A man walks past a carcass of a camel at Maikona area in Marsabit county
on April 21, 2019. Locals are counting losses as their animals die due
to the ongoing drought. PHOTO | JOSEPH KANYI
Kenya’s 18-year walk to accessing World Bank special credit line
to respond to natural disasters has paid off with Sh7 billion ($70
million) being released by the Bretton Woods institution to respond to
floods.
The Treasury document shows Nairobi, which was
granted access to the Sh20 billion window in June 2018, drew the amount
late last year after excessive rains in October caused floods and
landslides in more than 30 counties.
This saved Kenya
the pain of having to draw heavily from its already strained annual
budget to respond to disasters as opposed to funding budgetary needs
such as development projects.
The special World Bank
window is called Catastrophe Deferred Draw-Down Option (Cat DDO), a
30-year credit line with a grace period of five years and usually with
very low-interest rates.
“In addition to being a credit
line that can provide immediate liquidity to the country when a natural
disaster strikes, this instrument has promoted institutional reforms in
the disaster risk management framework of the country,” the Treasury
notes.
The window usually serves as early financing
while funds from other sources such as bilateral aid or reconstruction
loans are being mobilised.
The maiden loan means Kenya
has now joined the list of other Cat DDO beneficiaries in Africa such as
Seychelles, Malawi and Cape Verde, Madagascar and Morocco.
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Other beneficiaries in the world have been Colombia, Costa Rica,
the Dominican Republic, El Salvador, Guatemala, Panama, Peru, the
Philippines, Romania, Serbia, Seychelles and Sri Lanka.
But accessing this window that promises money within 36 hours of request has not been a walk in the park for Kenya.
Kenya
had seen near misses in close to two decades, leaving the economy
exposed as development funds were diverted into responding to natural
disasters.
The government first developed a Disaster
Risk Management policy in the year 2000. But this remained in draft form
and kept being tweaked. Only in May last year was it approved by the
Parliament.
The policy aims to increase the
understanding of disaster risk, strengthen disaster risk governance,
enhance preparedness for better response and ensure proper coordination
when disaster strikes.
Countries without a national Disaster Risk Management policy do not qualify for Cat DDO.
World
Bank can only fund countries at an advanced stage of preparing or
already have a “satisfactory disaster risk management programme”.
This meant Kenya had to turn to its budget or expensive loans to deal with risks such as floods.
Kenya’s
failure to put in place a comprehensive disaster preparedness policy
meant that its response to events such as droughts, floods, epidemics
and major accidents remained slow, poorly coordinated and unnecessarily
expensive.
For instance, the drought in the 2016-2017
period adversely affected the growth of the agricultural sector, slowing
down economic growth. This came with huge budgetary implications.
The
floods experienced in 2018 also hurt infrastructures such as
electricity poles and transformers, roads and bridges and therefore
affecting households both directly and indirectly.
This forced the government to set aside Sh60 billion to respond to floods.
The
amount was in addition to Sh17.5 billion infrastructure kitty that the
State Department for Infrastructure had put aside to fix roads damaged
by floods.
Kenya first came up with draft Disaster Risk
Management policy draft in 2000 after the devastating effects of El
Niño rains of 1997 and the bombing of the US Embassy in Nairobi in 1998.
However, the draft ran into numerous hurdles, hampering the approval.
First
was the 2002 elections that resulted in a change of regime. This led to
a breakdown in focus on the draft as the new government mulled new
policy.
UK-based
aid and development charity, Oxfam GB, was then hired in 2009 to
conduct countrywide consultations in a bid to improve the draft.
This
ended with a recommendation that Kenya forms a single agency to
coordinate risk management. This was the birth of the National Disaster
Management Authority.
Instead, the government opted for
different agencies to address the disaster. Some of them were National
Disaster Management Unit, National Drought Management Unit and National
Disaster Operation Centre.
The implementation of the
document would later be complicated by the Constitution that forced the
draft to be revised to take into account new ministries and the 47
counties that devolution created.
While Kenya dithered
for 18 years, countries like Uganda, Rwanda and Ethiopia benefited from
the Kenyan draft to develop, pass and implement their policies.
According
to the World Bank, extreme climatic events have long threatened
development progress in Kenya, where 84 percent of the land is
classified as arid or semi-arid.
A severe drought in
Kenya between 2008 and 2011 affected 3.7 million people and caused Sh1.2
trillion ($12.1 billion) in damages and losses, according to a Global
Facility for Disaster Reduction and Recovery-supported post-disaster
needs assessment.
World
Bank estimates that droughts and floods cost Kenyan economy more than
two percent of gross domestic product (GDP) each year on average.
This means the Cat DDO will be crucial in saving it from diverting development budget to fund contingencies.
The government has in the past relied on ad hoc donor support.
Between
2002 and 2012, international donors provided on average Sh27.8 billion
($276 million) per year in humanitarian aid to Kenya, the World Bank
data shows.
But with the policy approved, Kenya is now working to fully implement the Disaster Risk Management policy framework.
The
Treasury says Kenya has already developed multi-hazard early warning
system and preparedness and effected the National Drought, Emergency
Fund.
Further, the government has been implementing
National Disaster Risk Financing Strategy to improve its response to the
impact of disasters.
This means improved efficiency in budget allocation and execution when a disaster strikes.
A
solid risk financing strategy will see Kenya avoid incidences like that
of 1999-2001 drought which affected 4.5 million people.
The government used about Sh34 billion to respond to this.
Yet,
when it commissioned a study called ‘The Cost of Delayed Response,’ the
finding was that only Sh17 billion would have been enough if proper
coordination was in place.
“The extra amount was a cost
to the national economy attributed to poor preparedness and a delayed
response to this drought episode,” Kenya said in its 2009 policy draft.
The government seeks to strengthen and expand the portfolio of sovereign disaster risk financing instruments.
Cat
DDO now complements the Pandemic Emergency Financing Facility (PEF)
developed by the World Bank as a global solution to strengthen risk
management.
“Together, the Cat DDO and PEF provide
Kenya with liquidity (on different terms and conditions) and help
strengthen resilience to shocks” World Bank notes.
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