Technical Note: Review of Post-Disaster Expenditures in Kenya 2014-2020 to Inform Implementation of DRF Strategy

This technical note is to inform the implementation and planning of the next steps by the government of Kenya’s Disaster Risk Financing Strategy (DRFS) for 2018–22. It also forms a contribution to the government’s ongoing Public Expenditure Review (PER), which is supported by the World Bank’s Macroeconomics, Trade, and Investment (MTI) Global Practice. This note is the first comprehensive review of post-disaster expenditures in Kenya and is among the first reviews to be shared globally. It highlights the progress the Kenyan government has made in consolidating its prearranged financing for disaster response in addition to improvements that can be made with respect to the transparent and efficient use of funds to make better use of limited resources. Those considerations are in the context of creating additional fiscal space, improving delivery of responses, and rebuilding fiscal resilience to disasters, all of which have been undermined by Kenya’s COVID-19 response. Recommendations made in this policy note will closely follow the four priorities laid out in Kenya’s DRFS and can be considered as steps that facilitate achieving the DRFS’s goals.

Kenya is exposed to a wide range of natural hazards and the impact on the budgets is expected to increase as a result of the changing climate, especially because currently only a very small portion of contingent liability risk is transferred to the markets and predominately sits with Kenyan government. Among the most impactful disasters affecting Kenya are droughts, floods, and—to a lesser degree—landslides and earthquakes.1 Yet, in 2020, Kenya faced some of the less frequent yet extremely high-impact natural, biological disasters: a locust infestation and the COVID-19 pandemic, which both emphasized the potential damage of the rarely addressed risks. However, the high economic impacts of disasters are primarily driven by the low level of preparedness, both institutional and financial, and not the frequency or nature of shocks themselves.