African governments are moving towards a regional financial mechanism designed to protect public assets and critical infrastructure from the growing fiscal consequences of climate and disaster-related shocks, following a two-day forum in Nairobi that brought together representatives from 21 countries.
The initiative emerged from the inaugural Climate and Disaster Risk Financing and Insurance Africa Forum, where governments, insurance regulators, development partners and industry representatives examined how countries can strengthen financial preparedness for floods, droughts, cyclones and other hazards that increasingly threaten public infrastructure and development gains. Participants agreed to advance insurance and regional risk-pooling mechanisms as part of a broader effort to reduce the financial exposure of governments when disasters occur.
The forum has mandated ZEP-RE, the COMESA specialised institution and pan-African reinsurer, to support the design, establishment and operationalisation of a thematic risk pool that would provide insurance capacity for public infrastructure exposed to climate and disaster risks. The proposed mechanism is intended to help participating governments assess their exposure, determine which risks and assets can be pooled and develop financial protection arrangements before disasters occur.
Hope Murera, Managing Director and Group Chief Executive Officer of ZEP-RE, said countries had called for financial protection that could safeguard public assets before disasters strike. She said ZEP-RE would support governments in assessing their exposure and determining how risks could be pooled.
The proposal comes as governments across Africa face increasing pressure to finance emergency response, reconstruction and recovery after climate-related disasters. When roads, hospitals, schools, water systems, energy infrastructure and other public assets are damaged, governments often have to redirect already constrained public resources towards recovery, potentially delaying planned investments and affecting the delivery of essential services.
The scale of the continent’s protection challenge was highlighted during the Nairobi forum. Participants heard that Africa currently insures only about 3% to 5% of its disaster losses, compared with roughly 40% globally, leaving governments to absorb the majority of losses estimated at between $7 billion and $15 billion.
This gap has implications beyond the insurance sector. Public infrastructure represents long-term economic investment, and repeated climate shocks can affect transport networks, electricity systems, water infrastructure, health facilities and other assets required for economic activity. ZEP-RE has described the protection of critical public infrastructure as an important component of strengthening resilience and reducing the fiscal impact of catastrophic events.
For governments, the proposed risk pool could provide another layer within broader disaster risk financing strategies. Rather than relying primarily on emergency budget allocations after a disaster, pre-arranged financial mechanisms can provide resources closer to the time they are needed. Participants at the forum also discussed the importance of combining insurance with risk reduction, adaptation, climate information systems and sound public financial management.
Reliable risk data will be central to whether such a mechanism can operate effectively. Forum participants identified national and regional risk data, stronger analytical and modelling capabilities and insurance products suited to African markets as important requirements for closing the continent’s protection gap. Better information on the location and vulnerability of public assets can help governments and insurers estimate potential losses, determine appropriate coverage and establish pricing and risk-transfer structures.
The emphasis on data also reflects a broader challenge for African insurance markets. Climate risks do not stop at national borders, while individual national markets may not always have sufficient scale or capacity to absorb large and correlated losses. Regional pooling can potentially provide greater diversification and underwriting capacity, although its effectiveness will depend on the quality of participating countries’ risk information, regulatory coordination, financial arrangements and implementation capacity.
The proposed mechanism builds on commitments made through the Zanzibar Declaration on Financial Protection of Critical Public Infrastructure. ZEP-RE’s 2025 annual report notes that the organisation contributed through the East Africa Insurance Supervisors Association to the declaration, alongside work on national disaster risk financing frameworks, asset registers and risk financing structures.
Alongside the proposed risk pool, governments participating in the Nairobi forum launched a peer-to-peer Community of Practice on Climate and Disaster Risk Finance and Insurance in Africa. The platform is intended to allow countries to exchange tested approaches and strengthen technical and institutional capacity as governments develop and implement national disaster risk financing strategies.
Kenya’s National Treasury Principal Secretary for Economic Planning, Dr Boniface Makokha, said the Community of Practice would allow participating countries to voluntarily share approaches to developing national disaster risk financing strategies. These approaches could include pre-arranged financing for critical infrastructure, regulatory alignment and complementary regional risk-pooling mechanisms.
For the insurance industry, the initiative could also create opportunities to develop products that respond more closely to the specific risk profiles of African governments. However, expanding insurance capacity will require continued collaboration between governments, regulators, reinsurers, development institutions and private insurers. ZEP-RE has identified collaboration, better data, regulatory alignment and innovation as important conditions for expanding insurance solutions and reducing the continent’s protection gap.
The involvement of regional institutions will therefore be important as the proposed pool moves from concept towards implementation. ZEP-RE already operates across multiple African markets and has a mandate that includes creating and administering insurance pools for the benefit of regional insurance markets.
The Nairobi discussions also point to a broader shift in how climate resilience is being considered within public finance. Instead of treating disaster response solely as an emergency expenditure, governments are increasingly examining how financial instruments can be arranged in advance to protect public balance sheets and maintain development spending after climate shocks.
For Africa, where infrastructure deficits remain significant and climate-related hazards can affect multiple countries simultaneously, the development of regional financial protection mechanisms could become an important component of long-term resilience planning. The proposed pool will nevertheless need to move beyond institutional commitments into practical systems covering asset identification, risk modelling, regulatory coordination, capitalisation and claims arrangements.
Protazio Sande, Interim Chairperson of the East Africa Insurance Supervisors Association and Acting Chief Executive Officer of Uganda’s Insurance Regulatory Authority, urged participating countries to translate the forum’s commitments into concrete measures. He called on each delegation to undertake at least one action following the meeting and report on progress when participants next convene.
The next phase will therefore be defined by implementation. For governments, the central task will be to establish reliable information on exposed public assets, determine appropriate levels of financial protection and integrate insurance and other pre-arranged financing mechanisms into national disaster risk strategies. For insurers and reinsurers, the challenge will be to develop capacity and products that reflect the scale and complexity of Africa’s climate risks.
The proposed regional risk pool ultimately reflects a wider recognition that climate resilience requires financial preparedness as well as physical adaptation. If countries can translate the Nairobi commitments into functioning risk-transfer mechanisms, the initiative could provide governments with an additional tool for protecting public infrastructure, limiting fiscal disruption and maintaining essential services when climate and disaster shocks occur.
