Johannesburg, South Africa – February 27, 2025

The International Finance Corporation (IFC) and African Risk Capacity Limited (ARC Ltd.) have signed a landmark agreement to enhance climate risk insurance solutions for smallholder farmers and agricultural value chains across Africa. This partnership aims to scale up agricultural insurance as a critical tool for de-risking investments and increasing resilience to climate change impacts.

The signing ceremony took place in Johannesburg, South Africa, and was formalized by Sergio Pimenta, Regional Vice President for Africa at IFC, and Lesley Ndlovu, CEO of ARC Ltd.

A Collaborative Approach to Agricultural Resilience

This partnership leverages IFC’s Upstream and Advisory Services to integrate agricultural insurance and reinsurance into the Africa Agriculture Accelerator Program (AAAP). The initiative focuses on identifying gaps, scaling climate risk insurance, and improving food security across the continent.

Key Areas of Collaboration:

• Strategic Alignment: Define shared objectives, prioritize countries, and target agricultural value chains for the pilot program.
• Needs Assessment & Stakeholder Mapping: Conduct risk assessments for smallholder farmers, AgTech startups, and financial institutions.
• Program Development: Create a framework that integrates insurance with financial solutions and capacity-building efforts.
• Donor & Partner Engagement: Mobilize funding and technical support from donors and private-sector partners.
• Tailored Insurance Solutions: Develop customized insurance offerings for farmers, agribusinesses, and financial institutions.
• Support for IFC’s Africa Inclusive Insurance Program (AIIP): Integrate climate risk insurance into financing mechanisms to enhance financial resilience.
• Stakeholder Collaboration: Work with governments, financial institutions, and AgTech providers to scale risk protection.

Advancing the Africa Inclusive Climate Risk Insurance Program (AIIP)

Launched in 2022, the Africa Inclusive Climate Risk Insurance Program (AIIP) aims to expand climate insurance solutions across 15 African countries, including Nigeria, Madagascar, Senegal, and Zambia. By the end of 2025, AIIP seeks to reach at least 5 million smallholder farmers and agri-MSMEs, promoting gender-sensitive insurance products and fostering financial partnerships.

Building on the successes of the WBG’s Global Index Insurance Facility (GIIF), IFC, in collaboration with insurance providers and regulators, will enhance technical capacity and support the design and commercialization of inclusive climate risk insurance products across the continent. Both AIIP and GIIF are supported by Germany’s BMZ as a central donor to the World Bank Group’s initiatives in the Climate space.

GIIF’s Key Components Include:

1. Increased Awareness of Index Insurance: Conduct value chain studies, raise awareness via implementing partners, and organize capacity-building activities.
2. Improved Technical and Commercial Capacity: Facilitate policy dialogues and provide technical training sessions.
3. Improved Legal and Regulatory Capacity: Establish the necessary pre-conditions to launch and regulate new insurance products.
4. Support through Premium Subsidies: Provide financial support for projects.

The initiative will also prioritize supporting women who represent about half of the agricultural workforce in sub-Saharan Africa. IFC and its partners will ensure gender-sensitive product designs and distribution strategies while conducting analyses to empower women within inclusive insurance schemes.

Promoting Climate-Smart Agriculture

As climate change increasingly threatens African agriculture, the IFC-ARC Ltd. partnership highlights the vital role of insurance as a de-risking tool. Expanding access to climate risk insurance will safeguard livelihoods, enhance food security, and create financial opportunities for farmers and agribusinesses across the continent.

Insurance also plays a pivotal role in fostering sustainable farming practices. By offering financial protection against climate-related risks, farmers are more likely to experiment with new crops and farming techniques that are better suited to evolving weather patterns, enabling long-term investment in their businesses. Moreover, it provides the confidence needed to navigate climate challenges while continuing to supply healthy food to local communities.

A Key Step in Boosting Climate Resilience and Financial Inclusion in African Agriculture

This collaboration is crucial because it strategically aligns efforts to enhance climate risk insurance across Africa’s agricultural sector. By defining shared objectives, prioritizing key countries, and targeting specific agricultural value chains, the partnership lays the foundation for a focused and impactful approach. The collaboration also includes comprehensive needs assessments, identifying the risks faced by smallholder farmers, AgTech startups, and financial institutions, and enabling the development of tailored insurance solutions that address these unique challenges.

In addition, the collaboration integrates climate risk insurance with broader financial solutions and capacity-building initiatives, which are vital to ensuring financial resilience and inclusivity. Through the mobilization of funding and technical support from donors and private-sector partners, the collaboration strengthens the impact of initiatives like the Africa Inclusive Insurance Program (AIIP), helping to enhance financial resilience for vulnerable agricultural communities.

Furthermore, by fostering collaboration with governments, financial institutions, and AgTech providers, this partnership works to scale risk protection, ensuring that smallholder farmers and agribusinesses can access the coverage they need to withstand climate-related shocks, secure loans, and continue producing food for their communities.