Disaster Risk Management Development Policy Credit with a Catastrophe Deferred Drawdown Option (Cat DDO)

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The Disaster Risk Management (DRM) Development Policy Financing with a Catastrophe Deferred Drawdown Option (DPF with Cat DDO), in the amount of Euro 165.4 million (US$200 million equivalent), will support the Government of Kenya’s (GoK) reform program to improve the country’s capacity to reduce disaster risks and improve management of the socioeconomic and fiscal impacts of disasters. The GoK has initiated a shift toward a more proactive approach to managing disaster and climate risks. This has involved taking systematic steps to develop a comprehensive approach to overall risk management, including addressing impacts of climate change (CC), to build programs and strategies that strengthen national response, and put in place contingency financing that will serve to improve post-disaster liquidity needed to meet emergency and recovery needs. Under the devolved governance structure that was established by the Constitution of Kenya 2010, the country’s forty-seven county governments play a key role in DRM1. The Constitution integrates key provisions on DRM including national level support to counties which are required to develop their respective DRM policies and programs in line with the National DRM Policy. Extreme climatic events have long posed a significant risk to Kenya, and contributed to increasing levels of vulnerability of the poor, smallholder farmers and pastoralists, whose livelihoods are threatened by increased variability of rainfall patterns, triggering episodes of acute food insecurity. Kenya is at an early stage of urbanization, but by 2050 about half of the population will be living in cities. Around 27 percent of Kenyans live in urban areas, and the country is urbanizing at about 4.3 percent a year. The urbanization process has been accompanied by increasing levels of urban poverty (60 percent of Kenya’s urban households live in slums), growth of informal settlements, poorly functioning land markets and institutions, and an incomplete legal and building regulatory framework. Historical factors underpinning land ownership have led to urban land market distortions and, today, these markets are having difficulty supporting sustainable urbanization. In addition, there is low technical capacity to enforce and to build resilient infrastructure, making the country and its population particularly vulnerable. Evidence of this is the proliferation of substandard buildings with poor services and insufficient infrastructure, with the collapse of more than 26 buildings in the last 20 years. Equally important is the exposure of urban areas to moderate seismic risk, due to the East African Rift running through west Kenya and fault lines that are present south of Mombasa.