Memorandum of Understanding

A critical part of the work of the ARC Agency Secretariat includes engagement and consultation with ARC Agency member states to determine how and if ARC could create efficiencies for countries and to determine what type of instruments are most appropriate for allowing governments to access the funds they need to manage natural disaster risks. 

Prior to joining the ARC risk pool, countries work collaboratively with the ARC Secretariat in an intensive capacity building programme to prepare in-country government staff for the prospect of risk transfer to the international market.  Countries formalize their engagement with the ARC Agency by signing a Memorandum of Understanding (MoU), which commit resources both from the ARC Agency and the government to undertake the capacity development programme. This support includes the secondment of government staff to carry out activities in the ARC Capacity Building Programme including:

• The refinement of and training on Africa RiskView software to accurately reflect the drought-related food security events in the country;
• The quantification of the country’s drought risk and selection of appropriate tools for the different layers of the risk transfer model, including risk transfer parameters for ARC;
• The drafting of operations plans for optimal use of a potential ARC Ltd payout; and,
• The commitment of premium payment.

After completing the Capacity Building Programme, countries apply for a Certificate of Good Standing from the ARC Agency Governing Board. These certificates reflect a country’s ability to link ARC Ltd payouts to time-sensitive, livelihood-saving and cost effective operations plans and enable governments to join the ARC Ltd risk pool.

24 countries have active MoUs with the African Risk Capacity to bolster their national disaster risk management systems and undergo preparations to join the ARC Ltd risk pool.

MoU Countries and Signing Dates

Upon entering a MoU, the government agrees to:

• Commit to carrying out technical work required under the Capacity Building Programme for a period of one year
• Avail relevant technical experts who form a core government team and act as focal points within their department for specific work streams of the programme
• Allow these staff members to retain their office space and to dedicate the necessary time to ARC activities.

Upon entering a MoU, African Risk Capacity agrees to:

• Provide resources that would enable the government team to complete the activities of the programme
• Provide training inside and outside the country for the government team in various aspects of the programme, transferring knowledge and capacity
• Provide technical expertise and guidance throughout the programme
• Provide the government with access to the Africa RiskView software and adequate training to the government team in the use of this software
• Supporting experts in country with training in drought, flood and/or tropical cyclone model-ling.

The ultimate objective of the Capacity Building Programme is to enable governments to make an informed decision regarding transferring the country’s natural risks to ARC. While signing a Memorandum of Understanding and participating in the Capacity Building Programme prepares countries to pool and transfer their risk to ARC Ltd, joining the risk pool is left to the discretion of each government.