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OPINION: Form should follow function in Green Climate Fund design

Anju Sharma and Annelieke Douma of Both ENDS look forward to the Green Climate Fund Board meeting in Bali, Indonesia in February with some suggestions for its agenda. This article first appeared on It Must Be Said!

The “to do” list for the Green Climate Fund (GCF) Board’s sixth meeting in Bali, in February 2014, includes two items that are crucial to its architecture – and potentially its success in facilitating country-level action on climate change.

The first is the completion of the Board’s discussions on National Designated Authorities (NDA), initiated at its previous meeting in Paris. The second is the discussion on the access modalities of the Fund, or how countries will gain access to funds.

The nature of these access modalities will largely determine the architecture of the Fund, including the form and function of the NDAs. It is therefore somewhat surprising that the Board chose to discuss NDAs first, before a discussion on access modalities. How can it expect agreement on the form of the GCF’s national architecture, before first being clear on its function?

Enhanced direct access

According to Article 31 of its Governing Instrument, the GCF is to provide “simplified and improved access to funding, including direct access” though a “country-driven approach”. Article 47 calls for enhancing direct access through funding entities: “[r]ecipient countries will nominate competent subnational, national and regional implementing entities for accreditation to receive funding. The Board will consider additional modalities that further enhance direct access, including through funding entities with a view to enhancing country ownership of projects and programmes”.

This wording owes it genesis to a submission by the Least Developed Countries (LDCs), and refers to an enhancement of the current model of direct access – that of the Adaptation Fund. The Adaptation Fund allows a degree of “direct access”, where National Implementing Entities shortlist proposals, but the ultimate decision on what to fund is left to the Adaptation Fund Board. An enhancement of this direct access model refers to a further devolution of decision-making, where funding decisions are left to national “funding entities”.

The term “funding entities” refers to the national-level climate funds that have been instituted in many developing countries for climate change finance. These are funds designed by national governments to fit national circumstances, and therefore show promise in terms of country ownership, and stakeholder involvement in decision-making – if the right criteria are set by the GCF. In the original submission by Least Developed Countries that led to its inclusion in the Governing Instrument, the funding entities are defined as “sub-national, national or regional legal entities or international organizations”, “entitled to approve programmes or projects in accordance with the relevant guidelines developed by the Board”.

So then what are NDAs?
Article 46 of the Governing Instrument also states that recipient countries may designate a National Designated Authority (NDA). This NDA will recommend to the Board funding proposals in the context of national climate strategies and plans, including through consultation processes. The national designated authorities will be consulted on other funding proposals for consideration prior to submission to the Fund, to ensure consistency with national climate strategies and plans”.

This introduces an element of schizophrenia that has been further strengthened by the GCF Board at its meeting in Paris, when NDAs were discussed, and the Board agreed that the NDAs should, among other things, recommend proposals to the GCF Board. How will this fit into the enhanced direct access model? This seems to imply that the GCF Board will take ultimate decisions on projects, not national entities.

When the Board does decide to facilitate Enhanced Direct Access, then a discussion on the role, governance and structure of the National Funding Entities and the NDAs will be necessary. The in-country design of the GCFs counterparts must sufficiently provide for active participation of all stakeholders, transparency and devolvement of funds to the local level, in keeping with the Governing Instrument, which calls on the Fund to “encourage the involvement of relevant stakeholders, including vulnerable groups and addressing gender aspects”.

In Bali, however, the Board must first seek clarity on its access modalities, the function of the NDAs, how they will fit within a model of enhanced direct access, and how they will relate to National Funding Entities. It does not make much sense for them to discuss form without clarity on function.


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Image courtesy World Bank image library.

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