For the people of Burkina Faso, Mali, and Niger (collectively the Central Sahel region), annual rainfall is essential for food security and economic stability. Even small shifts in rainfall patterns can lead to widespread food insecurity and economic hardship for millions.

The Natural Disaster Fund (NDF), managed by Global Parametrics, has supported African Risk Capacity Ltd. (ARC) with risk capacity for the UN World Food Program (WFP), contributing to food security in these drought-prone countries.

As the lead provider of risk capacity for the Sahel Climate Catastrophe Layer (SCCL), the NDF plays a pivotal role in ensuring that payouts are swiftly released during severe drought events that breach a predetermined index value. The parametric product leverages satellite data and advanced risk modelling, and was structured and placed by Gallagher Re and ARC Ltd.

The NDF is a public-private partnership administered by Global Parametrics and funded by UK and German governmental entities. The NDF shares risks with Hannover Re to provide risk capacity for parametric solutions that foster climate and NatCat resilience for poor and vulnerable communities in low-and-middle-income countries across the Global South.

The WFP, governments, and partners are embarking on the second phase of the Sahel Integrated Resilience Programme. The scale-up plan aims to reach 5 million people. The NDF risk capacity transaction provides coverage for up to 1 million WFP beneficiaries

The WFP is the world’s largest humanitarian organisation saving lives in emergencies and using food assistance to build a pathway to peace, stability and prosperity, for people recovering from conflict, disasters and the impact of climate change.

ARC Ltd is a specialised agency of the African Union. Its mission is to use modern finance mechanisms, such as risk pooling and risk transfer, to create pan-African climate response systems that enable African countries to meet the needs of people vulnerable to natural disasters.

We are grateful for the trust placed in the NDF and Global Parametrics as this transaction brokered by Gallagher Re demonstrates how parametric climate insurance can contribute to building resilience as well as delivering humanitarian relief for communities facing climate-driven crises.