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Gaps in drought insurance policy

A report on the performance of the drought insurance policy that the government purchased from the Africa Risk Capacity (Arc) has exposed gaps which entail that perhaps the policy does not achieve its initial intended purpose.

Towards the end of 2015, Malawi took out a $30 million insurance policy with Arc to cushion the country against the effects of adverse weather conditions which were expected to result in droughts.

A year later, Malawi received an $8.1 million payout from Arc following government’s claim which had been unsuccessful at first.

According to a report by Care, in 2015, the Arc insurance policy did not trigger a payout as the number of people affected by the drought indicated by the model was too low.

This was despite that President Peter Mutharika had declared a state of emergency due to food shortages where assessments indicated that 6.5 million people were affected.

“By investigating the discrepancy between the drought model and the country assessment, Arc found that while Africa RiskView worked properly, correct data was missing to make appropriate and realistic assumptions when customising the model,” the report says.

It was presented in Lilongwe on Monday night to allow stakeholders who include the government to polish up the detected gaps so that future policies are beneficial to Malawians.

Care International Advocacy and Partnership Coordinator on Food and Nutrition Security, Vitumbiko Chinoko, said in an interview that there is need for Malawi to continue with the policy only if the government works on the gaps.

“It is important that they work on capacity across the board. There is also the need for wider consultation and participation of various stakeholders which I think was wanting as far as the 2015/16 insurance policy was concerned,” Chinoko said.

He added that another issue with the payout problems was that Malawi insured against late-maturing varieties when farmers planted early-maturing varieties.

“According to our assessment, using a long-maturing variety could not trigger the facility for payout, so it was when we changed the model and put early-maturing variety that we were able to get the $8.1 million,” Chinoko said.

He attributed the challenge to lack of consultations where relevant experts could have helped in choosing the right model.

Chairperson of the Parliamentary Committee of Natural Resources and Climate, Werani Chilenga, lamented that the policy only looks at droughts when the country continues being hit by several other disasters including floods.

“Another thing is that at first we struggled to claim the money. After we got the money, it was not clear how it was used. Just a few people sat down and made decisions on how the money should be used, yet it was provided through Parliament,” he said.

He further argued that the government was not open enough on how it used the payout such that in some cases, the money was used for purchasing beans and pigeon peas which were already being distributed by other partners.

Apart from Malawi, the study also focused on Zimbabwe, Madagascar, Tanzania, Zambia and Mozambique. For Malawi, it recommends that stakeholders such as Members of Parliament and civil society organisations should be involved in insurance policy processes.

At the presentation of the study findings, Environment and Climate Change Chief Director, Yanira Mtupanyama, complained that consultations for the study were not broad enough, arguing that some issues could have been clarified.

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