In the Spotlight | Featuring the Social Support for Resilient Livelihoods Project in Malawi - Resilient Futures: Amplifying Disaster Risk Finance with Adaptive Social Protection
Chipo Msowoya (Senior Social Protection Specialist, World Bank) remembers the day, several years ago, when he visited the district of Ntcheu in Malawi. “The project team was chased and stoned. People in the community were furious that the level of drought emergency support was so low. Their actions reflected the sheer scale of desperation in the area,” recounts Chipo. Fast forward a few years, the very same community thanked us for changing their lives. This really shows the impact of scalable safety nets linked to disaster risk finance,” says Chipo.
Mulder Mkutumula (Scalable Coordinator for the National Local Government Finance Committee, Government of Malawi) and Chipo, task team leader for the International Development Association (IDA)- and Global Shield Financing Facility (GSFF)-supported Social Support for Resilient Livelihoods Project, have been working together over the past few years, on a project that is supporting Malawi’s social protection strategy. The Social Support for Resilient Livelihoods Project is a World Bank project with a total of US$490 million of support, including from IDA, the Crisis Response Window, the GSFF (formerly the Global Risk Financing Facility) and a standalone multidonor trust fund.
Please tell us about the Social Support for Resilient Livelihoods Project.
The Social Support for Resilient Livelihoods Project supports three core programs: the i) social cash transfer program; ii) climate smart enhanced public works program; and iii) livelihood support interventions. Innovation plays an important role in the program. The adaptive safety net component, also known as the ‘financing scalable safety nets component’, that is included as part of the social cash transfer program, is catalysing a big shift in how adaptive social cash transfers are implemented in Malawi, by linking DRF instruments with the delivery of emergency cash transfers, especially in response to drought. The other component is the delivery system. We’re focusing on three key delivery systems: i) the scaling-up of digital payments for both the regular programs and shock responsive programs; ii) scaling-up of the social registry, which in Malawi is called the ‘Unified Beneficiary Registry’; and iii) the grievance redress mechanism across all these components.
Financing scalable safety nets are an interesting sub-component of the Social Support for Resilient Livelihoods Project. They focus on delivering financial support to affected households before a disaster occurs. We have pre-agreed, transparent figures, pre-arranged financing mechanisms, and pre-targeted beneficiaries. We did not want to re-invent the wheel; we wanted to use the existing structures in Malawi under social cash transfers. Currently, the project focuses only on drought, and is being implemented in six districts - Karonga, Nkhotakota, Blantyre, Chiradzulu, Ntcheu, and Thyolo. We’re targeting 200,000 households, using two financial instruments – one from the World Bank, called ‘flexible contingency financing’ and one from the GSFF, using a premium insurance.
How did you choose the beneficiaries for the project?
The choice of beneficiaries was largely based on their risk profile, to ensure that the mechanism reaches out to the districts which have the highest risk of food insecurity. Within the districts, we used the Unified Beneficiary Registry to determine who the most vulnerable are. This mechanism scales up to existing safety net participants, alongside those on very slightly higher incomes but who are impacted by drought. I must mention that one of the six districts we have picked is also flood-prone. So, we are considering how we can develop a model that will also address this concern.
When a climate shock occurs, the first thing that a poor household does is to start selling its assets. In doing so, it slides below the poverty line. So, our vision was to cushion the impact. To ensure that the vulnerable are well-prepared and are eventually able to graduate out of poverty. For this project, we started our targeting activities by looking at the most drought-prone districts in the country. Then, we looked at the levels of food insecurity in these districts. Following this, in terms of delivery systems, we had to ask ourselves which districts were ready, in terms of the presence of a social registry and ready payment systems. Finally, we took into consideration districts in which other institutions were already intervening. After a thorough analysis, we were able to bring the list down to six districts, which qualified for the program. Eventually, we hope to expand to all 28 districts with the help of the World Bank and the GSFF.
Beneficiaries of the Social Support for Resilient Livelihoods Project
Could you tell us about the USD10 million GSFF grant that you utilized in June this year?
The GSFF supports us in several ways; capacity building being one of them. The Facility helped us procure the parametric insurance from African Risk Capacity Limited (ARC). After a thorough analysis of the risk profiles, we have now signed and paid the premium for a 2-year contract, with a maximum of payout of around US$10 million. In a given year, if there is no trigger, we still have flexible funding via a contingency fund, which acts like an insurance deductible and can be used to support affected communities.
What excites you most about this project?
At the macro level, I am seeing a big shift in the way that donor communities and the Government in Malawi are viewing the financing of Adaptive Social Protection (ASP). With the creation of a link between risk financing and social protection, we are seeing a shift in the thought process. This is extremely encouraging and makes me feel like Malawi is onto something exciting!
This project has brought together the social and humanitarian sectors. Last year, we worked as a team, led by government, during lean season. This was a milestone achievement and great experience. This kind of teamwork is crucial. Over time, we hope to deliver response for acute need much sooner ahead of the lean season.
Please tell us about your biggest achievement so far in the DRF space.
For me the biggest achievement is knowing that we have laid out a mechanism that is allowing our government counterparts to respond to disasters in a timely manner. The journey we have embarked on has allowed us to build a strong capacity on DRF. Many of us entered this project as social protection specialists, without much of a clue on DRF! I would be failing in my duty as a task team leader if I didn’t talk about the completeness of our team and the World Bank’s global DRF expertise we were able to access.
I have the privilege of supporting two countries that are neighbours - Zambia and Malawi. Malawi has made significant progress with respect to linking DRF and ASP. Now, the government of Zambia too is very keen on embarking on a similar type of journey. But, while the biggest hazard in Malawi is drought, the biggest one in Zambia is flood. The process of taking the DRF-ASP nexus towards a multi-hazard approach is going to be really interesting!
When we first started this project, there were doubters aplenty. So, it felt great when, last year, we were able to trigger the fund and be in a position to pay. The second biggest achievement is that we were finally able to put in place the parametric insurance after 2-3 years of talking about it! There were many challenges given it is a new type of product for us, but now we will be able to consider risk layering, with the insurance covering all six districts at once. This eliminates the risk of us not being able to find additional budget when we really need it. Finally, I would like to talk about the working relationship between the Government of Malawi and the World Bank. We have been able to reach out to the Bank at any given point, when faced with challenges, and we have always received answers within a short period of time. We hope to nurture this relationship further.
What is your biggest motivation working on climate risk finance?
In Malawi, climate shocks are increasing in severity. The biggest motivation for me is seeing the face of a beneficiary light up when they receive their 75,000 kwacha! I think this is what every development worker strives for.
Saving lives! When I see a household graduating out of poverty, it makes me happy, because this means that I can move on to another household that needs help.