate finance across the continent. It brings together components of quantifying drought risk, contingency planning and pre-agreed finance, to provide funding to African governments (who have bought policies) for timely interventions for drought. So far it has disbursed over $61m in payouts for early responses to over 2.1m community members facing severe drought.1

In 2017, the Start Network and World Food Programme sought to expand this approach through the ARC Replica programme, using the same Africa Risk View model and response thresholds selected by the governments they were partnered with. The goals were to further expand the coverage of ARC, test the new financing tools for civil society (especially insurance), and ultimately to increase the uptake of ARC across the continent. This points to the beginning of a significant shift in disaster risk management. It is the first example of parametric insurance to be used by NGOs, where pay-outs are made using pre-defined thresholds rather than reimbursing for losses. This opens the door to communities receiving rapid support when drought impacts look likely, to enable them to take measures to protect their families and assets. For example, an early cash payment can help pastoralists to transport their animals to market before their condition deteriorates too far, or limit extreme coping measures such as skipping meals. The ARC Replica model is also an early example of ‘risk layering’ where large scale, model based financial instruments are implemented alongside smaller, more flexible finance options, in this case a flexible contingency fund. This provides options to fund disaster impacts which are tailored to the scale and predictability of the situation.

This initiative has been supported by the German Development Bank (KFW) on behalf of the German Federal Ministry of Economic Cooperation and Development. They have supported the Start Network to develop our approach and buy the ARC Replica policy.

“ARC Replica is a ground-breaking initiative which we as KfW are happy to support on behalf of the German government (BMZ). Since 2018 the Start Network have worked alongside the Senegalese government to customize the insurance product, grow in-country technical knowledge and capacity, and agree contingency plans in advance of a payout. This strong partnership has been a success, the fruits of which are evident in the 2020 implementation phase, and we hope this collaborative approach will be sustained in years to come.” -Veronika Bertram, KFW

Through ARC Replica, Start Network has sought to introduce this new financing approach to the NGO community, while protecting communities at risk of drought in Senegal. In November, a drought was detected through the ARV model, triggering the largest ever early action pay-out to civil society. The Start Network received $10m, replicating the $10m received by the Government of Senegal. This was a watershed moment for civil society in Senegal, while providing a critical learning opportunity to better understand how theories and concepts around this new initiative play out in practice. Seven months after the pay-out was announced, the Start Network is now reaching communities across Senegal. We already have a wide variety of data and learning, which we will be sharing in July 2020.

We will be sharing data from across the participant communities in Senegal, visualising who we’re working with and who we have reached. We will be sharing insights from communities on the impact of drought conditions and the approaches they are taking to manage this disaster. We will also be sharing ‘behind the scenes’ analysis. This will look at whether ARC Replica has enabled Start Network members to coordinate better, how useful the contingency plans were in practice and the importance of maintaining curiosity about how all this impacts disaster resilience at the community level. We hope this shared critical reflection will contribute to an ongoing conversation about how to most effectively manage climate risk, with communities who are most exposed to the negative impacts of climate change.