Tropical cyclones Fitia and Rezanifer affected more than 500,000 people and caused widespread damage to infrastructure, livelihoods and basic services in many regions of Madagascar. US$29 million has been raised to support response and recovery efforts through a combination of pre-arranged parametric financing solutions driven by African Risk Capabilities (ARC) and its partner institutions.
According to ARC, the financing was launched through three pre-established supplementary instruments.
According to reports, the Madagascar government has first withdrawn US$19.9 million from the reserves of the REPAIR program, a World Bank initiative implemented by ARC Ltd that provides countries with rapid access to financing to support early response efforts after severe climate events.
The severity of the hurricane also triggered ARC’s sovereign parameter insurance, releasing approximately $5.6 million, while $3.79 million was raised through replication insurance in support of humanitarian partners.
Together, these mechanisms enable a coordinated financial response to hurricane impacts,” the company observed.
ARC continues, “This sequence illustrates how layered disaster risk financing can provide rapid initial liquidity and additional protection when climate shocks exceed a certain threshold, thereby increasing countries’ financial resilience to increasingly complex climate risks.”
Dr Jean Chrysostome Ngabitsinze, Director General of ARC Group, commented: “Our thoughts are with all those affected by cyclones Fytia and Gezani.
“Madagascar has shown strong leadership in strengthening preparedness for climate-related shocks and has been a long-standing and committed partner of the ARC. The resources mobilized today are the result of this collaboration and foresight.
“The ARC remains fully committed to standing with Madagascar as response and recovery efforts continue.”
David Maslo, CEO of ARC Ltd, added: “Climate-related disasters require financing that can respond to different types of impacts at different moments in the crisis.
“The campaign in support of Madagascar shows how combining complementary solutions can provide rapid initial liquidity while ensuring continued support for the recovery. This is at the heart of ARC’s mission to help countries build financial resilience to climate shocks.”
Caroline Cerruti, principal financial sector specialist and REPAIR regional leader at the World Bank, said: “Through REPAIR, the World Bank is committed to strengthening the capacity of countries in the region to respond to severe climate events.
“These expenditures demonstrate that pre-arranged financing combined with strengthened operational systems can provide the resources and framework needed to respond to complex disasters.
“This coordinated approach is critical to changing the way the region manages climate shocks and protects affected communities.”
Dr. Ramiarison Herijantovo Aimé, Minister of Economy and Finance of the Republic of Madagascar, said: “The rapid mobilization of funds after the hurricane provided vital support to Madagascar’s national response.
“Continued collaboration with ARC, the World Bank and partners strengthens our ability to effectively respond to disasters and support affected communities.”
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