FILM: Getting climate finance ready – Experience from Bangladesh and Pakistan
In this first of three sets of video presentations from the workshop ‘South-South Learning Exchange on Developing Bankable Climate Projects’, Jorge Villanueva and Zabreen Hasan of CDKN pose questions to climate finance specialists from South Asia: Iftikhar Hossain and Nazmul Haque of Bangladesh and Fawad Hayat of Pakistan.
Iftikhar Hossain, Economic Relations Division, Bangladesh
Bangladesh is extremely vulnerable to climate change: although the country contributes very little to the problem, it is the sixth most vulnerable country to climate change in the world, according to the Vulnerability Index 2015. The Government of Bangladesh has been quick to realise this.
“If you look at the figures over the past few years, Bangladesh is spending about a billion (taka) a year from its own exchequer,” said Mr Hossain, which makes up around 75% of the Government’s total spending on climate change adaptation and mitigation projects. Bangladesh is one of the few developing countries that have introduced a climate fund from their own resources: the Bangladesh Climate Change Resilience Fund.
The Government is eager to supplement domestic spending on climate change measures with more money from bilateral and multilateral donors, in order to free up revenues for other, desperately-needed development initiatives.
All the country’s projects have to be aligned with a certain aspect of climate change, and they ensure that the project proposals reflect that. Bangladesh has climate finance readiness support from the Green Climate Fund and Deutsche Gesellschaft fur Zusammenarbeit (GIZ), and is in the process of training government staff so that they can write the best possible proposals to make the projects ‘bankable’ for the donors.
Nazmul Haque Infrastructure Development Company Limited (IDCOL)
IDCOL has been working on climate compatible development for 12 years and so has succeeded in attracting climate finance for a large number of projects. Renewable energy development is a particular focus: according to IDCOL’s website, the company has already installed solar power home systems that reach 13 million Bangladeshis, and intends to finance 50 off-grid solar networks by 2017.
As an institution focused on climate-related projects, one of IDCOL’s objectives is to ensure that all projects are sustainable. For every project, they identify the bottlenecks to the involvement of the private sector and ways to incentivise the project for private businesses in the form of subsidies and loans. IDCOL’s project development model is heavily reliant on external funding, accounting for 80% of the total funds while the remaining 20% comes from internal sources.
Fawad Hayat, Ministry of Climate Change, Pakistan
At present, the Government of Pakistan is working toward financing a wide range of climate-related programmes. These span from smaller projects that run for a short length of time to very long-lived projects.
Regarding climate finance readiness, Pakistan has been working on deciding exactly what aspects of climate change it needs to focus on, and has prioritised them. It has also decided what it must work on in the short term and what can be done in the long term. Now the Government is working on aligning the projects and programmes with the donor community as well as agency priorities.
Since Pakistan’s climate change projects are divided into long and short term categories, the Government largely uses its own funds to manage short term projects that simply cannot wait for funding to come in, and which have a more or less national impact. For longer term projects that are larger and will have a greater impact, the government sends project proposals to donor agencies for funding.
Image: Bangladesh solar, courtesy DFID.