Tanzania Embarks on Innovative Risk Management Initiative to Combat Climate Change and Poverty
Introduction
The United Nations Development Programme (UNDP) has launched an initiative to support the Government of Tanzania in developing risk finance and insurance solutions to mitigate the impact of climate change, grow the economy, and reduce poverty.
Background
Tanzania is prone to natural disasters such as earthquakes, droughts, strong winds, floods, and fires. Between 2000 and 2020, a total of 363 disasters were recorded, with droughts affecting one in ten residents and impacting 12 percent of the country’s gross domestic product, resulting in a loss of US$5.6 billion per year.
The Engagement Initiative
The UNDP has launched an initiative to support the Government of Tanzania in developing risk finance and insurance solutions to mitigate the impact of climate change, grow the economy, and reduce poverty. The engagement initiative is financed by Germany and aims to build a conducive environment for the development of insurance and risk transfer products that can help individuals and communities build financial resilience and reduce vulnerabilities to various risks.
Objectives
- Build capacity of the Government to manage financial risks
- Reduce barriers that hinder the growth of the insurance sector in Tanzania
- Create a vibrant and sound insurance industry that contributes significantly to consumer protection, financial stability, and economic growth
National Insurance Policy 2022
The Government has committed to strengthening its resilience through insurance and risk finance. Plans are underway to endorse a National Insurance Policy 2022 and its implementation strategy plan. The policy aims to create a vibrant and sound insurance industry that contributes significantly to consumer protection, financial stability, and economic growth.
Integration with Sustainable Development Goals
The initiative is designed to integrate insurance and risk finance into national development policies and strategies to deliver the Sustainable Development Goals and safeguard development gains. It will involve research and evidence-driven approaches to support changes in legislation and regulation, allowing for the development of new products, tools, and services.
Global Shield against Climate Risks
Germany has welcomed the start of the Engagement Initiative as a crucial contribution to its Global Shield against Climate Risks, which aims to increase protection against climate risks for poor and vulnerable people and countries. Tanzania is the first country where the initiative will be implemented, with plans to expand it to at least four other countries by 2023.
Insurance and Risk Finance Facility
The initiative is part of UNDP’s Insurance and Risk Finance Facility, which aims to deliver innovative insurance and risk transfer solutions in partnership with industry in a minimum of 50 developing countries by 2025.