DISASTER RISK FINANCING: What it is and what it isn’t for adaptive social protection in the Sahel Debunking myths about DRF in the Sahel Felix Lung SASPP Operational & Policy Note Series November 2022 2 SASPP Operational and Policy Note Series November 2022 A. Summary: Adaptive safety nets are cash transfer programs that out some of these limitations and suggests ways for can rapidly increase beneficiary coverage or the policymakers to address them. Among these, it suggests cash amounts they provide in response to disasters. that governments in the Sahel focus on building reliable Disaster risk financing (DRF) provides a set of tools social protection delivery systems before turning to and instruments that can efficiently help finance the DRF; design DRF strategies that account for continued costs of such responses. In the West Sahel, where external assistance; focus first on more frequent, lower chronic food insecurity and vulnerability are high and severity shocks rather than the extreme ones; and start safety net coverage, data availability, and government their DRF engagements with sectoral DRF strategies fiscal space often remain limited, some of the common rather than comprehensive national ones that try to approaches to DRF meet their limitations. This note draws address all disaster risks, costs, and sectors. B. Introduction Across Africa, several governments have started available immediately when needed for scaling up a establishing elements of adaptive safety nets to safety net in response to a shock. Financing can thus respond to shocks such as droughts. These provide be available both faster and more reliably. By using regular cash transfers and accompanying measures data-driven triggers and rules, they can also help to to extremely poor households during normal times. enable decision-making processes to be more objective. Following a shock, they can rapidly increase their Finally, they can help reduce total response costs, as beneficiary coverage to include shock-affected some financing instruments are particularly well-suited households (horizontal scale-up) or increase the cash to finance certain types of shocks. amount provided to its regular beneficiaries situated in shock-affected areas (vertical scale-up). Programs Countries in the West African Sahel, such as Burkina such as those in Kenya, Niger, and Uganda and those Faso, Mali, Mauritania, Niger, and Senegal, have started considered by the Governments of Malawi and Sierra using DRF instruments to fund their major exposure Leone have automated response processes, providing to climate shocks, particularly droughts. So far, these emergency payments to shock-affected beneficiaries instruments have rarely been linked to adaptive safety when a pre-defined, objective trigger threshold is met nets. However, there is major potential to do so, especially (Zeufack et al., 2022). given the advances of Sahel countries in establishing national adaptive safety net programs. DRF outlines ways to help finance the cost of such shock- response systems. DRF instruments are arranged in As these DRF instruments in the Sahel emerge, so do first advance and include, for example, insurance contracts or lessons. One is becoming increasingly clear: DRF in the dedicated contingency funds. By pre-arranging financing, Sahel is different from elsewhere in some respects. Sahel DRF instruments can ensure that the correct amount is countries are exposed to major and particular challenges 3 SASPP Operational and Policy Note Series November 2022 that must be accounted for. They include their major 1. DRF is only about setting up financial instruments. exposure to various climatic and non-climatic shocks; 2. Establishing DRF instruments should be an ur- an extraordinarily high level of poverty and vulnerability; gent priority for countries in the Sahel. widespread chronic food insecurity; low development 3. DRF reduces the need for donors to support of payments delivery infrastructure, including mobile countries in responding to disasters. payments; a general lack of climatic, vulnerability, and 4. The focus of DRF in the Sahel should be on ex- other data; and an institutional landscape that is less treme climate events. geared towards disaster response rather than food 5. The first step for countries is to develop a com- security response. prehensive national DRF strategy. These characteristics impact the design and This work has been prepared with support from the implementation of any DRF instrument for adaptive Sahel Adaptive Social Protection Program (SASPP). social protection in the region. This policy note attempts This program is hosted at the World Bank and supports to capture these and suggest ways for policymakers to national safety net programs in the six Sahel countries— address them. It does so by first giving a brief overview Burkina Faso, Chad, Mali, Mauritania, Niger, and Senegal. of key concepts in DRF for adaptive social protection. The SASPP is financed by the German Ministry for It then evaluates common myths about DRF and shows International Economic Cooperation and Development how they do not or only partially apply in the context (BMZ); the Foreign, Commonwealth, and Development of the Sahel and what policymakers may consider Office (FCDO); the French Agency of Development (AFD); instead. The following myths are explored: and the Danish Ministry of Foreign Affairs. 