The Government of Ghana has made a groundbreaking move by purchasing its first-ever sovereign drought insurance policy, aimed at protecting vulnerable communities and the agricultural sector from the impacts of drought. This policy, issued by the African Risk Capacity (ARC) Ltd., was made possible through a coordinated effort by the Global Shield Secretariat, with financing of US$1 million from KfW Development Bank on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the Global Shield Solutions Platform (GSSP). This initiative reflects Ghana’s commitment to building resilience against climate-related risks, particularly in agriculture.
The drought insurance policy is designed to provide quick financial support in the event of a drought, allowing the government to act swiftly to aid affected farmers and communities. The funds will help maintain food security and stabilize the agricultural sector, reducing the impact of drought on vulnerable livelihoods.
Ghana’s investment in financial resilience marks the success of a collaborative process led by the Global Shield against Climate Risks Initiative, which brought together stakeholders to identify key climate risks and create a tailored solution. The country’s partnership with ARC serves as a model for other African nations facing similar challenges, emphasizing the importance of risk transfer mechanisms like drought insurance in building climate resilience across the continent.
Malvern Chirume, Chief Underwriting Officer at ARC Ltd., praised Ghana’s foresight in implementing the drought policy, highlighting its role in protecting the country against potential crises in a climate where droughts are expected to become more frequent and severe. The policy not only offers financial protection but also ensures that Ghana’s vulnerable communities can thrive despite increasingly unpredictable weather patterns.
Nilesh Prakash, Co-Director of the Global Shield Secretariat, commended Ghana’s proactive approach, stressing the importance of pre-arranged financing mechanisms to respond effectively to climate-related disasters. Karsten Löffler, Co-Head of GSSP, echoed this sentiment, highlighting the value of international cooperation in developing such risk-financing solutions.
Ghana’s participation in the ARC risk pool demonstrates its commitment to protecting the livelihoods of its agricultural population, positioning the country as a leader in climate resilience efforts in West Africa.
