After accreditation for international climate funds…what next?
After accreditation for international climate funds…what next?
Charlotte Finlay, CDKN’s Head of Country Support reports from day 1 of the CDKN South-South learning exchange on “mobilising resources for climate compatible development,” which takes place in Kigali, Rwanda this week. The key message so far is that after countries get accredited to receive international climate funds, they face even greater challenges in developing ‘bankable projects’ for investment.
Across the world, developing countries are working hard to gain accreditation for domestic institutions as ‘National Implementing Entities’ (NIEs) for the Green Climate Fund and other international climate funds. Achieving this goal should then allow countries direct access to millions of dollars to support climate-related development projects. (CDKN’s briefing on ‘enhancing direct access’ explores why countries are eager to adopt this route.)
Selection of an institution to become an NIE is tricky. Then, getting the institution accredited is even more difficult. It may call for government ministries and other institutions—many of which are already handling billions of dollars of funds—to shape and articulate their systems and processes to meet the needs of the Green Climate Fund.
Many developing countries have benefited from ‘readiness support’ from the Green Climate Fund or Adaptation Fund to shape and develop their strategy and institutions and they are on the path to accreditation. But it’s after accreditation that the real work starts. This is when the challenges emerge of developing a pipeline of bankable projects.
This week government representatives from 14 CDKN-supported countries across Asia, Africa, Latin America and the Caribbean have gathered in Kigali, hosted by the Government of Rwanda, represented by the Ministry of Natural Resources (MINIRENA) for a South-South learning exchange on mobilising resources for climate compatible development. They are tackling the difficult question: Are all developing countries ready and able to develop a suite of suitable project proposals for funding? What will it take for them to do this?
Rate of return – for whom?
Hot off the heels of accreditation by the Green Climate Fund, MINIRENA and the Government of Rwanda have some interesting lessons to share on developing a pipeline of projects from the early stages of mobilisation of the National Climate and Environment Fund (FONERWA). They reflect that in FONERWA’s first call for proposals nearly 1,000 were received, of which 11 went through to the next stage and five were finally funded. Since then the number of proposals for each quarterly funding window has declined but the quality has improved, thanks to significant efforts by the FONERWA team to provide feedback and capacity-building to applicants.
Rwanda’s experience of the difficulty of finding and developing suitable, bankable proposals for funding is further reflected in conversations with partners from many other countries. In any case, what does ‘bankable’ really mean? The word ‘bankable’ is borrowed from the world of banking and finance where investment managers are used to the due diligence and feasibility assessments that underpin investment decisions largely focussed on rates of return. There is a risk in using this term without a common understanding about what it means and how it can be applied in a development and climate change context. Our discussions together in Kigali show that ‘bankable’ means very different things to different people. Returns on investment are important, but what type of returns and returns to whom?
It’s clear that for now, for the countries represented in the room today, the idea of a bankable project generally is not going as far as considering rates of return on investment in a financial sense. There was also some scepticism about whether adaptation projects could ever be attractive to the private sector. Engaging with the private sector remains an important element which must be addressed in order to leverage the amounts of sustainable finance required for countries to truly move to a climate- resilient economic future. Governments and donor agencies will need support to broker relationships with the private sector and overcome issues such as the value of different types of returns, timescales for results, the quality and depth of information needed to inform significant investment decisions.
That said, the focus of bankable projects at the moment for our delegates is around projects that can attract or bank funds from international and national sources. This is the next big challenge for governments who want to follow accreditation success with high quality proposals.
Matching Funds’ criteria with national development priorities – we can learn from each other
The Green Climate Fund and others have clear criteria and templates that must be completed to access funding. These proposals need to include information on the business case for the work, the implementation process, how the funds will be managed and the results reported on and how the projects meet the fund criteria which varies fund by fund. The sectoral ministries who may be tasked with writing these proposals need support to answer the fund criteria as well as develop projects that are consistent with the wider development strategy and vision for the country in the long term. Feedback from country representatives today showed that they would like support in the short term to develop initial proposals and in the longer term to develop skills and capacity to do this in future. This is no small challenge.
The next two days in Kigali provide CDKN and our partners with a real opportunity to learn about what others have done well and where some of the mistakes have been made in terms of leveraging resources. No doubt this issue of ‘bankable projects’ will come up again. The willingness to understand, share and learn from each other, as well as to understand more about how things work in other countries and continents is a privilege. Our first day ended with our generous hosts Rwanda introducing us all to a spectacle of tradition Rwandan dance performed by a young troupe of dancers made up of survivors of the 1994 genocide. Our hosts reflected that one of the things about South-South learning is that it goes beyond learning about policies and climate change. It’s about understanding the whole path that a country has been on to where it is today. Tonight we saw part of the richness that makes up Rwanda’s heritage and it was unforgettable.
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This article has been produced as part of the “Lesson Learning from National Climate Compatible Development (CCD) Planning” project supported by CDKN and facilitated by the Centre for International Development and Training (CIDT) at the University of Wolverhampton. The project aimed to capture and share experiences and lessons related to national-level climate change planning in Kenya, Rwanda, Ethiopia and Mozambique.
Image courtesy CIAT - Rwanda scientist on climate smart agriculture project