Disaster risk finance for better response to COVID-19 and other risks
The COVID-19 pandemic is having a large negative impact on all economies given the health shock, global economic slowdown, and the impact of domestic containment measures. The outcome is people and firms are far more vulnerable to other shocks, such as droughts, storms, floods, given they are less financially secure and in some areas already suffering from food insecurity and conflict.
With government fiscal stimulus spending soaring, revenues falling, and future credit potentially restricted, the fiscal capacity to respond to these other shocks is constrained. It can be easy to deprioritize financial preparedness for future risks but the COVID-19 crisis has highlighted that countries that were better prepared acted earlier and have so far fared better.
The social protection sector provides important lessons for managing future risks. Linking risk financing to shock-responsive safety nets, as Kenya and Uganda have done and as Malawi, Sierra Leone, and countries across the Sahel are planning to do, can be a game-changer for resilience. These same principles can be used to strengthen the shock-responsiveness of other critical sectors, such as health, nutrition, and education services, or integrate ‘financial shock absorbers’ into vulnerable economic sectors.
The World Bank supports developing countries to develop shock-responsive financial planning and build resilience against future shocks through its Disaster Risk Finance and Insurance Program (DRFIP), implemented by its Crisis and Disaster Risk Finance team.
The webinar discussed the following questions:
- How does this crisis and disaster risk finance agenda link to the social protection agenda?
- What impact does COVID-19 have on the DRF agenda? Implications of compounding risks and DRF strategies.
- In which ways can we support countries to plan better for and financially respond to shocks, including health shocks like COVID-19?
- What key lessons have we learnt to date from DRF for social protection and how should this inform mechanisms for Covid-19 response.
- How can we assess the readiness of SP systems for the next crisis?
- How does the World Bank identify, anticipate and monitor potential compound risks and severe complex crises?
- How can we ensure that money reaches those who need it the most?
Olivier Mahul (World Bank, Program Manager, Disaster Risk Financing and Insurance Program)
Emma Mistiaen (World Bank – Social Protection)
Lindsey Paul Jones (World Bank Global Crisis Risk Platform)
Sophie Evans (Centre for Disaster Protection)
Evie Calcutt and Simon Hagemann – Financial Sector Specialists in the World Bank’s Crisis and Disaster Risk Finance Team
This was the twenty-sixth webinar of the “Social protection responses to COVID-19” webinar series. The series is a joint effort initiated by the IPC-IG, GIZ on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), and the Australia Government's Department of Foreign Affairs and Trade (DFAT) collaboration with the socialprotection.org platform, and in cooperation with partners from different organisations. Join the online community ''Social protection responses to COVID-19 [Task force]'' to learn more about the initiative and future webinars.