50 NON-SOVEREIGN BUSINESS: MALAWI The economy of Malawi relies heavily on agriculture, which accounts for more than a quarter of the country’s GDP. A significant percentage of the population also relies on rain-fed smallholder agriculture. In recent years, this sector has been hard-hit by an onslaught of climate shocks, such as cyclones, droughts, and floods, which have decimated harvests and threatened food security and livelihoods. Poverty is also pervasive in Malawi, with 75% of the population living below the international poverty line. From 2021 to 2022, Malawi struggled with a severe drought that pushed millions of people into crisis levels of food insecurity. Additionally, Tropical Storm Ana, which made landfall in January 2022, caused widespread destruction, exacerbating the situation. These climate events resulted in reduced agricultural production with more than 3.8 million people left facing severe food insecurity. The challenges did not end here. Tropical Cyclone Freddy battered the country twice in February and March 2023, causing significant damage, and another 1.6 million people were left food insecure. With climate change projections indicating increased frequency and severity of perils, building resilience is an urgent priority. Spearheading innovation Since 2020, the Malawi Government has been implementing the World Groundbreaking insurance innovation for Malawi Bank’s Social Support for Resilient Livelihoods Project (SSRLP), but a pivotal partnership with ARC Ltd. this year, saw the scaling up of the SSRLP with the introduction of an insurance innovation. The result was that Malawi's flagship national social safety net, the Social Cash Transfer Programme (SCTP) was reinforced with a risk transfer instrument to provide additional liquidity for the response to future droughts. The protection of additional vulnerable households to the existing list of beneficiaries was also made possible. NON - SOVERE I GN BUS I NESS – MALAWI
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