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G7 Leaders Affirm Importance of Disaster Risk Finance at Summit
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The Group of 7 wrapped up its annual summit in England last month, their first in-person summit since the outbreak of the COVID-19 pandemic, with a renewed focus on an inclusive, green recovery. In their joint communiqué, the leaders of the G7 countries underscored the importance of disaster risk finance as integral to this vision, saying "We welcome the commitments already made by some of the G7 to increase climate finance and look forward to new commitments from others well ahead of COP26 in Glasgow. This increase in quantity and predictability is complemented by improved effectiveness and accessibility, and includes more finance contributing to adaptation and resilience, disaster risk and insurance, as well as support for nature and nature-based solutions." The Global Risk Financing Facility (GRiF) is contributing to this vision by helping countries be financially prepared for climate shocks, disasters and crises.
Read the full joint communiqué here.
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Jamaica Issues GRiF-Supported Catastrophe Bond
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Jamaica's first-ever catastrophe bond, or cat bond, was recently issued with support from GRiF. Priced by the World Bank at USD 185 million, the bond will provide the Government of Jamaica with financial protection against losses for three Atlantic tropical cyclone seasons ending in December 2023. Payouts to Jamaica will be triggered when a named storm event meets the parametric criteria for location and severity set forth in the bond terms. The government of Jamaica is the first in the Caribbean region, and the first of any small island state, to place a catastrophe bond.
Read the full press release here.
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Supporting Access to Finance in Burkina Faso
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Micro, small, and medium-size enterprises, also called MSMEs, comprise a significant portion of Burkina Faso's private sector, with more than 1.4 million informal MSMEs in the country. In fact, enterprises employing less than 99 workers comprise about 90 percent of all firms in Burkina Faso. Private sector growth is a key component of Burkina Faso's poverty reduction strategy, but reliable access to credit is a constraint for informal businesses. In light of the COVID-19 pandemic and security challenges, the World Bank's Financial Inclusion Support Project was restructured to increase access to private capital, including a partial portfolio credit guarantee that had been originally designed to partially guarantee loans to SMEs, the agriculture sector, and women entrepreneurs. Supported in part by a USD 10 million grant from GRiF, a new crisis response window within the existing credit guarantee fund is being added to support small firms affected by the pandemic.
To learn more, read the full blog post here.
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PROJECT IN FOCUS: SIERRA LEONE
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Sierra Leone has weathered many disasters, including the Ebola epidemic in 2014 and massive landslides in 2017. To protect the most vulnerable, the government of Sierra Leone in 2014 created a Social Safety Net program to provide regular cash transfers to extremely poor households. A USD 2.5 million grant from GRiF supports the government's priority of creating a more systematic approach to scaling up future social safety nets to enable a faster response to natural disasters and crises. The support from GRiF co-finances a USD 30 million World Bank Social Safety Net project.
To ensure that systems for shock-response are linked to available finance for emergency cash transfers, the government decided to hold USD 4 million of the 30 million contingent. When the COVID-19 pandemic struck Sierra Leone last year, the government was well prepared to quickly activate an emergency cash transfer response. Based on the success of the project, the European Union provided an additional EUR 5 million for emergency cash transfers, making use of the same systems that were used to channel the USD 4 million for the initial emergency cash transfer response. This additional funding is expected to reach 228,000 more beneficiaries, furthering GRiF's impact beyond the 170,000 people that benefitted from the initial response.
Read more about the project here.
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GRiF continues its monthly Technical Talks online speaker series, with a Summer Special edition on July 22 that focused on Storytelling. The event featured a deep-dive into the art of storytelling to communicate technical work such as Disaster Risk Finance. The webinar series, launched in May, provides an overview of GRiF and its innovative projects throughout the world. Resources from past Technical Talks, including recordings, fact sheets, and learning briefs, are available on the GRiF website. The next Technical Talk will take place in September.
To view resources from past Technical Talks, please click here.
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