Johannesburg, Frankfurt, Bonn: The Government of Ghana has purchased its first-ever sovereign drought insurance policy, taking a significant step towards safeguarding its vulnerable communities and agricultural sector from potential drought. Through an inclusive, country-led process coordinated by the Global Shield Secretariat, the African Risk Capacity (ARC) Ltd. issued the policy for the benefit of the Government of Ghana, financed with US$1 million by KfW Development Bank on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the Global Shield Solutions Platform (GSSP), managed by Frankfurt School of Finance & Management. This collaboration underscores the government’s commitment to building resilience in agriculture and protecting livelihoods in the face of climate-related risks.

The Government of Ghana has taken proactive steps to better protect its agricultural sector against the risk of drought. The policy, designed to provide financial relief in the event of a drought, will enable the government to respond quickly and efficiently to support affected farmers and communities. Funds from the insurance payout will be directed towards safeguarding food security and stabilizing the agricultural sector.

Ghana’s investment in the financial resilience of vulnerable livelihoods marks the culmination of a truly collaborative process, set in place by the Global Shield against Climate Risks Initiative. The convening of relevant stakeholders, and a tailor-made, demand-driven and inclusive approach to identify key climate risks and viable pre-arranged finance mechanisms paved the way for this first drought insurance policy.

Ghana’s proactive approach, in collaboration with ARC, sets a strong example for other African nations facing similar climate-related challenges. As the continent confronts the realities of climate change, risk transfer mechanisms, such as drought insurance, will play a crucial role in protecting lives, securing livelihoods, and strengthening climate resilience across Africa.

“The Government of Ghana has shown foresight and initiative by implementing this first-ever drought policy,” says Malvern Chirume, Chief Underwriting Officer, ARC Ltd. “Within the context of climate change where drought events will increase in frequency and severity, the country is now protected against a potential crisis.” Furthermore, Chirume emphasises that the policy extends beyond financial protection: “It ensures that vulnerable communities in Ghana can continue to thrive despite increasingly erratic weather patterns due to the early warning tools available to the government. This policy is also a key component of our broader efforts to enhance climate resilience across Africa.”

“We are delighted to see the implementation of the Global Shield process come to fruition in Ghana, through multi-stakeholder, collective action, marking the completion of the first in-country process. We know that disasters don’t wait to happen – they strike with little warning, so the importance of pre-arranged finance mechanisms cannot be stressed enough. With the ARC policy in place, we are assuring the resilience of vulnerable livelihoods amid the ever-growing threats posed by climate change”, says Nilesh Prakash, Co-Director of the Global Shield Secretariat.

“The GSSP is very pleased to financially support the purchase of ARC drought insurance by the Government of Ghana for the benefit of vulnerable populations”, says Karsten Löffler, Co-Head of GSSP. “It is a good example of what pooling funds for pre-agreed risk financing solutions and international coordination can achieve.”

“KfW Development Bank is very happy that Ghana is becoming an active member of the ARC family”, states Malte Marek, Senior Portfolio Manager at KfW. “Being the second largest economy in western Africa, Ghana can set the scene for other countries joining ARC in the future.”  

“Ghana’s participation in the ARC risk pool is evidence of the proactive approach that the government is taking to protect the lives and livelihoods of the population that relies on agriculture as a source of livelihoods” according to Charlotte Norman, Government Coordinator for the ARC Programme. “This protection is one of many initiatives that the Government of Ghana is taking to boost its capacity to respond to various climatic shocks that affect its population”.

About ARC Ltd.

The African Risk Capacity Limited (ARC Ltd.) is a financial affiliate of the African Risk Capacity (ARC) Group, a specialised agency of the African Union (AU), an initiative designed to improve current responses to climate-related food security emergencies.

ARC Ltd. is a mutual insurance facility comprised of its members, which have included Côte d'Ivoire, Togo, Somalia, Benin, Ghana, Senegal, Gambia, Tchad, Sudan, Mali, Burkina Faso, Mauritania, Niger, Madagascar, Malawi, Zambia, Zimbabwe, Mozambique, Coromos, Kenya.

The membership also includes its capital contributors, the British FCDO and KfW / BMZ.   

Media contact:
Sonnette Fourie
sonnette@bigambitions.co.za. 

About KfW

KfW Development Bank has been helping the German Federal Government to achieve its goals in development policy and international development cooperation for more than 60 years. On behalf of the German Federal Government, and primarily the Federal Ministry for Economic Cooperation and Development (BMZ), KfW finances and supports programmes and projects that mainly involve public sector players in developing countries and emerging economies – from their conception and execution to monitoring their success. The goal is to help our partner countries fight poverty, maintain peace, protect both environment and climate and shape globalisation in an appropriate way.

Media contact
Malte Marek
malte.marek@kfw.de

About Global Shield Solutions Platform 

The Global Shield Solutions Platform (GSSP), managed by Frankfurt School of Finance & Management, is a multi-donor grant facility and one of the financing vehicles under the Global Shield against Climate Risks. With the mandate to foster the actual development and use of Climate and Disaster Risk Finance and Insurance (CDRFI) solutions, the GSSP contributes to effectively addressing losses and damages exacerbated by climate change.

Media contact
Marianna Aguilera
m.aguilera@fs.de

About the Global Shield against Climate Risks

With accelerating climate change, more severe and frequent extreme weather events are expected to threaten sustainable development gains of particularly vulnerable countries. To address this, the V20 Finance Ministers together with the Group of Seven (G7) and other supporting countries, launched the Global Shield against Climate Risks at COP27. With around EUR 300 million raised in funds, the aim of the Global Shield is to increase protection for vulnerable people by providing and facilitating substantially higher and more effective pre-arranged finance against disasters.

Media contact
Michelle Maibaum
michelle.maibaum@globalshield.org