Government’s low investment in disaster insurance has cost the country multi-million-dollar payouts to victims of cyclones that hit the Indian Ocean’s southwest region, Nation on Sunday has established.
Department of Disaster Management Affairs (Dodma) spokesperson Chipiliro Khamula confirmed that Malawi does not have cover against floods induced by cyclones.
He could not shed more light on the matter, saying the Ministry of Finance and Economic Affairs is responsible for such payments.
The ministry had not responded to our queries as we went to press, but Khamula confirmed the country has a drought insurance policy with the African Risk Capacity (ARC).
Malawi only paid out a premium for drought insurance at ARC, a specialised agency of the African Union established to help governments improve their capacities to better plan, prepare and respond to extreme weather events and natural disasters.
Through the policy, countries that subscribe are paid out funds to support citizens following poor crop production worsened by droughts.
But thousands of people were displaced by cyclones Ana and Gombe that ravaged the country between January and March this year. Billions in kwacha worth of infrastructure such as roads, schools and Kapichira Hydro Power Station were left in ruins.
Khamula said last Wednesday: “We insured against drought and, so far, it has triggered this year and we will get a payout. More details and final payout amount will be determined at the end of the season.”
Capital Hill ignored the tropical cyclone policy and parametric flood insurance despite the country being prone to such disasters.
Currently, Madagascar, which alongside Malawi and other countries suffered from the cyclones, has received $10.7 million (K9.6 billion).
The country took out a tropical cyclone policy with ARC to cover the 2021/2022 cyclone season under Africa Disaster Risk Financing, a partnership programme of the African Development Bank and ARC Group designed to strengthen and enable timely response in the event of a disaster.
The financing of the insurance premium was made possible by contributions from the governments of the United Kingdom and Switzerland, meaning that Madagascar shouldered a small portion of the premium payment.
Meanwhile, insurance expert Eric Chapola said in the absence of significant insurance cover, Malawi will struggle to recover from cyclones and other natural disasters.
He said: “The truth of the matter is that as a country, we will be very exposed. It’s possible for a commercial farmer to buy weather index insurance for example to protect cattle and crops. But when you look at small and medium scale enterprises, when you go down to the local farmer, what can those do?
“So, for me, there must be a deliberate action by the government to ensure that all crops and infrastructure in the country are protected…The question is: What is the government planning to do because it is dealing with all its citizens?”