EC approaches to Disaster Risk Reduction in Africa Wim Olthof

1. EC approaches to Disaster Risk Reduction in AfricaWim Olthof DG Development Unit B2 – Policies for Sustainable Management of Natural Resources Pretoria, ITF-CRM, 15-17 May 2006

2. Outline • Background • Policy on DRR • Support to Risk Management • GIIF

3. Background • Humanitarian and Development dimension • ECHO mandate: save and preserve life in emergency and post-emergency situations • 2005: € 652 million; 37% in Africa • Development: EU main donor to Africa (2003 - € 15 billion; 60% of ODA to continent) and increasing

4. EU Approaches to Natural Disasters in Africa • Humanitarian Response: ECHO • through NGOs, IOs • Reconstruction: Mix • Immediate: ECHO • Longer-term: reserve (B) envelopes of national programmes • Prevention and Preparedness: Mix • through DIPECHO programme (mainstreaming in relief operations, small-scale) • Main Country Programmes (A-envelopes) • 9th EDF Natural Disaster Facility (€ 12 million) • Risk Transfer: support in preparation • Commitment to operationalisation of market-based insurance schemes

5. Policy Quotes • Communication on Agricultural Commodities (2004): • The EU will …..support the development and financing of a range of new insurance and finance instruments for the various operators in the commodity chain, including producers” and “the EU will support piloting of the use of market-based insurance tools at the macro-level, to cushion the effects of commodity shocks” • EU Strategy for Africa (2005): • “To reduce the impact of price shocks on commodity dependant countries., the EC should introduce innovative insurance instruments to complement it existing FLEX mechanism”

6. Policy Quotes • EU Council Conclusions (May 2005) • “In order to mitigate the impact of exogenous shocks, including price vulnerability, on developing countries economies, the EU will support the operationalisation of market-based insurance schemes….” • EU Consensus on Development (2005) • “Some developing countries are particularly vulnerable to natural disasters, climatic change, environmental degradation and external economic shocks. The Member States and the Community will support disaster prevention and preparedness in these countries, with a view to increasing their resilience in the face of these challenges.”

7. DRR Policy? • Entry Points on Natural Disasters • Humanitarian Dimension • Food Security • Commodity Price Risk • Increasingly: long-term development opportunities • More coherent policy on Disaster Risk Reduction in preparation

8. EU Support Programmes in Preparation • 1. Support to core work of WB CRM Group (in framework of € 45 million programme on commodities): • Covers price and weather risk management; product development, capacity building and market infrastructure • Deals with commodities in selected ACP countries • FAO involvement in food commodity risk management work • Indicative amount: > € 4.5 million • To start January 2007

9. EU Support Programmes in Preparation • 2. Support to establishment GIIF/GIRF (€ 25 million): • Support to ‘development window’ of GIIF/GIRF • Main aims: enhance ACP access to global risk (re)insurance market and reduce costs of access • Feasibility/Formulation Study nearing completion • Planning: programme operational in first half of 2007

10. EC Role in GIIF/GIRF • Rationale for involvement with development funds: • Bridge gap between ACP need for insurance and international (re-)insurance market • Provide ‘push’ to make GIIF/GIRF also operate for and in ACP • Need to expand the market in index insurance in ACP countries • Leading to: lower costs, enhanced coverage, lower development risks -> higher growth

11. EC Role in GIIF/GIRF • Support through separate Trust Fund • Envisaged uses: • Some start-up costs and some costs related to deals (where cost of deal making would be too high) • Technical assistance for targeted product development and for in-country capacity building on index insurance • Smart subsidies to initial ACP based deals

12. Longer-term support options • Two main sources – complementarity needed • 1. Thematic Programme on Food Security (funded from EU budget; 2007-2013 perspective) • Coverage: all developing countries • Multi-annual Programme • Annual budgets • 2. 10th European Development Fund (2008-2013) • Under Cotonou Agreement: ACP coverage • One envelope for entire period

13. Thematic Programme Food Security • Operational from early 2007 onwards; amount: € 200-250 million p.a. • Multi-annual perspectives: advanced stage of preparation • Risk management identified as one of the themes for support to Africa, including scaling up of innovative risk management tools • Support at regional/continental level (IOs, continental, regional organisations)

14. 10th European Development Fund (2008-2013) • Amount: € 22.6 billion • Programming takes place in 2006/07 • Support at National, Regional and All-ACP level – predetermined envelopes; subsidiarity principle • All-ACP: Disaster Risk Management Facility??? • Strong demand ACP; scaling up 9th EDF NDF • Orientation/mix: prevention, preparedness, mitigation, reaction?? • Could be instrument to better streamline integrated disaster risk management • Discussions to be held and concluded in next few months

15. Conclusions • EU policy commitment to operationalisation and use of market-based insurance mechanisms • Applications foreseen from various perspectives (humanitarian, food secuirty, long-term development etc.) • GIIF proposal in advanced stage-> good suggestions still welcome!