MASERU – Natural disasters cost Lesotho an estimated M260 million each year. For more infrequent and severe shocks, the costs can be much higher: over M400 million for shocks that occur every 10 years, and over M600 for shocks that occur every 50 years, according to a diagnostic study by the World Bank. The study aimed to identify options to strengthen the country’s financial resilience to disasters was prepared at the request of the Ministry of Finance.
It included a review of disaster response costs and the current government’s Disaster Risk Financing (DRF) arrangements, including institutional and legal frameworks. The study proposed some recommendations. “The average annual cost of disaster response is estimated at US$19.3 million (about M260 million) or 1.6 percent of the total budget expenditure in the 2019/20 fiscal year,” read the report.
“For more infrequent and severe shocks, the costs can be much higher: US$31.8 million (or 2.6 percent of total budget) for shocks that occur every 10 years, and US$45.3 million (or 3.8 percent of total budget) for shocks that occur every 50 years,” it added.
Last week, three experts – Maleshoane Lekomola-Danziger, Barry Maher and Alejandra Campero – indicated that the cost of responding to the recent heavy rains which caused infrastructure damage, was estimated at $28 million (over M393 million), 2.3 percent of the budget.
“Yet more distressing than the erosion of the budget, disasters intensify the acute challenge of hunger in Lesotho. On average a quarter of the population were food-insecure between 2003 and 2018 each year,” the trio said in an article published last week.
Lekomola-Danziger holds a Masters’ Degree in International Economics and Trade. She is currently the budget controller for the government and has been working for the ministry of finance-budget department for over 16 years.
Barry is a senior financial sector specialist working in the Finance, Competitiveness, and Innovation (FCI) Global Practice based in Pretoria, South Africa, where he coordinates the work of the World Bank on crisis and disaster risk financing in the Africa region.
Campero is a consultant with the crisis and disaster risk finance team in the World Bank. She works with governments in advancing policy dialogue and developing customised financial solutions to improve their financial resilience to natural disasters and crises.
Their article explains three ways Lesotho’s past experience with disasters has strengthened the country’s Covid-19 response. “The country was in the throes of responding to a catastrophic drought as the Covid-19 coronavirus insipidly yet inevitably advanced into Sub-Saharan Africa in February 2020,” read the article.
This drought, according to the article, was so severe that the United Nations (UN) said it was “one step away from famine – highlighting the acute risk of compound shocks in Lesotho which jeopardises efforts to improve the lives of Basotho”. “In early 2021, still battling against the incessant Covid-19 pandemic, Lesotho was hit by heavy rains that caused infrastructure damage, worsening the already critical situation,” read the article.
In February this year, Prime Minister Dr Moeketsi Majoro declared a six-month state of disaster after heavy rains had destroyed infrastructure, homes and crops. Majoro said the country needed between M70 million and M100 million to rebuild and called on development partners to assist. He said that the situation was made dire by the Covid-19 pandemic. “The heavy rain has caused loss of lives. The destruction of infrastructure, including bridges, has left many of our people stranded and unable to access essential services,” Majoro said.
“Preliminary estimates indicate that the cost of rehabilitation, which must start very quickly, is going to be somewhere just below M100 million. As time passes and better costing takes place, the estimates are likely to escalate,” he added.
The World Bank’s Disaster Risk Finance Diagnostic for Lesotho, published in December 2019, five months before Lesotho recorded the first case of Covid-19, included several recommendations to strengthen financial resilience.
Lekomola-Danziger, Barry and Campero said the response to the Covid-19 pandemic, however, motivated the ministry of finance to prioritise three recommendations.
The three recommendation were: to develop a national disaster risk finance strategy; increase the amount and improve the timeliness of resources mobilised for disasters; and, strengthen budget execution systems for targeted support to affected households.
The three experts explained, first, having a national disaster risk finance strategy would help speed up response saving lives and livelihoods as “it aids in formalising policy priorities to address both budget mobilisation and budget execution for disaster response”.
“Secondly, increasing the amount and improving the timeliness of resource mobilisation is critical to an effective response to disasters. Lesotho’s Covid-19 response relied on ex-post financing, including budget reallocation and development partners funding,” they said.
“Lastly, mobilising funding is not enough, it needs to reach those most in need by leveraging on existing systems or setting up new ones to identify and deliver assistance to affected households and firms,” they added.
They indicated that this made strengthening budget execution systems for targeted support to affected households another critical element for an effective response to disasters. “Building on past successes, the government of Lesotho decided to scale up their flagship cash transfer programme (CGP) to provide financial relief to the poor in response to Covid-19,” they said.
Their article concluded by cautioning that Lesotho remained highly vulnerable to compound risks and emphasised that the ministry of finance was committed to strengthening its capacity to fund future shocks with a view to alleviating their financial burden on the budget.