Leveraging Technology and Innovation for Disaster Risk Management and Financing

The Asia-Pacific Economic Cooperation (APEC) region is highly exposed to disaster and climate risks, accounting for more than 80% of global economic losses from disaster events in the last 20 years. The destruction and disruption that usually follow disaster events pose an important challenge to economic development and can perpetuate vulnerability. Despite substantial investment in reducing risk across the region, economic losses from disaster events continue to increase at a much faster rate than gross domestic product, implying that the relative economic burden is increasing over time. Efforts to enhance the reach of insurance and other financial protection tools have not significantly reduced the share of economic losses borne by households, businesses, and governments, which often lack the capacity to absorb these impacts. A changing climate as well as continued population growth and asset accumulation in areas exposed to disaster and climate risks is expected to exacerbate these challenges—with particular implications for vulnerable groups with limited economic resources. Enhancing resilience in the face of increasing natural hazards, exposure, and vulnerability will require investments in reducing the economic, social, and financial impacts of disasters by improving risk and impact assessment and leveraging those improvements to invest in risk reduction, preparedness, and response. APEC finance ministers have long recognized the need to build financial resilience to disaster risks and have included this objective in their work for a number of years. The Cebu Action Plan, approved by APEC finance ministers in 2015, aims to enhance financial resilience against economic shocks, including by “developing innovative disaster risk financing and insurance mechanisms (including micro insurance) to enable APEC economies exposed to natural hazards to increase their financial response to disasters and reduce their fiscal burden” (APEC 2015). Referenced by APEC finance ministers in their 2019 Joint Ministerial Statement, this report aims to contribute to this objective by supporting efforts to reduce underlying risk and develop tools to manage the financial consequences

Developing Local Currency Bond Markets for Long-term Development Financing in Sub-Saharan Africa

This article discusses the role that local currency bond markets (LCBMs) can play in the long-term financing of sustainable development of Sub-Saharan African (SSA) economies and presents an empirical analysis of the factors which may hinder or promote the development of such markets in SSA. Using a new dataset for 27 SSA countries, our findings support earlier research on SSA and other regions, showing that LCBM development is related to country size, larger banking systems, greater trade openness and better regulatory frameworks and the rule of law. Foreign investor participation broadens the investor base and can give a boost to LCBM development, yet it may also increase volatility of international capital flows. Hence, with view to the experience of emerging economies in other regions, capital market liberalisation should be pursued only very cautiously and in pace with solid financial and institutional development