South Africa - Disaster Risk Finance diagnostic

This disaster risk finance (DRF) diagnostic was prepared as part of a broader engagement between the World Bank and the Government of South Africa (GoSA) on strengthening national and municipal resilience. The objective of this DRF diagnostic is to assess South Africa’s financial preparedness to disasters and crises. South Africa is highly vulnerable to shocks, including droughts, floods, wildfires, and social violence. Between 1952 and 2019, South Africa experienced US$9 billion in economic losses due to disasters, with an acceleration in losses due to the increasing frequency and severity of shocks.

This assessment analyzes:

• the scale of economic losses following disasters;
• pre-arranged funding available to the government and existing ex post sources of funding;
• key legal and institutional arrangements relevant to DRF; and (iv) the funding gap (the difference between the pre-arranged funding available and government liability driven by disaster losses).

Based on this analysis, the diagnostic proposes some measures to strengthen the financial preparedness of South Africa to disasters and crises. The diagnostic was led by the World Bank Finance, Competitiveness and Innovations (FCI) Global Practice (GP) in collaboration with Global Practice of Urban, Resilience, and Land (GPURL). The diagnostic was delivered with financial support from the Sovereign Disaster Risk Financing and Insurance Program for Middle-Income Countries, a partnership between the World Bank and Swiss State Secretariat for Economic Affairs (SECO), managed by the Crisis and Disaster Risk Finance global team in the FCI GP.