This paper describes the short term and long term effect of natural disaster on the Kenya economy and possible actions taken by World Bank in the next few years. Natural disaster like severe earthquake creates negative impact on the growth of the economy and its national assets. International organisation such as World Bank provides aid to the lower income country for disaster management. The paper highlights the decision making process and their implications on the Kenyan economy.
Natural disaster damages the tangible assets of the economy that creates either short term or long term effects. The relative impact depends on the rate of growth and rate of convergence of an economy. As stated by Blaikie et al. (2014), human capital is crucial factor, which helps to deal with frequent disaster management. An economy with rich in human capital can revive even after severe disaster. Natural disaster in Kenya disrupts the lives of poor people and leads to displacement, job loss, and loss of property, destruction of national infrastructure such as rail, telecommunication, and water sources contamination. These are all short term impacts of natural disaster Kenya. This country suffers from frequent disaster and hence impact is rigorous (meteorology.uonbi.ac.ke, n.d). Loss of agricultural output is also the short-term impact. During February 2017, Kenya Government has declared drought as national disaster. 2.4 million People in the country needs help in terms of fund, food and non-food items (abc.net.au, 2017). External aid is required to manage drought and complement government effort in this country. People and wildlife both are under risk due to severe drought. Food rationing and cash transfer among affected people are foremost responsibility of the Kenyan government.
Long-term effect of natural disaster such as drought in this low-income country like Kenya is negative. Agricultural sector is mostly affected by the disaster. As aggregate output of the economy falls, per capita income falls (opendata.go.ke, 2017). Moreover, government spending increases to rehabilitate displaced people and rebuilding infrastructure. Increase in such government expenditure is unplanned and hence leads to fiscal deficit in the economy. Loss of agricultural output leads to the increase in crop price and creates inflation. Inflation reduces purchasing power of people and deprives some consumers from consumption of high priced products. As financial market in the economy like Kenya is not improved, rate of capital formation in the economy is slow (Blaikie et al., 2014). Without proper infrastructure, government has to start to reorganise economy after every disaster. Therefore, financing infrastructure is highly dependent on public funding. Government of developing country like Kenya hence, requires relying either on the foreign debt or foreign aid to use capital in the economy. Natural disaster may create long term unemployment in the economy.
World Bank provides global facility and assistance to disaster management. World Bank can increase aids to Kenya to support infrastructure development. The aid needs to be long term that can be used in productive purpose (worldbank.org, 2014). Aids can be provided to support short term impacts like migration, displacement, providing facilities like water, food and sanitation services. Any productive infrastructure project in this country needs to be technologically advanced to reduce the risk of natural disaster. The aid for 10 years can be granted to build rail, road, and telecommunication system. Aid of World Bank is required to support agricultural sector that is in the form of building technologically advanced warehousing and storage facilities, rotational cropping, improved irrigation system. These facilities can reduce demand supply gap created at the time of drought and flood. Schools can be made earthquake proof as Indonesia has implemented with the assistance of World Bank Global Facility for Disaster Reduction and Recovery (GFDRR) programme (worldbank.org, 2014). This programme assists countries in five areas such as risk identification, reduction of risk, preparing for disaster, financial protection for country and people and flexible recovery.
As drought has been announced as national disaster in Kenya, the World Bank can provide funds to the build up technologically improved crop storage unit where farmers can store grains and crops, when there is excess supply in the economy. Storage products can be supplied in the drought affected season. Drought is the result of chronic degradation of environment and climate change. Provision of emergency medicine, food and other non food items are short term aid that World Bank can provide. However, Kenyan government needs to use the funds to improve infrastructure for long term to resist drought in the form of building up water supply system, water storage system in the summer season.
It can be concluded that natural disaster management is crucial factor for the growth of the economy that are vulnerable to the natural disaster. International organisation such as World Bank supports low income courtiers in disaster risk management programme in the form of aid. World Bank aid has been growing over the years. However, World Bank assistance would be effective only when government fiscal and monetary policy is supportive for the implementation of disaster management programme. World Bank may assist a significant portion of the spending. Government has to manage the effects of disaster through building proper infrastructure for which effective cost benefit analysis is required. Cost benefit analysis is required to evaluate the viability of the projects among several available alternatives.
abc.net.au (2017). Kenya declares drought a national disaster, appeals for local and international help. Retrieved on 1st May from https://www.abc.net.au/news/2017-02-11/kenya-declares-drought-a-national-disaster/8261970
Blaikie, P., Cannon, T., Davis, I., & Wisner, B. (2014). At risk: natural hazards, people's vulnerability and disasters. Routledge.
meteorology.uonbi.ac.ke (n.d) Kenya Natural Disaster Profile. Retrieved on 1st May from https://meteorology.uonbi.ac.ke/sites/default/files/cbps/sps/meteorology/Project%20on%20Disasters.pdf
opendata.go.ke (2017) National Natural Disaster Inventory. Retrieved on 1st May from https://www.opendata.go.ke/datasets/national-natural-disaster inventory?geometry=23.995%2C-7.673%2C51.681%2C7.661
worldbank.org (2014) Helping Countries Better Prepare for and Manage Disaster Risks, Climate Change Retrieved on 1st May https://www.worldbank.org/en/news/feature/2014/01/30/gfdrr-helping-countries-manage-disaster-risk-climate
worldbank.org (2014) How to Develop Effective Disaster Recovery Programs – Lessons from Vulnerable Countries. Retrieved on 1st May from https://www.worldbank.org/en/news/feature/2014/09/10/lessons-in-effective-disaster-recovery-from-vulnerable-countries
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