Climate and Disaster Risk Finance Diagnostic 2022 - Ethiopia

Climate and Disaster Risk Finance Diagnostic 2022 - Ethiopia was prepared as part of a broader engagement between the World Bank and the Government of Ethiopia on strengthening disaster risk financing (DRF). This effort was led by the World Bank Group’s Global Practice for Finance, Competitiveness, and Innovation (FCI).

The objective of this disaster risk financing (DRF) diagnostic is to assess Ethiopia’s financial preparedness to disasters and crises at the sovereign, firm, and household level. At the request of the Ministry of Finance (MoF) of the Government of Ethiopia (GoE), this report focuses on the direct impacts of climate shocks and provides recommendations to support the development of a credible strategy for how costs from potential future disasters can be met. This assessment reviews and analyzes the following:1 (i) the historical socioeconomic and fiscal impact of disasters in Ethiopia; (ii) the role of the private sector relevant to DRF; (iii) the key legal and institutional arrangements relevant to DRF; and (iv) the existing pre-arranged and ex post sources of funding and opportunities for enhancing the use of DRF instruments. It also makes recommendations to the government for strengthening the financial preparedness of Ethiopia to disasters and crises. This document is intended as a starting point from which to conduct further technical, legal, institutional, financial, and policy work and consultations as necessary.

The diagnostic was delivered with financial support from the Disaster Protection Program, a trust fund managed by the Crisis and Disaster Risk Finance global team in the FCI Global Practice and funded by the UK government (Foreign, Commonwealth & Development Office).