4 SASPP Operational and Policy Note Series November 2022 C. Disaster risk financing for adaptive social protection—underlying concepts Pre-arranged funding, triggers, and extreme event with many affected people is more costly scalability parameters than responding to a smaller one with fewer affected International experience shows that many countries— people), and the transfer size per household. If these including the countries in the Sahel—wait until a disaster elements are decided on upfront, the financing can be has struck before obtaining funds to pay for resulting prearranged so that an appropriate amount is available response costs. This ad hoc approach to funding disaster- to scale up the safety net at the right time. related costs is often slow and relatively expensive. The fundamental realization at the heart of DRF is that it can Thus, DRF is about more than just setting up financial often be predicted how natural hazards will strike and that instruments. The pure act of establishing financial arranging financing in advance, e.g., via a disaster fund instruments is part of the equation, but so is the ex- or insurance, makes the response faster and cheaper. ante design of triggers (e.g., when the trigger reaches threshold X, emergency cash transfers are launched), the However, DRF goes beyond that. To pre-arrange funding upfront definition of beneficiary numbers (e.g., a trigger needed for future responses, one needs to know how threshold of X corresponds to a total of Y beneficiary much money will be needed. For adaptive safety nets, households), and transfer size per household (e.g., this depends on when and how often the response will each beneficiary household receives a total of US$Z). occur (once a year is more expensive than once every These elements cannot be seen in isolation—they are five years), the number of beneficiaries (responding to an all connected and must be planned together (Figure 1). FIGURE 1. DESIGN FRAMEWORK FOR SHOCK-RESPONSIVE SAFETY NETS Trigger reaches threshold X Safety net scales Pre-arranged up to Y beneficiary financing HHs providing released US$Z per HH finances Source: Adapted from Lung, 2020 5 SASPP Operational and Policy Note Series November 2022 FIGURE 2. CONCEPT OF LAYERING FINANCIAL INSTRUMENTS ACCORDING TO RISKS (RISK LAYERING) Low frequency National insurance High-severity RiskTransfer Sovereign risk transfer programs (e.g. shocks agriculture) Contingent Credit Contingent credit line Low-severity National Strategic grain Contingency Reserves disaster fund reserve budget line shocks High frequency Source: WBG In an ideal DRF scenario, the response would be largely basic idea is that no single financial instrument is suited automated. Based on objective data, the safety net is to cover all types of risk efficiently. Instead, different scaled up immediately when the trigger reaches a pre- instruments are the most cost-effective and appropriate agreed threshold. This could, for example, be a maximum depending on the expected frequency and severity of amount of rainfall at the end of the agricultural season as the financed risk. For more frequent, less severe shocks, an indicator for drought or a river’s minimum water level reserves—such as dedicated budget lines or disaster as a flood proxy. As such, an automated approach also funds—tend to be the most cost-effective. Meanwhile, enables earlier response, and it is a direct application of risk transfer instruments, such as insurance, tend to be the growing literature on the benefits of early response better suited for extreme events. via safety nets (Pople et al., 2021; Cabot Venton, 2018; Clarke and Hill, 2012). As for other response programs, a mix of different instruments for adaptive social protection tends to be Risk layering the most cost-effective to finance scale-ups in response The concept of risk layering has received particular to different shocks. The risk layering approach has attention in DRF (see Cummins and Mahul, 2009), and been described in detail elsewhere, see Cummins and its specific application for adaptive social protection is no Mahul (2009) or Clarke et al. (2016). The concept is exception (Bowen et al., 2020; Longhurst et al., 2021). Its summarized in Figure 2. 6 SASPP Operational and Policy Note Series November 2022 D. DRF for ASP in the Sahel—revisiting assumptions The following evaluates five common presumptions countries; however, as the analysis will show, they do about DRF in the light of the context of the Sahel and not hold true in the context of the Sahel. adaptive safety nets. Some of these apply in different MYTH 1 DRF is only about setting up financial instruments. Responding to shocks is costly. DRF looks at how these • To plan response activities: DRF can help inform costs can be financed most effectively. Thus, DRF is shock-response activity planning, as possible re- sponse activities depend directly on the available about setting up certain financial instruments, such as financing—what cannot be paid for and should not insurance, credit lines, and disaster funds. Or is it? be planned (Dercon and Clarke, 2016). • To develop triggers: Accepted criteria with tested In the previous section, we established that creating methodologies and techniques have