ARC launches Shariah-compliant climate protection facility to strengthen Africa’s resilience

African Risk Capacity Limited, the commercial insurance affiliate of the African Union’s African Risk Capacity Group, has announced the launch of new Shariah-compliant protection solutions designed to strengthen climate resilience and expand access to financial protection across its Member States.

The new initiative introduces a non-profit facility that enables governments, communities, and insurers to access climate risk coverage consistent with Islamic principles.

The announcement was made during the 7th Global Takaful and Re-Takaful Forum 2025 in Dubai, where ARC Ltd. received the “Resilient Re-Takaful Finance Innovator Award” for its leadership in inclusive climate financing.

ARC developed the facility to address a significant gap in climate protection for populations that have limited access to insurance products aligned with their faith.

By creating Shariah-compliant, community-based coverage, the organisation aims to support faster recovery for households and institutions affected by droughts, floods, and other climate-related shocks.

The ARC Re-Takaful WAQF Facility (ARC ReTak) forms a central part of ARC Ltd.’s mission to ensure no community is excluded from efforts to build resilience to climate change. Structured as a Waqf (charitable trust), ARC ReTak allows participating governments, Takaful operators, and communities to share climate risks through faith-based mechanisms and access timely payouts after natural disasters.

Through this facility, ARC is enhancing existing risk management systems while expanding coverage to underserved groups. It will also strengthen the capacity of local insurers to provide protection to pastoralists, smallholder farmers, and other at-risk populations. Any surpluses generated will be reinvested into grants and resilience-building programmes, supporting long-term recovery efforts.

ARC is fostering collaboration between African and international Islamic finance institutions through ARC ReTak, creating a bridge between conventional insurance and faith-based financial systems. The organisation is also developing tailored protection solutions grounded in the principles of mutual support, solidarity, and shared responsibility.

In the Takaful system, participants contribute to a common fund to assist members in need, while Re-Takaful extends this cooperative structure to allow Takaful operators to manage larger risks. Unlike conventional insurance, which operates on profit-based underwriting, Takaful and Re-Takaful are built on fairness, transparency, and collective responsibility—principles consistent with ARC Ltd.’s developmental mandate.

By integrating these frameworks, ARC is broadening access to its portfolio of risk-transfer products, ensuring that faith-based communities can benefit from financial protection against climate-related disasters.

The establishment of ARC ReTak also strengthens ARC’s role as a key implementing arm of the African Union’s African Risk Capacity Group.

The organisation supports Member States in anticipating, planning for, and responding to climate disasters through sovereign and replica insurance mechanisms. The addition of a faith-based facility reinforces ARC Ltd.’s contribution to Sustainable Development Goals (SDGs) 1 and 13 and the African Union’s Agenda 2063.

“Africa’s resilience must be inclusive,” added David Maslo, Chief Executive Officer of ARC Ltd. “With this new facility, we are expanding the protection net to include millions who have so far remained outside conventional systems, not by choice, but by lack of access. This initiative embodies solidarity and innovation, ensuring that every African, regardless of faith or background, can recover and rebuild after climate disasters.”

Currently in its structuring and capitalisation phase, the ARC ReTak Facility underscores ARC Ltd.’s long-term commitment to innovation, inclusion, and faith-based finance in advancing climate resilience across Africa. By linking Islamic finance with disaster-risk protection, ARC continues to play a central role in safeguarding the continent’s most vulnerable communities.