African Risk Capacity Limited (ARC Ltd.) and the International Finance Corporation (IFC) have signed a Letter of Engagement to strengthen agricultural insurance solutions across Africa. This strategic partnership aims to mitigate climate-related risks, making the agricultural sector more secure and attractive for investment. The signing ceremony took place at the Marriott Hotel Melrose Arch in Johannesburg, South Africa, attended by Lesley Ndlovu, CEO of ARC Ltd., and Sérgio Pimenta, IFC Vice President for Africa, along with their teams.
Agriculture is a vital pillar of Africa’s economy, supporting millions of livelihoods. However, farmers and agribusinesses face significant challenges in securing funding due to risks such as unpredictable weather, market fluctuations, and limited financial safeguards. Africa has around 183 million hectares of cultivated land, with 95% relying on rainfall, making it highly vulnerable to climate variability. The World Bank projects that food demand will rise by 70% by 2050, necessitating major investments in agriculture. Yet, with less than 5% of African farmland under irrigation and financing barriers limiting growth, the sector remains at risk. Without effective risk management solutions, investors are hesitant to support agricultural projects, leaving farmers exposed and food production unstable.
Through this collaboration, ARC Ltd. and IFC will develop innovative insurance solutions to help farmers, financial institutions, and agribusinesses manage agricultural risks. The initiative will support the IFC Africa Inclusive Insurance Program (AIIP) by introducing insurance products that safeguard farmers against climate shocks and other uncertainties. These solutions will not only reduce financial losses but also boost investment in agriculture, leading to increased food production and enhanced food security across the continent.
Key focus areas of this partnership include identifying priority regions for agricultural insurance, designing tailored insurance products, and working with governments, financial institutions, and AgTech providers to expand access to risk protection. By ensuring farmers and agribusinesses can recover quickly from losses, this initiative will contribute to a more resilient and productive agricultural sector in Africa.
