- AfDB backs Mozambique with $2m drought insurance
- Programme shields Africa’s economies from climate shocks
MAPUTO, MOZAMBIQUE – The African Development Bank has renewed Mozambique’s drought insurance for a third consecutive year with a $2mn premium under its catastrophe risk financing programme for the 2025–2026 agricultural season.
The announcement was made at the 2025 Climate and Disaster Risk Financing Forum (CDRFI), held in Maputo under the theme “Building Africa’s Resilience through Transformative Climate and Disaster Risk Financing and Insurance.” The AfDB and the Mozambican government co-hosted the event to advance the Africa Disaster Risk Financing Programme (ADRiFi) across the continent.
A strategic safety net for climate-vulnerable nations
The ADRiFi initiative strengthens African nations’ financial resilience by promoting sovereign risk insurance, improving risk modelling, and embedding disaster-risk financing in national policies. Through the programme, AfDB helps countries manage climate shocks by subsidising insurance premiums and enhancing institutional preparedness.
Funding for ADRiFi comes from a Multi-Donor Trust Fund supported by the United Kingdom, Switzerland, Canada, Norway, and the Netherlands. The African Risk Capacity Group (ARC) provides sovereign insurance coverage and ensures quick payouts once climate disaster thresholds are met.
Albertina Fruquia Fumane, Permanent Secretary of Mozambique’s Ministry of Finance, accepted a ceremonial cheque marking the premium payment. She described the policy as “a strategic instrument of anticipation that enables the state to protect the most vulnerable, maintain social stability, and mitigate the economic impacts of recurring climate shocks.”
AfDB’s Lead for De-Risking Agricultural Finance and Climate Resilience, Andrew Mude, said the initiative was critical as climate impacts intensified across the continent. “The Africa Disaster Risk Financing Programme has mobilised over $150 million in support of 16 African nations, safeguarding more than six million people and demonstrating the transformative potential of strategic financial solutions in safeguarding lives and livelihoods,” he noted.
Ambassador Elsbeth Akkerman of the Netherlands, representing ADRiFi’s donor countries, said the programme’s success relied on “African leadership that enables success,” praising Mozambique’s Ministry of Finance for championing the initiative alongside other African governments.
Fiscal resilience and investor confidence
Dr. Bismarck Rewane, CEO of Financial Derivatives Company in Lagos, called the renewed coverage “a critical step in deepening Africa’s financial preparedness against climate shocks.”
He said, “This kind of pooled risk financing reduces the fiscal burden on governments during crises and strengthens macroeconomic stability. It shows that African economies are learning to self-insure against climate volatility rather than waiting for aid.”
By covering drought-related losses, the insurance payout helps Mozambique maintain fiscal discipline and protect its reform agenda. Analysts say this kind of financial cushioning can bolster investor confidence, particularly among Eurobond holders in frontier markets, by reducing the risk of fiscal slippages due to climate disasters.
The expansion of the ADRiFi initiative to $150 million underscores growing investor confidence in Africa’s climate-risk insurance systems. Economists say such frameworks enhance macroeconomic stability, reduce emergency borrowing, and reinforce Africa’s long-term creditworthiness – vital factors for ESG-driven global investors seeking resilient frontier markets.
