South Africa: Government Looks Into Insurance for Climate-Related Disaster Events

Govt of South Africa
The Minister of Finance Enoch Godongwana delivered the Medium-Term Budget Policy Statement (MTBPS) in the National Assembly on Wednesday, 30 October, in Cape Town, South Africa.
30 October 2024
SAnews.gov.za (Tshwane)

Government is exploring options for purchasing insurance for certain climate-related disaster events, where such a practice would not undermine budget sustainability.

Tabling the 2024 Medium-Term Budget Policy Statement (MTBPS) in Parliament, Finance Minister Enoch Godongwana said climate-related disasters have intensified, damaging infrastructure and disrupting life.

"The increasing frequency and intensity of climate disasters is costly, and we must proactively work to reduce their impact on the fiscus and on society," the Minister said on Wednesday.

National Treasury's document on the 2024 MTBPS indicated that methods previously developed by the public and private sectors to manage disaster response and recovery are becoming unrealistic in terms of their costs.

"National Treasury is undertaking a detailed analysis of the experience of local governments regarding their access to emergency financing and their ability to disburse it.

"This analysis will help us better understand their capacity to manage a multi-layered, disaster risk finance approach.

"It will look into the willingness of municipalities to independently manage their financial response to disasters, existing incentives to invest in readiness, and their ability to set aside sufficient funds for their response," the Minister said.

He said the recommendations of the disaster risk financing strategy will be implemented from 2025 to improve readiness and response time.

Rebuilding and rehabilitation of infrastructure damaged by floods

The 2024 Adjustments Budget includes unforeseeable and unavoidable adjustments dedicated to support the rebuilding and rehabilitation of infrastructure damaged by floods across multiple municipalities and provinces.

"Provincial allocations include an additional R948 million for infrastructure reconstruction in the Western Cape due to flood damage, with funds allocated to the provincial roads' maintenance grant, the health facility revitalisation grant, the comprehensive agricultural support programme grant and the education infrastructure grant.

"Additionally, R35.7 million is rolled over for the school infrastructure backlogs grant in the Eastern Cape, and R251 million is added in the education infrastructure grant for the Western Cape Rapid School Build Programme through the Budget Facility for Infrastructure," National Treasury said.

Local government allocations include R684 million for the municipal disaster recovery grant to repair flood-damaged infrastructure across several provinces, with specific amounts allocated to Eastern Cape, Free State, KwaZulu-Natal, Limpopo and Mpumalanga municipalities.

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