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The impact of Africa’s rising population and the rapid levels of urbanisation across the continent have placed an enormous strain on infrastructure and available resources.
As emerging economies face growing demands to deliver vital and risk-informed infrastructure, planning is required to support and ensure the resilience and socio-economic development of city communities. Coupled to this, the uncertain risks of climate change will demand revised thinking as communities adapt to changing environments. In South Africa, the situation is no different.
Presently, up to 64% of the total population live in urban areas. Out of a population of 54 million, more than 39 million are under the age of 40, and most of these individuals live in cities. According to the African Cities Growth Index, South Africa has a much higher level of urbanisation than that of China (at 54%), India (at 32%), and Nigeria (at 47%).
Short term insurer, Santam has been exploring ways toaddress these challengesincluding the risks and potential impact of climate changeto promote sustainable, financeable and insurable infrastructure to meet the future needs of local communities.
Vanessa Otto-Mentz, Head of Santam Group Strategy Unit says, “The high cost of investment and spending on the development of national and local infrastructurenecessitates advanced planning- particularly as these decisions have long term impacts on the risk profile and development trajectories of cities”
Otto-Mentz notes that climate change and rapid urbanization combined poses serious risks to the stability and quality of human society here in South Africa. “With one of the highest urbanisation rates on the continent, South Africa is particularly vulnerable to climate change as increasing extreme weather events leave cities and communities vulnerable to storm, fire and flood disaster risk."
Santam and the other partners in the multi-sector collaboration felt that the general (short term insurance sector) could offer African city decision-makers a new way of looking at these challenges and wanted to explore the appetite for and value of a proactive risk management approach to infrastructure decision-making at city level. Typically the general insurance sector gets involved much later in the value chain that creates urban infrastructure.
As an outcome of the proof of concept workshop held in Dar es Salaam, Tanzania, ClimateWise launched a guide, to share learnings and encourage others to support collaboration between cities and the insurance sector. The City Innovation Platform: A guide to multi-sector collaboration on resilience provides learnings and insights to city officials, planners, investors and developers should they want to partner with others to explore and solve complex city level challenges. “Given infrastructure life span, many decisions today will have long and lasting impacts on the communities they serve,” adds Otto-Mentz and it is therefore critical that we pay attention to how we make these decisions – and should be well considered by decision-makers in the public and private sector.
The guide draws on the City Innovation Platform (CIP) workshop, a collaboration between officials from the city of Dar, insurance industry organisations and asset managers. Partners included Santam, Global Infrastructure Basel, ICLEI-Africa, Marsh, Munich Re, Santam, Sanlam, UNEP-Fi Principles for Sustainable Insurance, the Cambridge Institute for Sustainability Leadership and ClimateWise.
“Within the African context, many municipal structures are challenged given the available resources combined with rapid urbanisation in delivering basic needs and services, exposing communities to high levels of physical, social and economic risk,” says Otto-Mentz. These are key issues for sustainable development. In response, Santam was the first African insurer to mobilise the short-term insurance industry in response to increasing climate and weather risk to address this need - a gap that can be termed ‘the risk protection gap’.
“Reducing risk and building resilience is a long-term process that will need to involve research-based evidence, multiparty collaboration, capacity building, and knowledge generation and sharing. Climate change presents a key material risk to the insurance industry as it makes it extremely difficult to accurately predict and cost current and future risk.”
“At Santam we have begun to tackle this challenge, partnering with municipalities across the country to manage fire and flood risks and to build our understanding of the systemic risks inherent to where we do business. There is a strong incentive for collaboration as the proactive management and restoration of these ecological systems that has the potential to offset substantial portions of the future increases in risk driven by climate changes,”concludes Otto-Mentz.
The City Innovation Platform: A guide to multi-sector collaboration on resilienceguide serves to highlight the many opportunities for supporting more aligned risk management activities and is designed to support future replication and decision making in the creation of sustainable environmentsbetter equipped to deal with the future needs of African cities and their growing populations.
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