IDRIMA Advocates for Parametric Insurance to Shield Africa’s Hydropower Revenues

IDRIMA, the Integrated Disaster Risk Management Alliance formed by the Insurance Development Forum (IDF) and AFD Group (Agence Française de Développement and Expertise France – AFD), has launched a new paper, From Exposure to Protection: The Case for Parametric Insurance Revenue Cover for Hydro-Dependent Utilities in Eastern and Southern Africa.

A brief for action, the paper outlines the climate-financial risks that energy systems in Africa face and proposes parametric insurance as a tested and yet to be scaled solution with specific benefits, from protecting hydro-dependent utility revenues, to shielding public finances and energy tariffs.

Hydropower accounts for over 17% of electricity generation across Africa, and above 80% in countries such as the Democratic Republic of the Congo (DRC), Ethiopia, Malawi, Mozambique, Uganda and Zambia. This dependence makes electricity supply, public finances and sovereign creditworthiness directly vulnerable to hydrological variability, a risk that climate change is making more frequent, more severe and increasingly unpredictable.

The paper outlines how revenue protection can complement investment in resilient infrastructure, and highlights the potential for regional risk pooling to expand access to protection. Including case studies, it also presents practical steps which power utilities, ministries of finance, energy and insurance regulators, international financial institutions and development banks, as well as private finance institutions are invited to take to enable insurance protection to be put place.