When Richard Wilcox told the world he wanted to insure Africa for drought he was laughed out of boardrooms, but, three years on, more and more nations on the continent are paying millions to prepare for disaster.
Wilcox is the Director General of African Risk Capacity (ARC), an insurance fund set up by the African Union to pay out nations when they are hit by natural disasters like floods, drought and cyclones.
“When I first told people I was going to insure Africa against drought I was laughed out of the room. Now, people are taking it seriously,” said Wilcox at WEF Africa.
In the first two years of the ARC-Kenya, Mauritania, Senegal and Niger joined the 200 million dollar fund, based in Bermuda. Assessors use satellites to calculate risk and Kenya, with its vast flood plains and dry areas paid the biggest premium of 9 million US dollars-a-year. While Senegal, Mauritania, Mali and Niger paid 8 million US dollars between them.
In return, when disaster strikes, the fund pays millions to national coffers to cover the cost of everything from food to the repair of bridges. Senegal claimed 1.6 million US dollars for drought in the last year; Mauritius 6 million US dollars and Niger 3.5 million US dollars. Wilcox hopes Malawi, Gambia and Burkina Faso will join the insurance scheme this year and in 2016, the targets are Ghana, Nigeria Core D’Ivoire, Zimbabwe, Mozambique, Uganda Tanzania and Mauritius. The fund hopes to have 25 members by 2020 in an insurance fund worth 1 billion US dollars.
“Climate change is coming. We found out Niger used to be flooded once every 10 years, now it is being hit once every five years,” said Wilcox.
Asked about the fund’s capacity to tackle manmade disasters like insurgency and terrorism, he said, “We get asked that all the time, but we can only insure disasters that have a natural trigger…But we are planning to expand the scheme to include epidemics like Ebola.”
*Chris Bishop is Managing Editor of Forbes Africa and is attending the World Economic Forum on Africa 2015, which takes place in Cape Town, 3-5 June.