Insuring against climate risk in Kenya
How can innovative approaches to disaster risk finance help communities manage climate uncertainty? Vincent Mutie Nzau, from the National Treasury of Kenya, explains.
In Kenya, climate change is already having an impact. There have been 12 serious droughts since 1990, with each one affecting some 4.8 million people (PDF). The average annual costs of the damage caused are estimated at some US$1.25 billion – with each drought reducing the country's Gross Domestic Product by an average of 3.3 per cent.
The government of Kenya is keen to minimise the impact and cost of disasters to ensure the country can achieve its development goals.
Finance has an essential role to play in reducing these costs – both before and after disaster strikes. Beforehand, investment can be used to reduce risk and increase resilience, for example through flood prevention schemes or crop insurance. After shocks occur, finance is also needed to fund post-disaster recovery and long-term sustainable development. Covering these costs demands an innovative approach to disaster risk financing (DRF).