The Government of Ghana has received a payout of USD 960,202 and is set to receive a second payment of USD 1,927,334, as part of its first-ever sovereign drought insurance policy, issued by African Risk Capacity (ARC) Ltd. This milestone policy, financed by KfW Development Bank (KfW) 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, comes at a critical time as the nation was confronted with a severe drought in its agricultural sector.
The initial payout of USD 960,202, triggered in early March, supported communities in Ghana’s northern regions. 39,000 people received emergency food assistance, with each household provided essential supplies, including 62.5 kg of rice and 5 liters of cooking oil, ensuring immediate relief. The National Disaster Management Organization (NADMO) and the Ministry of Finance oversaw the implementation to guarantee timely and transparent delivery.
A second payout of USD 1,927,334 is currently being processed to assist drought-affected communities in the southern regions. Together, these funds are helping Ghana respond quickly and effectively to climate-related shocks during the 2024/2025 agricultural season, while reinforcing the country’s commitment to building resilience in the face of climate change. The measures aim to support vulnerable communities and safeguard livelihoods until the next harvesting season in the face of worsening climate impacts.
Recognising the lack of sovereign financial protection against drought in Ghana, ARC’s sovereign drought insurance was identified as a suitable solution to ensure funding is rapidly available in the event of drought. The National Disaster Management Organization (NADMO) led the development of contingency plans, which outlines predefined measures to ensure an efficient and targeted response following an insurance payout. The premium support provided by KfW and GSSP ensures insurance is in place to provide financing for the implementation of the contingency plans.
This policy does more than provide financial protection – it ensures that vulnerable communities in Ghana can continue to thrive despite increasingly erratic weather patterns. It is also a key component of our wider efforts to enhance climate resilience across Africa.
Lesley Ndlovu, CEO of ARC Ltd.
We are proud to support Ghana in this initiative through the Global Shield Solutions Platform. The payout from the sovereign drought insurance policy taken out with ARC is a testament to our commitment to strengthening climate resilience and providing rapid financial support to communities in need. This milestone not only addresses immediate needs but also strengthens the foundation for long-term sustainability and resilience to future climate challenges.
Karsten Löffler, Co-Head of GSSP
KfW is delighted to see the second payout to Ghana within a year from the newly established ARC insurance policy. It demonstrates the importance of preparing for disasters and utilising the innovative tool of sovereign insurance to provide timely support to those most in need. On behalf of Germany, KfW has not only subsidised the premium payments required for the ARC insurance but has also supported the ARC mechanism since 2014 with over USD 100m. The successful proof of concept of such insurance will hopefully aid in the establishment of insurance structures within the Ghanaian context.
Malte Marek, Senior Portfolio Manager at KfW Development Bank
Ghana’s proactive adoption of sovereign drought insurance, supported by ARC Ltd.’s expertise, sets a powerful example for other African nations. As the continent faces increasing climate uncertainties, risk transfer mechanisms like drought insurance will play a pivotal role in protecting lives and livelihoods while enhancing long-term climate resilience.
For more information from the Global Shield against Climate Risks, please visit here.