Mozambique secures US $2m drought‑insurance premium under ADRiFi to bolster 2025‑26 agricultural season

In a decisive step to strengthen climate resilience and safeguard vulnerable livelihoods, the African Development Bank (AfDB) announced that Mozambique has received a US $2 million insurance‑premium payment covering its agriculture sector risk for the 2025–2026 season. This marks the country's third consecutive year participating in the continent‑wide Africa Disaster Risk Financing Programme (ADRiFi), underpinning its commitment to proactive disaster‑risk financing.

The premium payment was formally unveiled during the 2025 key forum on climate risk financing — the 2025 Climate and Disaster Risk Financing Forum, held from October 14 to 16 under the theme "Building Africa's Resilience through Transformative Climate and Disaster Risk Financing and Insurance." The event was co‑hosted by the Government of Mozambique and the AfDB and provided a platform for governments, insurers, donors and technical partners to chart the future of parametric and sovereign risk transfer in Africa.

Under the ADRiFi framework, the AfDB subsidises insurance premiums that enable African governments to access sovereign risk‑transfer mechanisms via the African Risk Capacity Group (ARC). Countries benefit from parametric insurance cover — e.g., for drought or other climate shocks — that releases rapid payouts when predefined triggers are met. ADRiFi also supports risk modelling, contingency planning, institutional policy development and the integration of disaster‑risk financing into national budgets and frameworks. (guidebookforjustfinancing.com)

Strategic significance for Mozambique

Mozambique's US $2 million premium payment for the 2025–26 season reinforces the country's institutional commitment to disaster‑risk financing and underscores several important dimensions:

• Continuity and scalability: This is Mozambique's third year of ADRiFi‑supported insurance cover, signalling maturation of its climate‑risk financing architecture.

• Fiscal foresight: By allocating budgetary resources to the premium, Mozambique advances from reactive disaster‑funding towards a proactive, planned approach to climate risk.

• Social and economic protection: As the country faces recurring droughts, floods and cyclones, the insurance cover helps protect the most vulnerable — small‑scale farmers, rural communities, women and youth — by ensuring funds are available quickly when shocks strike.

• Leadership and demonstration effect: By presenting the premium cheque publicly (handed to Ms. Albertina Fruquia Fumane, Permanent Secretary at Mozambique's Ministry of Finance), the government underscores its role as a champion of climate‑risk preparedness.

In Ms. Fruquia Fumane's words, the country's risk‑insurance policies serve as "a strategic instrument of anticipation that enables the state to protect the most vulnerable, maintain social stability, and mitigate the economic impacts of recurring climate shocks."

Broader ADRiFi context and architecture

The ADRiFi programme is designed to assist AfDB Regional Member Countries in three interlinked ways:

1. Premium support for sovereign risk insurance: ADRiFi helps countries pay a portion of the premium required to join the ARC risk pool. (arc.int)

2. Capacity‑building and risk profiling: Countries receive technical assistance in climate‑risk modelling, contingency‑planning, early‑warning systems and integration of disaster risk financing into national policy frameworks. (Early Warning System)

3. Institutionalising disaster‑risk financing in national systems: Over time, countries are expected to absorb premium payments into their national budgets, reducing dependence on subsidies and increasing sustainability. (guidebookforjustfinancing.com)

According to AfDB data, ADRiFi has mobilised over US $150 million in support and covers roughly 16 African nations, safeguarding millions of people through risk‑transfer mechanisms.

The 2025 Forum: Building momentum

During the 2025 Climate and Disaster Risk Financing Forum, several key messages emerged:

• Climate impacts in Africa are intensifying, and conventional post‑disaster responses alone are insufficient — a shift to ex‑ante financing and risk transfer is urgent.

• Partnerships between African governments, multilateral institutions like the AfDB, specialized agencies such as ARC, and donor‑supported trust funds are critical to scaling risk‑transfer solutions.

• Demonstration cases like Mozambique serve not only national resilience but also continental learning‑platforms. In this event, participants visited drought‑affected communities in Magude District, Maputo Province to witness how insurance premiums translate into on‑the‑ground support for farmers and households.

• The role of donor countries remains significant: countries including the United Kingdom, Switzerland, Canada, Norway and the Netherlands contribute via the ADRiFi Multi‑Donor Trust Fund, enabling premium subsidies and capacity support.

Implementation considerations and next steps for Mozambique

As Mozambique enters its third cycle of ADRiFi‑supported insurance cover, several implementation imperatives and opportunities arise:

• Trigger preparation and contingency planning: Ensuring that the parametric trigger thresholds (e.g., rainfall deficits, soil‑moisture indices) are well‑understood and aligned with national response plans — so that when payouts occur, funds reach vulnerable communities swiftly.

• Budgeting and sustainability pathway: Mozambique will need to progressively absorb more of the premium cost from domestic resources, achieving a transition from full subsidy to partial subsidy and ultimately country‑financed cover.

• Monitoring outcomes and impact: Collecting data on how payouts are used (e.g., for drought relief, seed procurement, social‑protection transfers) will help assess the realisation of resilience benefits and justify future scaling.

• Scaling to other risks: While this cover is for drought in the agricultural season, Mozambique faces multi‑hazard risks (floods, cyclones). There is scope to broaden risk coverage under ADRiFi or complementary mechanisms.

• Policy coherence and integration: The premium payment and the insurance cover must be embedded within the broader national disaster risk management strategy, agricultural policy, and climate‑adaptation frameworks to ensure coherence and avoid fragmentation.

Why this matters for Africa's resilience agenda

Mozambique's case illustrates how sovereign risk‑transfer mechanisms are shifting the paradigm from reactive humanitarian response to proactive risk financing. Key benefits include:

• Reducing the fiscal burden on governments when disasters strike by pre‑arranging funding through insurance rather than scrambling for emergency resources.

• Enabling earlier assistance to affected populations, reducing the time‑lag between shock and response, which is critical for protecting livelihoods and preventing long‑term poverty traps.

• Signalling to private markets and the global insurance industry that African states are viable participants in risk‑pooling and parametric‑insurance models, potentially unlocking future financing options and innovation.

• Complementing other resilience‑building measures — such as early‑warning systems, climate‑smart agriculture and social protections — thereby enhancing the overall risk‑management ecosystem.

Mozambique's receipt of the US $2 million insurance premium for the 2025–2026 agricultural season marks a meaningful milestone in the country's journey toward climate‑resilient disaster financing. With the support of the AfDB‑led ADRiFi programme and collaborating partners, Mozambique is pivoting from short‑term responses to a more strategic, anticipatory model of financing climate risk. As the continent grapples with more frequent and intense climate shocks, cases like Mozambique's become increasingly important as models for scaling sovereign disaster‑risk insurance across Africa.