Background

Pakistan’s geophysical conditions, climatic extremes, and high degrees of exposure and vulnerability have categorized Pakistan as a severely disaster-prone country. According to the Index For Risk Management (INFORM) 2018, Pakistan’s risk rating stands at 6.4 out of 10, as the country continues to suffer from a plethora of natural and human-induced hazards that threaten to affect the lives and livelihood of its citizens.

Impacts of natural disasters in Pakistan have been colossal in recent history. An Earthquake of 7.6 magnitudes shook the northern areas of Pakistan in October 2005, resulted in the loss of over 73,000 lives and left 3.5 million people homeless. This mammoth disaster caused huge damage to the properties and lifeline infrastructure, which costed 5.5 Billion USD. Subsequently, Flood of 2010 affected 78 districts across Pakistan (about 1/5 of the total land area of the country) and resulted in the loss of lives, property, and infrastructure. It claimed 1985 lives and affected over 20 million people. Further, it damaged 1.6 million houses and 160,000 km² of the cropped area. Flood of 2010 caused an overall economic loss of 10 Billion USD.

Following the 2005 earthquake, the Government of Pakistan realized that it had no adequate institutions to manage natural disasters and emergency response. This led to the establishment of the National Disaster Management Authority (NDMA), which holds the key role in implementing, coordinating and monitoring disaster management. However, due to the increase in frequency and magnitude of disasters in Pakistan, the Government discerned the need to focus and invest in Disaster Risk Management and Financing through pro-active strategies.

As a result, the Government of Pakistan established the National Disaster Risk Management Fund (NDRMF) in December 2016 to generate and consolidate resources and invest in a risk reduction and mitigation strategy to reduce the impact of disasters in a proactive manner.

About NDRMF

NDRMF is a government-owned not-for-profit institution registered with the Securities & Exchange Commission of Pakistan under Section 42. The Fund is established as a non-banking financial intermediary with a corporate structure whose aim is to provide funding through matching grants of up to 70% for a range of structural and non-structural interventions to be carried out by United Nation Agencies, International and/or National Non-Governmental Organizations as well as Public Sector Entities.

The Fund is responsible for awarding, managing, and guiding investments that shall reduce risk and vulnerabilities that are associated with climatic change and natural hazards. The Fund’s objective is to focus on primary or critical level disaster planning, preparedness, pre-disaster mitigation, and early warning systems. It will not carry out any post-disaster activities. Being a rights-based organization, gender equality and inclusion are placed at the core of all NDRMF operations and programming.

The Fund is in line with existing policies and strategies of the GOP to address disasters, including

1) The Disaster Risk Reduction Policy (2013)
2) Climate Change Policy (2013)
3) GOP Vision 2025
4) National Disaster Management Plan 2013-2022 (NDMP)
5) National Flood Protection Plan IV (NFPP) (2016-2025)
6) Sendai Framework for Disaster Risk Reduction, 2015-2030

It is also contributing to international development targets such as the Sustainable Development Goals (SDGs), UN Sendai Framework and the Paris Agreement on Climate Change.

The initial financing of NDRMF is through a loan of $200 million by the Asian Development Bank and grants of $3.4 million by the Government of Australia and $1.5 million by the Swiss Agency for Development and Cooperation (SDC) respectively. It is expected that more international development partners will support NDRMF by pooling in more funds to comprehensively address key issues in Disaster Risk Reduction (DRR) and Disaster Risk Financing (DRF).

The National DRR Policy identifies Disaster Risk Financing as one of the Policy Interventions. With respect to Disaster Risk Financing, the Fund is mandated to develop a national level NATCAT (Natural Catastrophe) Model. This model will be developed for four different perils, i.e. earthquake, flood, drought, and tropical cyclone. In addition to this, under the umbrella of the Fund, a national level Disaster Risk Financing (DRF) Strategy is to be developed, along with two DRF instruments, one of which is to be piloted.

_{^[i]A study carried out in 2016 by Verisk Maplecroft, a UK-based risk management company}