As a result of inadequate efforts from rich countries to reduce greenhouse gas emissions, we are already
living in a world 1o C warmer than pre-industrial times: and climate change is affecting women living in
poverty first and worst. This is a graphic tale of how an international attempt to support these people
failed abysmally.
In 2015, the Government of Malawi purchased a drought insurance policy for the 2015/16 agricultural
season from the African Risk Capacity (ARC) Insurance Company Ltd, costing almost US$5m dollars.
This decision was taken amidst a global wave of enthusiasm for climate insurance generated by the
World Bank and the G7, with support from the insurance industry. Malawi then experienced severe
drought across almost all of its districts, induced by a record El Niño, supercharged by climate
change. This resulted in 6.5m people being assessed in May 2016 as requiring food assistance by
the Government of Malawi with the support of UN agencies and NGOs.3 However, a pay-out from the
drought insurance policy was not automatically triggered, as the model used by ARC calculated that
only 20,594 people had been affected by the drought.
This report tells the story of Malawi’s experience of the drought and its ARC insurance policy, based
on focus group discussions and interviews with a wide range of Malawians, from rural communities
to government officials and other stakeholders, as well as the ARC Secretariat, caught up in the
drought that need not have become a disaster. The government officials we spoke to were senior
officials with responsibility for providing advice and information to inform decisions made with respect
to ARC insurance and associated policies from within the Ministry of Finance, Economic Planning and
Development, the Department of Disaster Management Affairs, the Ministry of Agriculture, Irrigation
and Water Development, and the Department of Climate Change and Meteorological Services. We
also spoke to key local government officials in Rumphi and Mchinji districts, experts from the National
Smallholder Farmers’ Association of Malawi (NASFAM) and the Lilongwe University of Agriculture
and Natural Resources, and staff from ActionAid’s Local Rights Programmes and their local partners
in Chiradzulu, Machinga, Nsanje, and Rumphi. Focus group discussions incorporating participatory
research methodologies were held with rural communities in Nsanje and Rumphi. These sought to
understand the perspectives of the communities – and in particular the women – on climate and disaster
risks, their decision-making regarding agriculture and livelihoods, and the steps they had taken to build
resilience to droughts, climate change and other disaster risks; on support provided to them by the
government, NGOs and other development actors regarding agriculture, climate change adaptation,
disaster risk reduction (DRR) and social protection; and on the impacts of the recent drought and other
disasters. (The communities were asked about their experience with, and views about, various forms
of insurance, but not specifically about ARC, since they knew nothing about it.) Our interviews and
discussions took place in the time between the initial ARC decision not to make a pay-out and the
revised decision in November 2016 to pay Malawi $8m: ARC and the Government of Malawi officials
then had the opportunity to provide feedback on the draft report, which was taken into account in its
subsequent revision, as were developments after the eventual ARC payment. The report is also informed
by in-depth secondary research.