Madagascar obtains $29m parametric payout following tropical cyclones: African Risk Capacity

In response to the extensive damage caused by tropical cyclones Fytia and Gezaniver, which disrupted essential services and impacted over half a million people across Madagascar, $29 million has been deployed for recovery efforts through a blend of parametric financing solutions facilitated by the African Risk Capacity (ARC) and its partner institutions.

According to the announcement, this financing was activated through three complementary instruments established in advance.

Madagascar’s government first drew on $19.9 million from the REPAIR programme’s reserve, a World Bank initiative implemented by ARC Ltd that provides countries with rapid access to financing to support early response efforts following severe climate events.

In addition, the severity of the cyclones also triggered ARC’s sovereign parametric insurance coverage, releasing approximately $5.6 million. While a further $3.79 million was mobilised through replica insurance supporting humanitarian partners.

ARC explained that together, these mechanisms have enabled a coordinated financial response to the cyclones’ impact.

“Madagascar has worked closely with ARC over several years to develop and implement risk financing solutions aligned with its exposure to tropical cyclones and climate-related shocks. The activation of several complementary mechanisms following cyclones Fytia and Gezani reflects this sustained collaboration and the importance of financial preparedness,” ARC said.

The firm also emphasised that this sequence illustrates how layered disaster risk financing can provide both rapid initial liquidity and additional protection when climate shocks exceed certain thresholds, strengthening countries’ financial resilience to increasingly complex climate risks.

Dr Jean Chrysostome Ngabitsinze, ARC’s Group Director General, commented: “Our thoughts are with all those affected by cyclones Fytia and Gezani. Madagascar has demonstrated strong leadership in strengthening its preparedness for climate-related shocks and has been a longstanding and committed partner of ARC. The resources mobilised today are the result of that collaboration and foresight. ARC remains fully committed to standing alongside Madagascar as response and recovery efforts continue.”

David Maslo, Chief Executive Officer of ARC Ltd, said: “Climate-related disasters require financing that can respond to different types of impact and at different moments of a crisis. The activations supporting Madagascar illustrate how combining complementary solutions can provide rapid initial liquidity while also ensuring sustained support for recovery. This is central to ARC’s mission to help countries strengthen their financial resilience to climate shocks.”

Caroline Cerruti, World Bank Lead Financial Sector Specialist and REPAIR Regional Lead, added: “With REPAIR, the World Bank is committed to reinforcing the capacity of countries in the region to respond to severe climate events. These disbursements demonstrate how pre-arranged financing, coupled with strengthened operational systems, can provide the resources and frameworks required to respond to complex disasters. This coordinated approach is essential for transforming how the region manages climate shocks and protects affected communities.”

Dr Ramiarison Herijantovo Aimé, Minister of Economy and Finance of the Republic of Madagascar, noted: “The rapid mobilisation of financing following these cyclones has provided important support to Madagascar’s national response. Continued collaboration with ARC, the World Bank and partners strengthens our capacity to respond effectively to disasters and support affected communities.”