Malawi to get K3 billion from insurer
Insurer Africa Risk Capacity Company Limited has made a U-turn on its earlier decision not to give Malawi relief for the K21 billion (about $30 million) disaster risk cover the country bought to ease disaster recovery efforts.
Minister of Finance, Economic Planning and Development Goodall Gondwe said in an interview on Friday government will now get K3 billion to finance disaster recovery efforts.
The minister, who recently cancelled a K75 billion loan to purchase maize, said he queried the insurer, an initiative of the African Union (AU), which said it had problems with the actual baseline.
Said Gondwe: “Yes, we met them [African Risk Capacity Company Limited] and they agreed to pay us K3 billion [$4 million], an amount slightly lower than the premiums we paid. They said it would be difficult to pay the amount we expected and they settled for K3 billion.”
The development comes after The Nation in May this year reported that government had lost out on the insurance cover whose benefit was estimated at K21 billion.
It emerged that the contract for the 2015/16 farming season had a clause that stipulated terms and conditions under which a country can make a successful claim, which Malawi Government officials signing the policy apparently did not see at the time.
In an earlier interview, Department of Disaster Management Affairs (Dodma) Principal Secretary, Ben Botolo, said there was a need to critically scrutinise the policy documents and involve lawyers before signing such contracts.
On the way forward regarding another insurance contract, Gondwe said government is yet to decide.
He said: “Insurance is important, but whether we are buying or not, I would need to discuss with relevant people on the way forward. On the maize loan, we will look for other avenues, but as government we will buy the maize.”
In a separate interview, Ministry of Agriculture, Irrigation and Water Development public relations officer Hamilton Chimala said the insurer had a small baseline of the affected people which it used to determine whether Malawi should be paid or not.
He said: “After their assessment, we also did a ground proofing, which actually revealed that Malawi had more than five million people who were affected as opposed to the less than 1.3 million which was used by the insurance company as their baseline. So, after the assessment, this was determined; hence, the pay out.”
Chimala added that further assessments are being done in the Central Region and that the number is expected to increase.
Malawi paid the annual premium of K2.9 billion for the K21 billion cover.
According to Malawi Vulnerability Assessment Committee (Mvac), there are over 6.5 million people in need of food aid. However, the number of people affected by food shortages in general is estimated at 8.5 million.
Malawi Government allocated K35 billion in the 2016/17 National Budget for humanitarian crises.
In April this year, President Peter Mutharika declared the country a State of National Disaster following prolonged dry spells in the Southern Region and parts of the Central Region that wilted crops, reducing food harvest by about 30 percent.
The President appealed for assistance from local and international well-wishers.
