WASHINGTON, April 26, 2024 - The World Bank is providing immediate support for millions of Malawians severely affected by the ongoing food security crisis. A quick-release of $57.6 million in innovative grant financing is designed to provide the country immediate liquidity through the Catastrophe Deferred Drawdown Option (CAT-DDO1). This CAT-DDO support comes in the context of the severe food crisis the country is suffering due to El Niño conditions in the wider southern Africa region. Moreover, a series of intense disaster events over the last few years has left almost no time for the country to recover and has resulted in a severe erosion of food security at the national level.
The World Bank Board of Executive Directors in December 2023 approved the Malawi First Growth and Resilience Development Policy Operation of $80 million to support core structural reforms in the economy together with the $57.6 million CAT-DDO that could be triggered in the event of a natural disaster or crisis. Following the declaration of the national disaster by President Lazarus Chakwera on March 23, 2024, the World Bank has now made available the CAT-DDO resources.
"Malawi, together with the wider Southern Africa region, currently faces very serious food insecurity, impacting millions. This crisis comes as the country is struggling to stabilize its macro-economy and get on a path of inclusive growth. We are pleased the Government of Malawi had the foresight to lock in a CAT-DDO instrument when securing IDA budget support in late 2023: this innovation can help the Government of Malawi's efforts to mitigate the impact on the most vulnerable," says Hugh Riddell, World Bank Country Manager for Malawi.
Malawi's ongoing food crisis is linked to the ongoing strong El Niño conditions which is driving rainfall deficits in southern districts and above-average rainfall in central and northern districts, resulting in flood events. Moreover, the number and severity of climate-related disasters in Malawi have increased in recent decades, with devastating consequences. Since 2010 alone, Malawi has experienced 16 major flooding events, five storm-related disasters, and two severe droughts. Climate change-related events are affecting vulnerable households and could increase poverty rates in the country, potentially pushing millions of people into poverty over the next 10 years. In the near term (by 2030) climate change shocks to the economy are projected to reduce GDP by 3-9%, growing to 6- 20% in 2040 and 8-16% by 2050 as the climate impacts intensify.
"We are pleased with the World Bank's response to the call made by President Chakwera by providing additional budget resources under the CAT-DDO which will significantly leverage the support from other development partners and well-wishers as we intensify the mobilization of resources to respond to the food crisis caused by El Nino," said Simplex Chithyola Banda, M.P. Minister of Finance and Economic Affairs.
Implementation of climate adaptation measures beyond those outlined in Vison 2063 will require that Malawi optimizes the use of the public resources and secures additional funds from other sources, especially the private sector. The Regional Climate Resilience Program for Eastern and Southern Africa 2 (RCRP-2), approved by the World Bank in December 2023 aims at supporting improved disaster risk management, social protection systems and protects households from exposure to water-related climate shocks, including flooding and droughts. Overall, the recently approved Disaster Risk Management Act (2023) presents an opportunity to support the country's shift from a disaster response approach to preparedness, risk reduction, and sustainable post-disaster recovery, aimed at addressing Malawi's high level of risks.
**The Catastrophe Deferred Drawdown Option (Cat DDO) is a contingent line of financing that provides immediate liquidity to the country in the aftermath of high-impact events linked to natural hazards and/or health-related events.
