With its unique its location, topography and landscape, Seychelles is often impacted by cyclones, flooding and mudslides. Following Tropical Cyclone Felleng in January 2013, a GFDRR-supported damage, loss and needs assessment (DaLA) helped quantify more than $8.4 million in damages throughout the Seychelles. In addition to identifying damaged roads and infrastructure, which 87,000 people rely upon, the assessment gave the country necessary information to begin formulating its disaster risk management framework, including its disaster risk financing profile. This ultimately enabled the Seychelles to become the first African nation to access the Development Policy Loan with a Catastrophe Deferred Drawdown Option (DPL with Cat DDO), which will help the country build resilience to disastrous events impacting its citizens and economy.

Funded through the International Bank for Reconstruction and Development (IBRD), the DPL with Cat DDO will serve as the ultimate rainy day fund, with a reserve of $7 million to help foster a more stable macroeconomic environment in the country. The DPL with Cat DDO is a contingent line of credit that enables Seychelles to “draw down” funds in the immediate aftermath of any natural disaster declared a national emergency by the government, such as a cyclone or landslide. This financing helps to build back more efficiently and help regain a citizen’s sense of normalcy, ultimately supporting faster recovery of the socioeconomic environment in a post-disaster situation.

The DPL with Cat DDO is available for three years, and can be renewed for up to 15 years. With it, Seychelles is better prepared to respond quickly to natural disasters, which frequently occur in the region. Tropical Cyclone Felleng, for example, caused losses equivalent to 0.77 percent of the 2012 country’s GDP and affected key sectors, such as transport and tourism.

For countries to be eligible for the loan, they must already have a functioning hazard risk management program in place. The DPL with Cat DDO, therefore, goes beyond financing. It includes post-disaster recovery to further support the strengthening of the legal framework for disaster risk management and the integration of disaster risk reduction into development planning and decision-making. In Seychelles, the government has spent the last two decades ramping up its efforts to improve resilience from disasters.

“The government has shown its commitment to strengthening disaster risk management, which is illustrated by recently approving a Disaster Risk Management Act, a disaster risk management policy and by establishing a risk information database,” said Doekle Wielinga, the Bank’s task team leader for the DPL with Cat DDO.

The DPL with Cat DDO also complements other Bank support for private sector development, social protection and fisheries development. Such support includes the Southwest Indian Ocean Risk Assessment and Financing Initiative (SWIO RAFI), financed by GFDRR with funding from the Africa Caribbean Pacific – European Union Natural Disaster Risk Reduction Program. The aim of this program is to improve the understanding of disaster risks and risk financing solutions of five Indian Ocean island states. There is also support from a third Bank-financed Seychelles Sustainability and Development Competitiveness Loan, which supports reforms through improving the business climate, enhancing fiscal transparency and increasing fiscal oversight and controls over public enterprises.

“The 2013 floods were a wakeup call for the entire nation, and perhaps a reminder similar to that of the 2004 Indian Ocean tsunami—that Seychelles is not safe from disasters,” said Rolph Payet, Minister of Environment and Energy for the Seychelles. “The damage, loss and needs assessment is proof of the Seychelles’ government’s resolve and commitment to ensure the safety and well-being of our people.”