[Event Recap] London Workshop: Leveraging private capital to build a regional platform beyond the World Bank’s HOA DRIVE project
The World Bank’s Crisis and Disaster Risk Finance team in London, hosted and facilitated a workshop from June 19 to June 23, 2023, to explore opportunities to mobilize additional private capital for the De-risking, Inclusion, and Value Enhancement of pastoral economies in the Horn of Africa project (DRIVE). The workshop enabled discussions between the World Bank, ZEP-RE (COMESA regional reinsurer and implementer for the financial resilience component of DRIVE), private sector partners, including the London-based Insurance Development Forum (IDF), and development partners including African Development Bank (AfDB) and African Risk Capacity Limited (ARC Ltd). Setting the meeting in London allowed for many UK and European based partners to join the meetings in person.
Discussions focused on the vision for DRIVE to build financial resilience against climate shocks for pastoralists, through a package of payments, savings, and insurance, and include them in value chains and facilitate the livestock trade. More details on the project can be found here.
There has been strong implementation in the first year, with over 1 million pastoralists covered, and US$100 million of capital at risk leveraged so far from the international insurance markets. More than 50 percent of those who signed up for the products are women. ZEP-RE has put in place the infrastructure and digital platform to deliver the project, as well as delivered the ambition for DRIVE to become a regional platform for multiple countries, programs, and development partners, rather than simply a 5-year World Bank project. In Djibouti, a sovereign policy against drought (37.5 percent of the policy) and flood (62.5 percent of the policy) was issued by African Risk Capacity Ltd (ARC Ltd) for a total coverage of US$2.2 million per annum for five years.
The workshop set an ambitious agenda, targeting strengthened product design with input from data provider Planet and lead reinsurer Swiss-Re, increased market capacity for reinsurance, Sharia compliance, opportunities to strengthen financial inclusion further, and develop new partnerships to leverage the platform further, including with the AfDB. The teams also met with the UK, Germany, and Canada, as contributors to the Global Shield Financing Facility (formally the Global Risk Financing Facility) which provided additional funding for the project.
Overall, the workshop was able to pave the way for clear next steps to be agreed. Priorities going forward are to continue to grow the DRIVE program in the existing countries, to areas where the products have been shown to be viable, and similarly look to expand to new countries, since a regional platform has been created.