Cabo Verde: Increasing resilience to disasters and climate-related shocks

Amid the COVID-19 pandemic, when constraints were at their highest, Cabo Verde was able to access immediate liquidity through the Disaster Risk Management Development Policy Financing with Catastrophe Deferred Drawdown Option (Cat DDO) Project. These resources were critical to supporting the government’s early response to the pandemic. Simultaneously, the implementation of comprehensive policies to increase resilience to disasters and climate-related shocks helped to shape a more sustainable development model for the future.

Challenge

Due to its location and geography, Cabo Verde is exposed to volcanic eruptions, droughts, hurricanes, tropical storms, landslides, and flash floods. In addition, rapid rural-urban migration, continuous land degradation, high indebtedness, and persistent poverty have magnified Cabo Verde’s vulnerability to natural hazards. Climate change is expected to further intensify floods and droughts, as well as exacerbate sea-level rise, sandy beach erosion and coral reef bleaching. In this context, increasing resilience to such shocks and promoting proactive climate adaptation actions are becoming urgent priorities. 

Approach

In the context of a more comprehensive approach to disaster risk management (DRM) and climate-related risk management, the World Bank initiated a strategic policy dialogue to support the Government of Cabo Verde in identifying a set of policy reforms to strengthen the current disaster risk management system. A World Bank DRM Development Policy Financing operation with a Catastrophic Deferred Drawdown Option (Cat DDO) was designed to provide Cabo Verde with immediate liquidity in case of a disaster caused by natural hazard(s). It also supported a comprehensive DRM reform program. These reforms build upon analytical work and policy implementation efforts from various sectors, thus complementing the overall World Bank lending portfolio. The Cat DDO was prepared together with the First State-Owned Enterprise Reform and Fiscal Management Operation, including other efforts to strengthen fiscal risk management in the country. Overall, the Cat DDO has provided an overarching framework to design, implement and monitor the disaster and climate resilience agenda. 

Results

From 2018 to 2022, within the framework of the Cat DDO, the World Bank supported the design and implementation of a comprehensive set of policy reforms aimed at increasing resilience to disasters and climate-related shocks. The combination of financing and policy advice provided by the World Bank has been critical to: (i) enhancing risk-informed territorial planning systems through the incorporation of hazard and climate risk assessments as part of the main spatial planning tools (for example, for municipal development plans); and (ii) increasing the financial capacity to manage impacts associated with disasters and climate-related shocks. This includes the establishment of a risk management service within the Ministry of Finance (MoF), as well as the operationalization of the National Fund for Emergency (or FNE, as it is known by its Portuguese acronym).

The World Bank and the Government of Cabo Verde jointly worked on a comprehensive program to train governmental officials in the management of open-source technologies to build the National Spatial Data Infrastructure Platform. This Platform has proven critical to centralizing, sharing and updating spatial information, particularly, associated hazard and risk, which is required to inform the preparation of territorial and land use planning instruments. Under the guidance of the Government, the World Bank has also provided an extensive assessment of Cabo Verde’s emergency preparedness and response system. Additionally, Ministry of Finance officials received training concerning the quantification and management of fiscal risks associated with disasters and climate-related shocks. The project provided the Ministry of Education with technical assistance in integrating DRM considerations into school infrastructure investments, maintenance, and operations, thus supporting safer and more resilient school facilities.  

Five trust funds were mobilized through the Global Facility for Disaster Reduction and Recovery (GFDRR), providing over US$1 million for technical assistance during the identification and implementation of the policy reforms supported under the Cat DDO Program. This technical assistance supported the development of critical analytical pieces and state-of-the-art risk assessments. It also provided continuous capacity building that contributed to the design and successful implementation of evidence-based DRM policy reforms, thereby strengthening the local capacity to sustainably maintain these changes.   

Bank Group Contribution

The US$10 million Cat DDO was funded through an International Bank for Reconstruction and Development (IBRD) loan of US$5 million and an International Development Association (IDA) credit of US$5 million. In addition, between 2017 and 2022, five trust funds were mobilized through the Global Facility for Disaster Reduction and Recovery for contributions of over US$1 million.  

Partners

The Program supported by the Cat DDO was discussed with development partners, and it was designed to ensure the integration with their initiatives. The preparation of the National Disaster Risk Reduction Strategy received technical support from the United Nations Development Programme (UNDP), as well as financing from the Governments of Japan and Luxembourg. The policy reforms related to risk-informed territorial planning received technical and financial support from the United Nations (UN)-HABITAT and the UNDP. Regarding the emergency response in 2017, the European Union contributed US$8 million to finance a drought mitigation plan, along with contributions from the African Development Bank and the Food and Agriculture Organization. The technical assistance program offered by the World Bank was financed by the Government of Luxembourg and the European Union through the GFDRR. 

Looking Ahead

The World Bank remains fully committed to further helping the government advance the disaster risk management agenda. This is reflected in the Country Partnership Framework that aims to help the government “increase fiscal and macroeconomic resilience and manage the economic impact of climate shocks.” Additionally, the upcoming Country Economic Memorandum will assess the main challenges and policy options to strengthen the management of fiscal risks from disasters and climate-related shocks. The Government of Cabo Verde has also expressed an interest in continuous collaboration with the World Bank Group concerning the building of resilience as part of the Second Sustainable and Equitable Policy Development Financing with a Cat DDO, currently under preparation. 

Beneficiary Story/Quote

“The Cat DDO supported our efforts to quickly mobilize resources to respond to the COVID-19 pandemic. The Cat DDO also supported the Government in strengthening our overall disaster risk management system by allowing us to put in place important policy reforms and mechanisms to better manage fiscal risks associated …  with disasters and climate-related shocks”.