What governments want from pre-arranged financing: evidence from Africa and the Caribbean

This policy brief presents the first cross-country study of what governments want from pre-arranged financing (PAF) — funding secured in advance to respond to disasters. As disasters strike more often and hit harder, draining public finances and threatening to undo years of development gains, PAF has become an essential tool for fiscal resilience and fast response; yet in many lower-income and climate-vulnerable countries, its uptake and effectiveness remain limited, partly because what governments want and what providers offer do not fully align. To help close that gap, the Centre partnered with the International Food Policy Research Institute (IFPRI) and the University of the West Indies' Sir Arthur Lewis Institute of Social and Economic Studies (UWI), drawing on insights from nearly 250 government officials and national stakeholders across eight countries in Africa and the Caribbean — Belize, Grenada, Jamaica, Kenya, Malawi, Nigeria, Senegal, and Zambia — deliberately chosen to reflect a diverse mix of risk profiles, geographies, capacity levels, and experience with PAF.

Four key findings emerge from the study. First, government officials value most the features that prevent an instrument from failing them when disaster strikes — speed, flexibility, and broad coverage — while seeing slow payout decisions, narrowly defined coverage, unreliable triggers, and rigid spending rules as critical design flaws; where trust is weak, governments often stack instruments defensively rather than layering them by design. Second, preferences are shaped by the broader fiscal environment, particularly debt levels: demand for PAF is lowest among the most fiscally constrained countries, which are reluctant to adopt instruments that increase debt when triggered and prioritise non-debt options, whereas countries with more fiscal space often view contingent loans as a valuable source of emergency liquidity. Third, preferences within governments are far from uniform — finance ministries prioritise the fiscal implications of the PAF portfolio, while frontline agencies prioritise readiness and getting money to people quickly — making inclusive processes essential so the priorities of vulnerable groups are not overshadowed. Finally, an instrument is only as good as the system around it: the effectiveness of PAF depends on the national preparedness and response systems through which funds are deployed (emergency procurement, contingency planning, institutional coordination). The brief accordingly recommends that providers make PAF fast and reliable, avoid aggravating debt issues by tailoring solutions to different fiscal realities, take a more deliberate approach to inclusivity, and strengthen the response systems PAF relies on — where budgets are tight, through grants rather than loans.