In a strategic move to bolster Africa’s agricultural resilience, African Risk Capacity Limited (ARC Ltd.) and the International Finance Corporation (IFC) announced a collaboration Thursday aimed at mitigating climate-related risks for farmers and agribusinesses.
Signed at Johannesburg’s Marriott Hotel Melrose Arch, the partnership seeks to unlock investment in a sector critical to the continent’s food security and economic stability.
Agriculture sustains nearly 60% of Africa’s workforce and contributes over 15% to its GDP, yet remains acutely vulnerable to climate shocks. With 95% of the continent’s 183 million hectares of cropland reliant on erratic rainfall and less than 5% irrigated, droughts and floods routinely devastate harvests. Compounding these challenges, limited access to insurance and financing stifles growth, leaving farmers and investors exposed. The World Bank warns that Africa must ramp up food production by 70% by 2050 to meet soaring demand—a goal requiring urgent investment in climate adaptation.
The ARC-IFC initiative will design insurance products tailored to shield farmers from climate volatility, while encouraging financial institutions to fund agricultural projects. Key focuses include mapping high-risk regions, crafting region-specific policies, and collaborating with governments, banks, and AgTech firms to broaden risk coverage. By enabling quicker recovery from losses, the partnership aims to stabilize yields and attract private capital.
“Climate risks paralyze investment,” said ARC Ltd. CEO Lesley Ndlovu. “This collaboration empowers farmers to invest confidently, knowing they’re protected.” IFC’s Vice President for Africa, Sérgio Pimenta, emphasized agriculture’s role in regional development: “Securing Africa’s food future demands innovation. These solutions will catalyze sustainable growth and shield livelihoods.”
The timing is critical. Climate change has slashed African crop yields by up to 34% since the 1960s, according to the UN, while inflation and supply chain disruptions amplify food insecurity. By bridging the insurance gap—currently covering less than 3% of Africa’s agricultural losses—the partnership could unlock billions in dormant investments.
As global food pressures mount, the ARC-IFC pact signals a shift from crisis response to proactive risk management. For millions of smallholder farmers, it offers a lifeline—and for investors, a roadmap to navigate Africa’s evolving agricultural landscape.