been devel- DRF instruments requires estimating disaster-related oped for what makes good triggers. Many innova- needs and interventions in advance. For this, a range tive ways exist to detect or model the occurrence of analytical tools has been developed, mainly in the and severity of disasters (Lung, 2020). insurance sector. These can be useful for policymakers • To analyze historical cost: Financial analytical ap- who are designing adaptive safety nets, of which the proaches can be used to estimate hypothetical setup of financial instruments is only one: response costs for past events—this allows for es- timating costs for the future (Calcutt et al., 2021). • To prioritize risks: Catastrophe risk models and • To plan financial instruments and strategies: probabilistic models quantify the likelihood and Analysis of what financing instrument, or mix of corresponding severity of a disaster occurring—in instruments, is best suited to ensure reliable and the context of ASP, this can be a key consider- cost-effective response financing (WBG, 2014; ation for geographical targeting (UNDRR, 2017; Clarke et al., 2016). GFDRR, 2014). 7 SASPP Operational and Policy Note Series November 2022 CONSIDER THE FOLLOWING EXAMPLES: Ex. 1 Niger, trigger and Ex. 2 Mauritania, risk analytics: shock-response design: During the design of a shock-responsive safety In the context of the World Bank’s support to net pilot program in Niger, an Excel tool was Mauritania’s social safety net system, a model was developed, enabling real-time analysis of developed to estimate the impact of drought on the effects of changes in trigger design and food insecurity during the lean season. Following scalability parameters. Users could alter trigger a catastrophe risk modeling framework, (i) the thresholds, the number of targeted shock-affected frequency and severity of droughts, (ii) the beneficiaries, and the cash amount allocated to drought exposure of rural households, and (iii) them. The tool then calculated and visualized the vulnerability of rural households to drought how often and to how many people the safety were evaluated. This helped the Government net would have scaled up in past years under of Mauritania prioritize communes in which the chosen parameters and the associated cost. households were added to the National Unified By making the impact of scalability decisions Social Registry (registre social unifié, RSU), a visible and intuitive, this tool was a central aid database of potential beneficiary households of in the Government’s decision-making process social assistance and shock-response programs. in adopting and designing the program (for a It also laid the baseline for the development of an description of the pilot, see Brunelin et al., 2022). early action trigger (WBG, 2018). FIGURE 3. NIGER DROUGHT RESPONSE FIGURE 4. MAURITANIA PILOT PROGRAM DESIGN TOOL DROUGHT IMPACT MODEL Source: WBG Source: WBG, 2018 8 SASPP Operational and Policy Note Series November 2022 Ex. 3 Ethiopia, estimate of people affected by drought: FIGURE 5. ETHIOPIA LIVELIHOOD, EARLY ASSESSMENT, PROTECTION TOOL Together with the World Food Program (WFP), the Government of Ethiopia (GoE) developed the “Livelihood, Early Assessment, Protection” (LEAP) tool in 2006. LEAP uses a model based on the Water Requirements Satisfaction Index (WRSI) which calculates the number of people needing food assistance due to rainfall shortages. It is used today as an input into decision-making by the GoE on scaling up the Productive Safety Net Program (PSNP) in response to droughts. The PSNP is Ethiopia’s national safety net providing food assistance and services to up to nine million people every year Source: Government of Ethiopia (Drechsler and Soer, 2016). MYTH 2 Establishing DRF instruments should be an urgent priority for countries in the Sahel Countries in the West African Sahel are severely however, have not yet reached the scale needed in most exposed and vulnerable to climatic shocks, in particular of the countries in the region except for Senegal and droughts and floods, often with devastating impacts on Mauritania, and coverage remains limited in the four other poor and vulnerable populations (Brunelin et al., 2020). SASPP countries. Establishing the underlying regular There is thus a strong argument that governments cash transfer programs at scale is a major undertaking should improve their disaster response systems to that takes time, as it entails building the institutional be able to support those affected. This includes the arrangements, identification and registration processes, needed financing, i.e., DRF instruments. Thus, the payment systems, grievance redress mechanisms, and argument goes, countries are well-advised to set up implementation capacity. Once core regular programs DRF instruments urgently. are in place, countries need to develop the system’s capacity to scale up in response to shocks, in other Two things need to be considered, however. First, words, to provide transfers to additional shock-affected before setting up any financing mechanisms, a delivery beneficiaries (horizontal scale-up) or to increase payments vehicle for any potential payouts needs to be in place. to existing beneficiaries (vertical scale-up). Establishing In the case of adaptive social protection, this is either the capacity to respond to shocks is the priority before a regular cash transfer program that is scaled up or establishing funding mechanisms—without them, a DRF a specific shock-response program. Such programs, instrument would have little to finance. 