Real Risk

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and integrate drought management activities among all organi-

zations partnering under the strategy.

Clear objectives and performance standards should be set,

along with a clear picture of regional vulnerability to drought.

Targets should be set for bringing more areas under sustainable

land and water management systems, and preparedness plans

should include comprehensive insurance, incentives and finan-

cial strategies. Monitoring, prediction and research are essential

to help farming communities, in particular, make informed deci-

sion on how to achieve the strategy’s goals.

Disaster management information centres would help a

community make risk-based choices to address vulnerabilities,

mitigate hazards and prepare response and recovery plans. A

strategic communication programme is needed to build aware-

ness of the value of preparedness in reducing drought impacts,

through partnerships at all levels.

Mitigation and preparedness

Proactive drought mitigation comprises a range of preparedness

measures from installing livestock watering ponds to technolo-

gies for capturing storm water and wastewater treatments that

allow water reuse.

A new, transboundary economy of agriculture, water for food

and ecosystem and water governance must be facilitated to help

harness water resources and achieve a unified African economy,

which will help facilitate, through a smart regional public-private

trade and investment partnership (SRPPTIP), cross-country links

for increased private and public investments in the form of African

transnational corporations (ATNCs) and African sectoral devel-

opment zones (ASDZs) to achieve economies of regional scale for

major agricultural commodities.

ASDZs will constitute the hub for strategic commodity produc-

tion, and will be located where conditions permit large areas to

be brought under sustainable land and water management

systems. Conditions should be provided to help integrate similar,

medium-size production structures into the hub through the

ATNC concept, and contract farming should enable the integra-

tion of small-scale, marketed-oriented agribusiness.

Adherence to mitigation measures would require secure prop-

erty rights for water and land, which in turn will help create

conditions where land can be used as collateral for loans.

Sustainable and reliable management systems for land and

water are the best insurance against disaster-related shocks like

bad harvest. However, these should take the form of a cost-sharing

programme between African farming and business communities

and governments.

A dedicated drought funding mechanism should support the

proposed African Working Group on DRR. Restructuring of

Africa’s integration would capture a larger share of global wealth

via Africa’s own wealth creation capacities.

Regional corporate tax

A regional corporate tax (RCT) could support the comprehensive

financing of drought impact reduction with emphasis on mitiga-

tion. The RCT could levy agricultural imports, currently estimated

at over USD24 billion, and contribute to a regional programme

of government-based incentives (RPGI), suggested under a

NEPAD support facility.

RCT proceeds could be used primarily to cover public-related

investments (permanent water supply infrastructures) and provide

agricultural drought assistance and financial incentives. The

scheme could help to finance mitigation measures through subsi-

dized and guaranteed loans, including commercial loans to launch

ASDZs and ATNCs related to high-demand food crops.

Loans should be used to adopt irrigation technologies, water

management practices and more resistant and productive seed

varieties, provide innovative policies for sustainable agricultural

production development, provide extension services for farmers

and improve agricultural, irrigation, input and farm management.

RCT proceeds could finance drought research and training on

drought risk management, support contingency plans and trigger

emergency response efforts including debt subsidies, income

support and guaranteed loans during a drought event that is

declared a disaster (although not all drought events should be

declared disasters).

RCT could contribute to a low-interest regional loan programme

or help promote microfinance and microinsurance solutions,

promoting welfare and economic development in the smallest of

communities. Other sources could include enforcing bank quotas

for microcredit, using insurance proceeds against agricultural

drought-related crisis, and public development aid – the demand

for food aid is currently estimated at over USD1.7 billion, which

should be provided in cash, two years in advance through

AU/NEPAD to support the microcredit programme.

Microcredit should support and promote the structural trans-

formation of subsistence-oriented operations into small and

medium market-oriented agribusinesses, minimizing the vulner-

abilities of more farmers.

Special financial incentives would help spread the best prac-

tices of farmers who use sustainable land management techniques

and reliable water control and management systems. Farmers

who normally produce a surplus could be given savings and tax

incentives.

Insurance

According to the commission, even the best preparedness and

proactive mitigation measures will not adequately address some

drought-related risks.

Insurance and relief are needed to mini-

mize risk further.

Insurance penetration across Africa is low, especially for

weather-related natural disasters.

Most farming communities

diversify activities as a risk coping mechanism, keeping a quan-

tity of food crops to cover consumption for 2-3 months above

annual requirements wherever possible. They raise livestock to

sell in case of crop failures, and undertake off-farm activities to

ensure economic security. Severe agricultural drought affects all

these activities.

Under these conditions, an insurance scheme becomes essen-

tial. For drought-related losses, this should cover food and cash

crops and livestock, emphasizing self-help and the provision of a

socio-economic safety net.

Households could pay an annual premium above the self-

insured level in the form of maintaining their own farm food

storage at 2-3 months above requirements. The premium could

be paid in the form of food crops or cash during a drought-related

disaster period, and disaster-affected farmers would be guaran-

teed food security commensurate to the level of premium paid.

Food crops paid as premiums could be stored in strategic loca-

tions, with amounts above a set level sold off to subsidize the

insurance programme, public investments, mitigation measures

or microfinance programmes.

If the rainfall (or other climatic

variable) falls outside the established limits, all those who have

paid the premium will be compensated for their probable

losses.

Insurance could be sold in standard units, with all