Across Africa, disaster risk finance is putting a resilient future within reach

By Hugo Wesley and Lorenzo Piccio

Sub-Saharan Africa knows more than its fair share of disasters induced by natural hazards. The past few months alone have seen drought in the Horn of Africa, floods in Mali and Rwanda, and landslides in Ethiopia and Uganda. Between 2005 and 2015, the region experienced an average of 157 disasters per year, claiming the lives of roughly 10,000 people annually.

Disasters can have a debilitating impact on countries’ growth and development prospects. Losses from disasters are only expected to rise as the impacts of climate change intensify across the region. Given these challenges, governments have often been reliant on external aid and budget reallocation to pay for disaster recovery. However, this financing strategy comes at a cost. Uncertainty and delays in aid flows tend to complicate planning for relief and recovery efforts, and budget reallocations can divert funding from vital development programs.

Launched in 2015, the Africa Disaster Risk Financing (ADRF) Initiative works with 19 African countries to develop and implement tailored financial protection policies and instruments that can help them respond quickly and resiliently to disasters. The ADRF Initiative is the first program in Africa to focus on the broad disaster risk finance (DRF) agenda. It is financed by the European Union (EU) and implemented by the World Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR), as part of the Africa, Caribbean and Pacific (ACP) – EU Program, Building Disaster Resilience in Sub-Saharan Africa.

At the most basic level, DRF aims to strengthen countries’ ability to manage economic and fiscal stresses when disasters strike. There is no one-size-fits-all approach to disaster risk financing—countries have a wide array of financial protection policies and instruments to consider, including sovereign risk finance, social protection programs, as well as agriculture and risk insurance programs. Since its inception, the ADRF Initiative has focused on three areas to pioneer DRF in Africa:

Gathering and developing disaster risk information

The ADRF Initiative is developing multi-hazard disaster risk information for nine countries in Africa: Cape Verde, Ethiopia, Kenya, Niger, Malawi, Mali, Mozambique, Senegal, and Uganda. This information is used to inform dialogue on DRF with national governments, thus shaping the broader disaster risk management agendas in these countries. For instance, data collected in the development of a risk profile for Mozambique has informed the dialogue on school safety, detailing the financial impact of disasters on schools, and laying the case for the need to invest in making schools more resilient to disaster.

Developing DRF strategies to achieve national financial protection priorities

The ADRF Initiative is supporting national governments of 19 African countries to develop financial protection policies, instruments and strategies, which are tailored to the local context. It is engaged with Ministries of Finance to conceive and design country-driven contingent financing options and strategies in several countries, including Cape Verde, Malawi, Mozambique, Madagascar, Lesotho and Benin.

With ADRF assistance, the World Bank approved a catastrophe credit for Kenya in June 2018, providing a $200 million contingent line of credit to the country. While preparing to develop this credit, the government of Kenya approved a National Disaster Risk Financing Strategy—the first to be implemented in Africa. Kenya also improved its policy framework for managing natural hazard risks in urban, land, and water management.  

The ADRF Initiative is also supporting countries establish shock responsive safety nets that rapidly deliver emergency assistance to vulnerable households in the event of a disaster (as in Uganda, Kenya, Malawi, Niger, Sierra Leone), as well as agriculture insurance programs, which unlock critical assess to credit for low-income farmers (as done in Uganda, Kenya, Rwanda).

Sharing knowledge and lessons learned

The ADRF Initiative has already organized nearly 60 knowledge exchanges and trainings, designed to gather and disseminate lessons learned and build the capacity of governments. In May 2018, an event was organized on the margins of the Understanding Risk Forum in Mexico City. Attracting more than 60 participants, including 40 Sub-Saharan African government delegates, the event was the largest assembly of African DRF practitioners to date, demonstrating the impact of the initiative in building DRF capacity among governments in Sub-Saharan Africa.

While the ADRF Initiative has made huge leaps in pioneering DRF across the region, it does take time for policy and institutional changes to take effect, and to build the strong relationships with governments, which are needed to get DRF off the ground. Yet, against the backdrop of intensifying climate and disaster risk, this has also been clear from experience on the ground— enthusiasm for DRF and its potential to help countries respond more quickly and resiliently to disasters isn’t in short supply. This is cause for optimism that a resilient future for the countries of Sub-Saharan Africa is on the horizon.