9 SASPP Operational and Policy Note Series November 2022 There is a second, broader argument. Countries in the to tackle poverty and chronic food insecurity, even if they Sahel are faced with large-scale chronic food insecurity. do not have a shock-response component (Bossuroy et With financing being scarce and the objective to al., 2022; Banerjee et al., 2015; Bandiera et al., 2017). relieve food insecurity, it seems prudent for countries Against this background, there is a strong rationale for to prioritize chronic food insecurity. The numbers are prioritizing investments in building robust safety net striking: As per FAO data, undernourishment in the six programs and delivery mechanisms in the Sahel. Risk SASPP countries varied between eight percent of the financing mechanisms are key to institutionalizing ASP- population in Senegal and 32 percent in Chad in 2019 based shock-response—however, establishing these (FAOSTAT). A 2019 analysis of Niger estimated that about is a second step. Safety nets need to be operational 32 percent of the country’s population was moderately or to enable the potential delivery of response funds to severely chronically food insecure (FEWS NET, 2019). As shock-affected beneficiaries. If not, response efforts a growing body of evidence shows, regular cash transfers may be frustrated not by the lack of finance but by the accompanied by measures to promote greater human lack of capacity to implement them adequately. capital and productive inclusion can be an effective way MYTH 3 DRF reduces the need for donors to support countries in responding to disasters. International partners sometimes envision DRF latest data available1. Their financial resources available instruments to help countries increase their capacity for shock-response are severely limited. A recent to pay for shock-related costs. DRF, so the argument evaluation found that these four countries could need goes, helps reduce disaster-related costs, spreads them as much as US$582 million to respond to food security out in smaller chunks over longer periods of time, and shocks occurring once every five years. However, they builds government-owned systems to pay for them. It have only US$128 million covered through existing can thus enable a gradual transition of donors covering reserves and other financing instruments (Hoglund shock-related costs to governments doing it themselves. Giertz et al., 2022). Instead, they are highly dependent In practical terms, this is sometimes expressed in funding on external financing: In terms of humanitarian support, criteria of available DRF funds that privilege sustainable these four Sahel countries request food security-related DRF initiatives, i.e., those with country-based financing humanitarian support of around US$1 billion annually, of in the medium term. which, on average US$360 million get funded (UN OCHA FTS, 2020). Disaster response efforts are often almost For most Sahel countries, this argument does not hold. entirely donor-financed (Hoglund Giertz et al., 2022). In four of the six SASPP countries (Burkina Faso, Chad, Mali, and Niger), GDP per capita is less than US$1,000. Given the size of the need and current financial support, In these four countries, annual government spending it seems unlikely that Sahel countries will be able to per citizen amounted on average to only US$105 per the finance disaster-related social protection response 1 Government final consumption expenditure in current US$, World Bank World Development indicators 10 SASPP Operational and Policy Note Series November 2022 costs by themselves in the short-to-medium term, even nstruments in the Sahel: They must account for it. DRF when using more effective, government-owned DRF strategies in the Sahel need to explicitly integrate donor systems. Donors will continue to play an important support and government allocations in a common, role in financing response efforts. DRF will not change rules-based framework. This is different in other low this. This should not be discouraging to partners—also, and middle-income countries and regions: National countries with less exposure, greater public resources DRF strategies attempt to establish country-financed available, and more DRF instruments in place continue instruments that cover the entirety of the identified to have at least short-term needs for external assistance. risk exposure. In these strategies, donor financing For example, Kenya, which adopted a DRF strategy plays a role mainly through concessional credit lines in 2018 and has established multiple instruments, granted by international financial institutions but not also received, on average, US$196 million per year through grant support, as is the case for much of the in external humanitarian assistance from 2019–2021 external donor support Sahel countries are receiving. (OCHA FTS). If referenced at all, the international humanitarian system features as a side note2. DRF strategies could External partners will also have to continue to play explicitly state that donor support will be required an important