A drought insurance scheme championed by the G7 failed in its mission to protect millions of Malawians from hunger and illness last year, according to a report by Action Aid.
The African Risk Capacity (ARC) paid out “too little, too late” to help communities hit by poor rains and crop failure, said the development charity.
G7 countries have promised to extend insurance cover to 400 million people in developing countries at risk from climate change impacts by 2020. But they must avoid replicating a model with “major defects”, the report argued.
The Malawian government paid ARC a premium of $4.7m in 2015 for the 2015/16 agricultural season. Soon afterwards, the El Niño weather system triggered drought across many parts of Africa, including Malawi.