世界发展银行-Lesotho-Disaster-Risk-Financing-Diagnostic_40页_1mb

Summary of Lesotho Disaster Risk Financing Diagnostic

Core Content

This report provides a comprehensive analysis of disaster risk financing (DRF) in Lesotho, focusing on the country's vulnerability to natural disasters, the financial impact of past events, and the current institutional and financial mechanisms in place. It also outlines key recommendations to improve the country's financial resilience to disasters.

Main Points

Lesotho's Vulnerability to Natural Disasters

• Economic and Social Context: Lesotho is a small, landlocked, lower-middle-income country with a GDP of US$2.6 billion (2017) and a population of 2.2 million. It is among the poorest countries in southern Africa and classified as a "least developed country" by the UN.
• High Poverty Rates: Nearly half of the population (49.7%) lives below the national poverty line. Poverty is especially high among children (60.9%) and the elderly (52.0%).
• High Inequality: Lesotho is ranked in the top 20% of the most unequal countries with a Gini index of 44.6 (2017).
• Agricultural Dependency: Over two-thirds of the population is engaged in agricultural activities, primarily subsistence farming. Agriculture contributes only 10% to GDP, with low productivity and limited access to irrigation and credit.
• Climate Change Impact: Climate change is expected to increase the frequency and severity of weather-related disasters, particularly droughts, which are the most frequent and impactful in Lesotho.

Natural Disaster Occurrence

• Common Disasters: Lesotho is prone to droughts, floods, storms, snowfall, hailstorms, and early frosts.
• Drought Frequency: Drought has been the most frequent and impactful disaster since 1990, with major events in 1991/92, 2001/02, 2006/07, 2011/12, and 2015/16.
• Impact of Drought: The 2015/16 drought was the worst in 35 years, affecting 979,000 people and leaving 709,000 food insecure. Cereal production fell by 66%, and food prices rose sharply.
• Floods and Storms: Floods and storms have occurred less frequently but still cause significant damage, especially in rural areas.

Financial Impact of Disasters

• Annual Average Cost: The average annual cost of disaster response is estimated at US$19.3 million, or 1.6% of total budget expenditure.
• Severe Events: Costs for more severe and infrequent disasters can be significantly higher, reaching up to US$51.5 million for a 1-in-100-year event.
• Funding Gap: There is an estimated average annual funding gap of US$12.4 million, indicating that pre-planned resources are insufficient to cover disaster costs.
• Ex Post Financing: The government often relies on budget reallocation and donor support for disaster response, which can be slow and unreliable.

Key Recommendations

1. Develop a National DRF Strategy: Formalize policy priorities using a risk layering approach, addressing both budget mobilization and execution.
2. Strengthen Ex Ante Financing Mechanisms:
   • Establish a dedicated contingency fund with clear rules for replenishment and disbursement.
   • Utilize contingent credit, such as the World Bank's Development Policy Loan with Catastrophe Deferred Drawdown Option (Cat-DDO).
   • Purchase sovereign catastrophe risk insurance to cover severe disasters.
3. Enhance Budget Execution Systems:
   • Implement shock-responsive social protection to provide early assistance to vulnerable households.
   • Develop strong operational rules for the disbursement of disaster risk financing instruments.
4. Explore Agricultural Insurance: Consider a public-private partnership to introduce agricultural insurance for farmers and herders, helping them manage disaster risks.

Key Financial Instruments and Frameworks

• Contingency Funds: Two existing contingency funds (one at MoF, one at DMA) are often insufficient and depleted early in the fiscal year.
• Sovereign Insurance: Available in the region, but not widely utilized in Lesotho.
• Agricultural Insurance: In its early stages, with limited uptake.
• Legal and Institutional Framework: The Disaster Management Act of 1997 established the Disaster Management Authority (DMA), supported by the Multi-Hazard Contingency Plan 2015-2018 and the recently approved National Resilience Strategic Framework (NRSF).

Data and Tools

• LVAC (Lesotho Vulnerability Assessment Committee): Provides data on the number of food-insecure people and disaster impacts.
• EM-DAT Database: Records the frequency and impact of natural disasters in Lesotho.
• Statistical Simulations: Used to estimate the cost of disaster response and funding gaps for different return periods.

Conclusion

The report emphasizes the importance of prearranged financing mechanisms to enhance the timeliness, cost-effectiveness, and reliability of disaster response in Lesotho. It highlights the need for a comprehensive DRF strategy to build resilience against natural disasters, especially in a context of high poverty, vulnerability, and climate change risks.