role in the delivery of shock-related to pay for certain risk financing instruments, such as assistance. The current level of development of through the African Development Bank’s Africa Disaster adaptive social protection systems is still relatively Risk Financing (ADRIFI) program. DRF strategies could low in at least four of the six SASPP countries (Burkina also leave explicit financing gaps for certain risks and/ Faso, Chad, Mali, and Niger). As these systems grow and or risk layers intended to be financed by donors—for mature, they should develop the capacity to respond example, for the most extreme events that receive the to shocks of small and medium size. However, in the greatest international attention. short-to-medium term, their shock-response efforts will need to be complemented by response systems DRF instruments should also be designed to allow of humanitarian partners. Additional implementers will for continued donor support. For example, dedicated likely be needed for large and extreme shocks in the contingency funds for adaptive social protection could future—this is the same for middle and high-income be established with both government and donor countries that turn to external support when national participation. In Burkina Faso, Mali and Niger, this systems become overwhelmed by major shocks. could build on the financial reserves for food security that were set up in the late 1980s–early 1990s and The continued need for donor support has important managed jointly by the respective government and implications for the design of DRF strategies and i donors (ECOWAS, 2011). 2 For example, the DRF strategies of the Governments of Colombia, Panama, and the Philippines include some concessional funding by interna- tional financial institutions but no grant funding. The international humanitarian system is not mentioned (GoC, 2017; GoP, 2014; GoP, 2017). The DRF strategy by the Government of Kenya accommodates only marginal grant funding, and the humanitarian system is only mentioned stating that any government response should be “coordinated” with it (GoK, 2018). The DRF strategy of the Government of Malawi acknowledges the “important role” thus far of development partner financing of disaster-related costs. However, it only focuses on the fact that it is often late and unpredictable rather than including it explicitly in the envisaged disaster financing framework (GoM, 2019). 11 SASPP Operational and Policy Note Series November 2022 MYTH 4 The focus of DRF in the Sahel should be on extreme climate events. Countries in the West African Sahel experience major at US$3.20,4 surpassing 25 percent in three out of the droughts approximately every five years3. When these are six SASPP countries (World Development Indicators). particularly devastating and widespread, approximately People living in poverty have limited resources to fall every 10 years, they attract significant international back on. Thus, even relatively frequent, low-intensity attention and lead to large commitments of humanitarian climate shocks can have devastating effects on large aid. Major floods similarly have the potential to destroy the parts of the population, often pushing millions into food livelihoods of both rural and urban populations. Countries insecurity. Strengthening their resilience and building in the Sahel have become known to be exposed to response mechanisms for frequent shocks should these extreme climate events. With climate change, it thus be prioritized before pre-arranging response is expected that these shocks will become even worse instruments to more extreme, but rarer events. (IPCC, 2021). Given the terrible and very visible impacts these extreme shocks have on populations, those working Second, external financing is more readily available for on DRF often start with establishing instruments covering rare extreme shocks than for more frequent, smaller these most extreme shocks. ones. This is reflected in the data: For example, the Global Humanitarian Assistance Report 2021 found For the Sahel, two nuances should be considered. First, that “In general, countries (…) with larger appeals climate resilience levels are generally low across the were better funded than those with smaller appeals in Sahel. The majority of Sahelian people work in agriculture 2020. Countries (…) with appeal targets of over US$1.0 and most in subsistence agriculture, thus making them billion were covered on average at 57 percent, while extremely vulnerable to droughts, even relatively small countries with targets of under US$250 million had ones. Extreme poverty is pervasive, with around 40 an average coverage of 40 percent” (Development percent of people living in poverty in five out of the six Initiatives, 2021). As of June 2022, almost 50 percent SASPP countries. It is also deep, with the poverty gap of international humanitarian aid 2022 went to only five 3 Various analyses of drought occurrence have been conducted for different SASPP countries, including Integrated Context Analyses (ICA) by WFP and probabilistic Disaster Risk Profiles by the Global Facility for Disaster Reduction and Recovery (GFDRR). 