Sovereign DRF in Middle Income Countries

Switzerland’s State Secretariat for Economic Affairs (SECO) and the World Bank’s Disaster Risk Financing and Insurance Program (DRFIP) launched a partnership to support middle-income countries (MICs) strengthen their financial resilience against natural disasters. Established in late 2011, the Sovereign Disaster Risk Financing and Insurance Program for Middle-Income Countries (the Program) is one component of a broader World Bank-SECO partnership on fiscal risk management for MICs. The Program provides tailored advisory services and institutional capacity building for public financial management of natural disasters. The Program’s engagement has spanned nine countries, making steady progress in many. At its inception the countries proposed for participation were Azerbaijan, Colombia, Egypt, Ghana, Indonesia, Peru, South Africa, Tunisia, and Vietnam. Progress across the different countries has varied in nature and scope. The Program has had successful engagement in Azerbaijan, Colombia, Peru, Indonesia, and Vietnam; it then expanded to Morocco and Serbia. Engagement has not materialized in Egypt, Ghana, South Africa, and Tunisia. The Program has seen promising outcomes in four years. Understanding of the financial impact from disasters has increased in all participating countries. This understanding has often influenced or enabled changes in the institutional environment of countries to improve financial planning for disasters. For instance, guidelines provided by the Program have been key to improving the quality and coverage of insurance of public assets in Colombia and Peru, and of private assets in Morocco. The Program has adopted a demand-driven approach that delivers a large number of outputs targeting specific client needs. In several countries, such as Colombia, Peru, and Vietnam, engagement began with understanding the needs of the government and providing customized solutions for specific demands. Overall, 66 reports have been produced targeting specific technical knowledge gaps and 25 trainings and workshops have reached more than 680 people, strengthening governments’ capacity to make informed decisions. This has set the foundation to develop comprehensive national-level strategies. Lessons from the past four years highlight what has made this engagement successful.

1. Government ownership: Active ownership of the agenda by the government has been instrumental in countries that have made substantial progress.

2. Identifying key stakeholders: Building relationships with several relevant ministries and departments in each country proved to be effective in continuing engagements despite changes in government. MiddleIncomeCountries 8-10-16b.indd 8 8/10/16 5:05 PM SOVEREIGN DISASTER RISK FINANCE IN MIDDLE INCOME COUNTRIES ix

3. Clear identification of priorities and challenges: Having that discussion early on in the engagement enabled a strategic approach in the support provided.

4. Timely delivery of customized solutions: Responding to client needs in a timely and responsive manner has been a key factor for strengthening relationships.

5. Regular interaction with counterparts helps build capacity: Local consultants have made engagement with government officials possible. 6

. Balance between technical and policy solutions: Giving equal weight to both technical and policy aspects of Disaster Risk Finance (DRF) has helped in finding sustainable solutions that can be implemented.

7. Capacity building of government officials: Peer-exchange, training workshops, and targeted technical assistance have contributed to a sustainable DRF agenda.