Uganda

Uganda - Better data, better resilience: Lessons in disaster risk finance from Uganda

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A growing number of low- and middle-income countries are investing in social safety nets to improve the lives and livelihoods of their poor and vulnerable residents. According to the World Bank (2015) report The State of Social Safety Nets, more than 1.9 billion people in 136 low- and middleincome countries are now beneficiaries of social safety net programs. In Africa alone, the number of countries setting up such programs has doubled over the past three years, and rigorous evaluations prove that these programs work to reduce poverty. But around 55 percent of the world’s poor, or 773 million people with acute needs, still lack safety net coverage. Moreover, even where safety nets are in place, the gains they make possible can be undermined by disasters, which tend to have the highest impact on the poorest. Recent studies show that disasters drive over 26 million people into poverty each year (Hallegatte et al. 2016)

Results

  • The El Niño event in 2016 caused a widespread absence of rain on the African continent, contributing to a humanitarian crisis in many countries. The early warning system developed by the government of Uganda (GoU) captured the drought in the north and triggered an automatic scale-up of the Third Northern Uganda Social Action Fund (NUSAF III), a safety net project that is supported by a US$130 million World Bank lending operation.

  • To finance this scale-up, US$4 million was rapidly drawn from a US$10 million reserve fund set up under the Disaster Risk Finance (DRF) component of the NUSAF project. It is expected that the scale-up will provide disaster assistance to about 25,000 households (125,000 people) in Karamoja—that is, to about 20 percent of households in the affected region. This is in addition to the core beneficiaries of about 5,000 households (25,000 people) already receiving assistance.

  • Over the life of the project, the DRF component of NUSAF III is estimated to finance the cost of scaling up assistance to 84,000 additional households.

In Uganda, NUSAF III makes use of social safety nets to invest in the livelihoods of poor households, and it specifically includes a disaster risk finance (DRF) subcomponent that scales up protection in response to disaster shocks. Uganda’s predominantly rural population, which consists mostly of smallholder farmers subject to various production constraints, has limited capacity to cope with recurrent shocks. The country has made significant gains in reducing poverty—the share of people living in poverty fell from 62 percent to 35 percent between 2003 and 2013—but the poorest 40 percent of households remain exceptionally vulnerable to drought and price shocks (Hill and Mejía-Mantilla 2017).

NUSAF III is designed to lessen this vulnerability and “to provide effective income support to and build the resilience of poor and vulnerable households in Northern Uganda.”1 A US$130 million International Development Association (IDA) lending operation, it builds on findings by the World Bank Group’s Social Protection and Labor Global Practice showing that safety net systems can provide additional support in times of crisis, help to defend the welfare of vulnerable households, and enable them to develop strategies to build their resilience (Monchuk 2014).

NUSAF III has a strong focus on labor-intensive public works (LIPW), and through the DRF subcomponent it is developing a mechanism for scaling up assistance to poor and vulnerable households immediately following disaster shocks in Northern Uganda. The DRF subcomponent is activated temporarily and automatically in response to crisis or shocks, primarily climatic shocks such as drought. Once a predefined trigger has been reached, LIPW activities are scaled up and coverage extended to additional beneficiary households. The ability to automatically scale up LIPW is expected to prevent households’ consumption from dropping after drought periods and to protect their livelihoods and assets, leading to a more rapid post-crisis recovery.

This DRF mechanism, which is being piloted in Uganda’s Karamoja region, became live in July 2016. A full scale-up of LIPW activities was triggered in the first year of operation, when Karamoja suffered an El Niño–driven drought. The lessons learned from this experience— described below—relate specifically to the expansion of public works, but some lessons may apply more broadly to scalable social protection initiatives where different disbursement mechanisms are used (for example, unconditional cash transfers).