4 The poverty gap at US$3.20 a day (2011 PPP) is the mean shortfall in income or consumption from the poverty line US$3.20 a day (counting the nonpoor as having zero shortfall), expressed as a percentage of the poverty line. 12 SASPP Operational and Policy Note Series November 2022 protracted crises, none of which in West Africa and all In terms of DRF instruments, this means that there is a of them largely driven by conflict . Thus, for countries 5 strong argument for the Sahel to prioritize risk retention with financing needs across the spectrum such as mechanisms such as disaster contingency funds or those in the Sahel, it may in fact make financial sense contingent credit lines which tend to be most cost- to first focus on financing solutions for more frequent, effective for the more frequent, lower severity shocks. less extreme events. However, in some cases, it can also make sense to use risk transfer instruments such as insurance to finance While DRF instruments are of key relevance to these shocks. They may then not be the most cost- countries in the Sahel, governments should consider effective—however, they can help bring about financial their respective priorities carefully. With household discipline via regular premium payments, lock in shock shock resilience low, continued investments in financing in environments where it may be difficult to strengthening people’s day-to-day livelihoods and hold reserves, and crowd in analytical capacity. They may resilience should rank high on the priority list. Swift also help governments obtain additional donor support response mechanisms for relatively more frequent, as some initiatives (such as the AfDB’s Africa Disaster lower severity shocks, backed up by suitable DRF Risk Financing Program or the InsuResilience Solutions instruments should equally be considered priorities. Fund) are specifically designed to finance insurance Meanwhile, response mechanisms and associated solutions. The optimal mix of financing instruments financing for rarer, more extreme events should be should be determined based on a careful analysis of considered with a relatively lower priority. country context, needs, and available options. 5 These include the crises in Ukraine, Afghanistan, Yemen, Syria, and Ethiopia - https://fts.unocha.org/global-funding/overview/2022, accessed on 8 June 2022. MYTH 5 The first step for countries is to develop a comprehensive national DRF strategy. DRF instruments should be well planned and coordinated 2014; OECD, 2017; Meenan et al., 2019; ADB, 2020). to avoid overlapping coverage and overlooking certain These strategies try to be comprehensive, covering disaster-related costs. Thus, so the theory goes, countries all major disaster risks and related costs across all should start by conducting a quantitative assessment sectors. In Africa, countries such as Kenya, Malawi, and and prioritization of shocks, estimating the associated Mozambique have adopted DRF strategies. costs to each identified risk, and designing a strategy defining which financing instrument will be used to In the Sahel, however, governments should consider cover which of the identified costs. Various frameworks starting small and develop DRF solutions not based have been suggested for developing such national on one comprehensive strategy but for specific risks, DRF strategies or shock financing strategies (WBG, costs, and sectors. 13 SASPP Operational and Policy Note Series November 2022 The context in the Sahel is different in three respects. Thus, a record of their occurrence and severity in the past First, data limitations constrain the estimation of costs has only limited predictive power for the future. While resulting from specific disasters. To assess disaster- efforts are underway to improve the predictive modeling specific costs, one would require either (i) an estimate of of social unrest risks, these have not yet proven to be how many people required assistance due to the specific reliable. The situation is similar for food price crises. disasters and attach a per-head intervention cost or These can be a major driver of humanitarian need in the (ii) as a proxy, the total amount spent on humanitarian region. They are driven by a complex and unpredictable assistance due to a specific disaster. However, in most set of factors. Through international connectedness of Sahel countries, data availability does not allow for markets, this includes global events, as witnessed by either approach. For (i), estimates of the number of the war-induced crop production shortfalls in Ukraine people living in food insecurity are published twice in 2022. Food price crises thus do not lend themselves a year via a regionally standardized assessment, the to the standard methodology applied to DRF strategies. Cadre Harmonisé (CH). However, the CH lists absolute figures and does not differentiate among causes. Other Third, institutional structures in Sahel countries may existing impact estimates such as those published by be less conducive to adopting and implementing the Université Catholique de Louvain (UCL)6 or the U.N. comprehensive DRF strategies covering all risks, costs, Office for Disaster Risk Reduction7 are often subject and sectors. Sahel countries across the board have to significant data shortages. For (ii), existing budget made the choice of establishing food security response systems of Sahel countries and of international donors agencies rather than disaster response agencies. For do not allow for