This blog was co-authored by Pedro Pinheiro (MiN), Dr. Astrid Zwick, Mavis Mainu, Jana Siebeneck (Global Shield Secretariat)
Countries in Africa are responsible for only a fraction of global greenhouse gas emissions, but are suffering disproportionately from the impacts of climate change. Rising temperatures and shifting rainfall patterns threaten agricultural production, food security, the balance of ecosystems, and strain national economies. These pressures in turn, lead to increased displacement, fuel competition over scarce resources, and widen the gap between adaptation needs and available financing, exacerbating existing inequalities and placing hard-earned development gains at risk.
To enhance fiscal preparedness and ensure rapid liquidity following climate shocks, many countries — including those where the Global Shield against Climate Risks is currently active — are integrating pre-arranged financial solutions, including parametric insurance and contingent credit facilities, as part of a broader paradigm shift from reactive disaster relief to proactive risk management. Yet, on the financing side, national public budgets remain constrained, international climate finance commitments continue to fall short, and official development assistance (ODA) stands at a crossroads. Against this backdrop, how can climate-vulnerable countries in Africa and beyond mobilise sustainable resources for resilience, without imposing additional burdens on governments and lower- and middle-income households?
International remittances — the money that migrants send back home to support their families and communities — offers promising potential here. According to World Bank data, over 60 countries globally rely on remittances for at least 3% of their GDP, and in around 20 countries, remittances exceed 10% of GDP. In 2024, African countries received approximately USD 96.4 billion in remittance inflows, equal to 5.2% of the continent’s GDP. In many countries, remittances now exceed ODA and foreign direct investment. In at least 18 of the 54 African countries, remittances account for at least 4% of the GDP and in a few, like The Gambia and Lesotho, they contribute over 20%. This significant source of financing is also remarkably stable. Unlike volatile capital markets, remittances tend to rise during downturns and disasters, providing a counter-cyclical lifeline that sustains households and communities through food shortages, health emergencies, and post-disaster reconstruction needs.
Remittances often function as a quiet form of global redistribution from developed to developing economies. They are used to complement household consumption and directly support education and health. So far, they have also served largely as an unofficial safety net against climate shocks, but their potential role in building formal climate resilience has yet to be fully explored. Innovative instruments — such as remittance-linked insurance products — could allow diaspora members to channel a small fraction of transfers into regulated coverage for climate hazards like drought, floods, or health shocks, with both more predictable payouts and the potential for Governments or humanitarian organisations matching funds. Pilots have been tested with varying levels of success, and the concept is gaining renewed traction, as countries seek alternative or additional sources of climate finance.
Multiple avenues can be explored to amplify the impact of funds already flowing into the region. One option is integration: embedding affordable micro-premiums directly into remittance transactions, so that both senders and receivers see tangible protection. Another is blended finance: using concessional capital to match or multiply diaspora contributions, lowering costs while expanding coverage.
Various challenges in linking remittances to insurance remain, however. High transaction costs are a hurdle, considering that Sub-Saharan Africa still has some of the world’s highest remittance fees, averaging 7–8%. Regulatory frameworks are often fragmented, and it is difficult to navigate cross-country compliance requirements, with digital penetration of both remittance services and insurance uneven across countries. Additional barriers include employment stability of senders, limited financial literacy and mistrust of formal insurance systems.
Success ultimately depends on political will, strong governance, trust, and effective collaboration between the public and private sectors. Clear and consistent regulation across sending and receiving countries provides a foundation, while regional coordination could further harmonise compliance. Operational enablers, such as simplified client identification and onboarding systems, interoperable payment networks, and trusted agent models are key to reducing costs and expanding reach. Finally, collaboration with diaspora associations and community organisations is vital to building the confidence and trust needed for widespread adoption of remittance-linked insurance.
The potential impact is promising. By weaving remittances into the climate finance architecture, African countries can reduce their dependence on unpredictable aid flows and insufficient climate finance pledges. Diaspora communities can move from being reactive responders to disasters to proactive co-investors in resilience. And critically, lower-income households gain access to protection that is both affordable and empowering.
While the focus here has been on Africa, similar dynamics are unfolding elsewhere. Countries in Asia and the Middle East — where some of the world’s largest remittance corridors exist — have already piloted innovative schemes linking diaspora contributions with insurance and climate resilience initiatives. Lessons from these experiences could help inform Africa’s own efforts to integrate remittances into its climate finance architecture, reinforcing a shared global agenda for inclusive and sustainable resilience.
The Intergovernmental Panel on Climate Change (IPCC) emphasises that delays in adaptation could increase costs, deepen inequality, and exacerbate vulnerability. Remittances will not replace the need for robust international climate funding, but they can serve as a pragmatic source of financing to help close the protection gap. With billions of dollars flowing annually, and remittances already functioning as de facto insurance, ignoring one of the most reliable financial flows into climate-vulnerable countries would be a real missed opportunity. By formalising and expanding remittance-linked insurance against climate risks, African countries can move towards actively and effectively building a more resilient future.
Disclaimer: all views reflected in this blog reflect the views of the authors, and not the views of the Global Shield initiative, its partners and donors.