Africa seeks options: To compensate or insure for climate-related damages?

Lilongwe, Malawi 29 April 2022: At a conference in Lilongwe, Malawi, African civil society players were divided on a number of issues including mechanisms to pay for climate-related disasters and the definition of what loss and damage is.

While some supported the need for insurance to cover for losses and damage due to climate change, others however rejected the call saying doing so will allow profiteers to maximize profits leaving victims and survivors of floods and droughts dry.

Yamikani Mlangiza of the Civil Society Network of Climate Change of Malawi (CISONECC) said climate and disaster risk financing and insurance can play a key role in financing for loss and damage.

However Dr Godwin Uyi Ojo, Executive Director, Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN) noted that farmers are supposed to be compensated for loss and damage due floods which come as a result of heavy rains and this can only be done through a global financial mechanism established under the UN Framework Convention on Climate Change.

“Allowing market mechanism into this will perpetuate the injustices the poor rural farmers have endured,” said Dr Ojo who added that Africa must not promote solutions that comfort the big polluters to the detriment of those vulnerable such as climate insurance disregarding adaptation among others.

Obed Koringo, Care International said the level of pay-out in the insurance sector is high so that the farmers are never getting compensated. “The farmers don’t have an understanding of insurance and threshold makes it easy for them to do an insurance policy that doesn’t benefit them. The data used for the insurance is sometimes too general and doesn’t work in the benefit of the farmer,” said Obed.

He said the market-based mechanisms thrive on “profiteering” at the expense of compensation for actual losses and damages experienced, under the climate crisis, across the African continent.

Nevertheless, Eva, the entry of the insurance sector into climate-smart solutions is needed and will ensure that poor rural farmers are not left behind.

Sharing the same views is Emmanuel Seck, Environmental Development Action noted that Africa needs to look at different strategies at different levels. “At global level we talk of the fund for loss and damage, but insurance is a solution at another level, namely the national level,” said Seck.

The very definition and understanding of what loss and damage is was also another cause of division from various speakers at the meeting.

While others want loss and damage defined within the disaster or emergencies, for Dr Godwin Uyi Ojo however, these two should not be confused. He added that when Africa talks about adaptation, this should not be confused with disaster risk mechanism. Loss and damage is public finance flowing from the global north to the global south.

Madagascar representative noted that the lack of mechanism on climate change continues to be a barrier in the fight against climate justice for the vulnerable people when disaster strikes.

Experiences from Malawi, South Africa, Zimbabwe and Madagascar show the escalating cost of climate change in Africa and that even the most effective adaptation mechanism cannot prevent loss and damage due to the impacts of climate change. “The need for fair, just and practical solutions cannot be gainsaid,” said participants.

A fortnight ago, over 400 people died when ‘rain bomb’ struck Durban, South Africa leading to flooded homes, highways destroying property and lives.

In the recent past, Africa governments have partnered with insurance firms to pay up farmers and livestock keepers as safeguard against poor farm yields or livestock deaths in droughts.