sufficient differentiation. example, in Niger, the Cellule des Crises Alimentaires (CCA) develops and delivers the Plan de Soutien, an Second, some of the major shocks that Sahel countries annual response plan for any kind of food insecurity are exposed to are not easily quantifiable. This is regardless of its causes—be it drought, conflict, higher particularly true for conflicts and price shocks. Conflict food prices, or general poverty. Other Sahel countries is a major driver of humanitarian need across Sahelian have similar agencies and arrangements 8. This is countries, with millions of people internally displaced different from countries in which chronic food insecurity and the security situation worsening significantly in is lower and response agencies focus on specific recent years. A fundamental idea of DRF strategies is perils. For example, Kenya has a dedicated National that an analysis of previous shocks can allow estimating Drought Management Agency (NDMA) and Malawi the frequency and cost of future ones. This often works has the Department of Disaster Management Affairs well for natural disasters but less so for man-made ones. (DoDMA)—in both cases, these response agencies Conflicts are a case in point: They do not occur with a focus mainly on drought response, with drought being certain natural regularity. Instead, they are driven by a the respective national priority risk. In Sahel countries, multiplicity of different factors that are less predictable. without agencies specifically in charge of planning and 6 www.emdat.be, curated by the Centre for Research on the Epidemiology of Disasters (CRED) 7 https://www.desinventar.net/ 8 For other Sahel countries, comparable agencies are the Sécrétariat Exécutif du Conseil National de Sécurité Alimentaire (SECNSA) in Burkina Faso; the Comité d’action pour la sécurité alimentaire et la gestion des crises (CASAGC) in Chad; the Commissariat à la Sécurité Alimentaire (CSA) in Mali; the Commissariat à la Sécurité Alimentaire (CSA) in Mauritania; and the Sécrétariat Exécutif du Conseil National de Sécurité Alimentaire (SECNSA) in Senegal. 14 SASPP Operational and Policy Note Series November 2022 financing disasters rather than food security response, national strategy and may thus be accepted more easily it is institutionally more difficult to design DRF strategies into the overall financing approach of the respective that cover all shocks and sectors. country’s food security response system. (ii) If a Sahel government wishes to draft a broader strategy, it may This has two important policy implications: (i) For a be more relevant to establish a food security financing given country in the Sahel, it may be more practical strategy rather than a disaster risk financing strategy. In to start its DRF agenda by implementing a program- line with existing institutional mandates, such a strategy specific DRF strategy rather than a comprehensive would outline a financing approach for all types of national DRF strategy. Adaptive safety nets can be a food insecurity, disaster-induced or not. Importantly, useful starting point for this. A respective DRF strategy it would still apply DRF principles to those parts of would outline how scale-ups of the safety net would shock-related response costs that are quantifiable be financed for different types of shocks. Kenya and using historical data, for example, due to droughts or Malawi have adopted such strategies (Calcutt et al., floods. Other parts would require estimation using other 2021). Adopting a financing strategy for such a specific means, such as annual forecasts by expert bodies or program is a smaller and more tangible output than a the most recent experience. E. Implications for SASPP countries This policy note has tried to outline some of the 3. DRF strategies and instruments in the Sahel need to account for continued external support. characteristics of how the DRF environment for The dependency on humanitarian donors in the adaptive social protection in the Sahel differs from region is high, and this is unlikely to change in environments elsewhere. This has some important the short-to-medium term. Potential solutions implications for policymakers in SASPP countries. These could be government contingency funds that are summarized below. are open to donor funds, donor-funded risk transfer solutions, or explicitly left gaps in the financing to be filled by donors. 1. DRF analytical tools can be a useful medium to understand the concept and benefits of adap- 4. In the Sahel, there is a particularly strong case tive safety nets. They can help to visualize the for establishing pre-arranged financing solu- impacts of triggering and scalability decisions on tions for more frequent, lower-severity shocks. beneficiaries. They can also be a useful capaci- Given extremely low levels of resilience, these ty-building tool for ASP-based shock-response. less extreme disasters also tend to have devas- tating impacts on affected populations. 2. Investments in reliable social protection systems and cash transfer delivery should be the first pri- 5. A DRF strategy designed specifically for the adap- ority for countries in the Sahel working on DRF tive safety net may be a useful starting point for for adaptive social protection. 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