Seychelles to become one of the first countries in africa to benefit from the WORLD BANK Financing Facility for Natural Disasters.

Seychelles is set to become one of the first countries to benefit from a risk financing instrument, called the Development Policy Loan (DPL) with a Deferred Drawdown Option for Catastrophe risks (Cat DDO), said Professor Payet, Minister for Environment and Energy in a recent meeting with a delegation from the World Bank. The four members delegation Doekle Wielinga, Sawkut Rojid, Julie Dana and Andre Carletto are currently in Seychelles on a working mission, where they will explain different financial tools commonly used in Small Islands Developing States  to improve their Risk and Disaster prevention and management and develop a new risk and disaster policy. This came after a request was made by the Government of Seychelles following the Felleng disaster.

During the meeting Minister Payet was briefed on the tool which is to develop and enhance the capacity of eligible countries to manage natural hazard risks. The Cat DDO provides a source of bridge financing until other sources become available. These post-disaster financing sources include for example concessional funding, bilateral aid, or reconstruction loans. The instrument aims at promoting continuity of national development planning and it is considered to be one of the most flexible and cost efficient risk retention instruments currently available on the international market. As the liquidity is provided in form of a loan, a Cat DDO incurs much smaller up-front costs than a risk transfer instrument would typically entail – for example insurance based risk transfer solutions.

However access to such a facility is not automatic and after a proper assessment, approval by the board of the World Bank. Once approved, Seychelles will be able to access the funds after a disaster is declared. As the scope and procedures for declaring the state of emergency varies from country to country, the Cat DDO trigger is defined on a case-by-case basis, taking into consideration the borrower’s national disaster risk management legal and policy framework, which needs to be in place. Disbursement occurs only after the natural disaster has taken place.

The World Bank will be working closely with the Division of Risk and Disaster Management, DRDM, in the Ministry of Environment and Energy, and in collaboration with the Ministry of Finance, Investment and Trade to prepare a frame work for Seychelles before the end of this year. Minister Payet says that the new finance instrument will assist the country to access much needed funding for recovery and reconstruction, adding that this has come at an opportune time,  as  our islands has been plagued with torrential rains, resulting in flooding and landslides for two consecutive years.