Official Press Release
ARC makes a combined parametric insurance payout of $5.4 million to support Mozambique’s response to the 2024/25 drought and to Tropical Cyclone Chido
Maputo, Mozambique – 14 October 2025 – Today, the African Risk Capacity (ARC) Group presented an insurance payout of just over $5.4 million to the Government of the Republic of Mozambique and Replica partner, the World Food Programme (WFP) in response to recent climate disasters.
The Government of Mozambique received just over $1.8 million for drought response, while WFP, which took out 2 insurance policies for drought and tropical cyclone on behalf of the country through the Replica programme, received $400,000 for drought and $3.1 million to support response to Tropical Cyclone Chido.
These funds will enable critical life-saving interventions in the form of large-scale food distribution for affected communities. This disbursement underscores the role of parametric insurance in building resilience and facilitating swift, pre-planned action in the wake of increasing and intensifying climate-related shocks.
Due to its geographic location, Mozambique is highly prone to seasonal cyclone events which continue to a source of great devastation. It also grapples with cyclical drought events - a stark reminder of the growing climate crisis globally. These events compound food insecurity and destroy key infrastructure, displacing many.
Speaking at the event, Albertina Fruquia Fumane, Permanent Secretary in the Minister of Finance, expressed the Government’s appreciation to be receiving this payout, citing how much it will support recovery efforts. “The insurance is an important defence line to protect the lives of the most vulnerable by reducing fiscal and social vulnerability. The Government has been investing in strengthening its capacity to respond and building resilience, and in the development of guiding instruments,” she said.
This payout emphasises the critical importance of instruments like sovereign insurance. It is made by ARC Limited, the insurance affiliate of the ARC Group responsible for risk pooling and transfer, availing predictable finance to facilitate early response to these two disaster events. The funds will help the government and its partners to reach the most vulnerable populations, preventing them from resorting to negative coping mechanisms.
“This payout demonstrates the value of ARC’s parametric products, which deliver fast and predictable finance when needed most. As a Class A Member of ARC, Mozambique not only benefits from insurance that keeps coverage affordable but also has the assurance that an AU-mandated institution will continue to support it against climate shocks”, stated David Maslo, ARC Ltd Interim CEO. “This is what sets ARC apart: an African-led solution that works, combining innovation, solidarity, and resilience for our Member States”, he concluded.
Mozambique’s participation in ARC risk pools was made possible by an insurance premium paid in part by the government, with premium support contribution from the Africa Disaster Risk Financing Programme ADF Fund (ADRiFi-ADF). ADRiFi is a framework developed as a collaboration between the African Development Bank and the ARC Group.
In his opening speech, Andrew Mude, AfDB’s Lead SME Agribusiness Development, underscored the value of preparedness. “ADRiFi has proved that prearranged finance works. We’ve seen it strengthen national systems and transform our countries to prepare for shocks. With Mozambique’s leadership, and that of many others who are here today and have been pioneering in this space, we have come to see that when we finance in advance, we can reduce the impact of this crisis.”
Replica partner, World Food Programme (WFP) also took out two policies (for drought and tropical cyclones) on behalf of the country. The Replica programme is an initiative that allows humanitarian actors to purchase insurance on behalf of a country, thus increasing the reach and impact of the ARC programme.
Speaking on the value of payouts in times of disasters, WFP Country Director, Claire Conan acknowledged the value and commitment of all partners in building resilience across Africa, particularly Mozambique. “This partnership with ARC and ADRiFi partners has already yielded concrete results. Following Tropical Cyclone Chido, Mozambique's cyclone insurance policy was activated, releasing US$3.1 million for WFP to respond quickly in Nampula and Cabo Delgado. This payment enabled rapid support to affected communities, complementing government actions and reducing the need for emergency appeals.”
Representing the donor partners of the ADRiFi, Her Excellency, Elizabeth Ackerman, of Portugal, highlighted the value of this framework in supporting countries. “Mozambique unfortunately experiences disaster almost every year, however, ADRiFi shows smart financial instruments such as insurance can help strengthen disaster preparedness and response. Quick payouts help save lives, aid recovery, limit losses and support rebuilding,” she said.
The Arab bank for Economic Development (BADEA), also funded Mozambique’s capacity building programme which provides training in risk modelling, contingency planning and risk transfer, critical to understanding parametric insurance to technical experts. This laid the foundations for Mozambique’s participation in ARC risk pools, facilitating informed decision making on insurance uptake.
The ARC value proposition offers four critical elements of climate response: early warning, contingency planning, risk pooling and risk transfer. The facility has proven to be an effective tool to improve a government’s preparedness to manage disaster events.
“The impacts of persistent weather-induced disaster events on lives and livelihoods have been devastating on many levels. ARC stands with the Government of Mozambique during these difficult times”, said Jean Chrysostome Ngabitsinze, ARC Group Director General and Assistant Secretary General. “We are honoured to partner with the country as it continues to strengthen its preparedness to respond to such catastrophes’, he concluded.
In handing over the cheques, Dr Antony Maruping, Chairman of the ARC Group Board, “I take this moment to salute the Government of Mozambique and its Technical Working Group, our donor partners, and our technical partners. This effort aligns with Agenda 2063 and SDG’s in that as we build resilience, we are helping achieve the goals of these two important frameworks.”
As climate vulnerabilities deepen across Africa, ARC continues to work with Member States to develop innovative risk management solutions that promote resilience, save lives, and safeguard economic stability.
===ENDS===
Media Contacts
For African Risk Capacity Group: Michele Karambiri, Head of Communication, ARC Group, Email: michele.karambiri@arc.int
For more information, please visit: www.arc.int
Please follow us on social media:
Twitter: @ARCapacity
LinkedIn: https://www.linkedin.com/company/african-risk-capacity/