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‘De-‐risking’ Framework for public sector support to catalyze private sector investment
Theory of Change for Market Transformation
Target Investor risk/return profile and barriers
De-‐risking to reduce high financing costs (where risks are priced into
financing costs)
Financial de-‐risking
Barrier removal
Policy de-‐risking
A potential approach to assess and select public instruments
Stakeholder consulta.ons
Risk & barrier
assessment
Iden.fica.on of public
instruments
Cost Benefit analysis Evalua.on
De-‐risking instruments
Direct support : financial incenGves
Suppor.ng MSEs to adapt to climate change
Why focus on MSEs?
EssenGal source of livelihoods for the world’s poor
Highly vulnerable to
climate impacts Limited capacity
to assess and manage risks
• Safeguard and adapt operaGons and processes to direct &indirect climate risks
Climate resiliency of the businesses
• New demand for technologies, products and services – spillover to enhance communiGes’ resilience
New business opportuniGes related to
climate change
MSEs have flexible business models, can be responsive, and locally attuned – critical to resilient communities
DRIVERS FOR MSE ADAPTATION in CLIMATE CHANGE
Policies and regulation can be enablers of these drivers through compliance and incentives
Barriers and IntervenGons – Evidence from UNDP projects supporGng MSE
Awareness, assessment, and management of climate risks; Assessment and availability of adapta.on op.ons; Financial capacity to implement; Technical capacity to implement; Policy
and regulatory factors; Social aKtudes
Climate informa.on and learning
CAMBODIA Community based EWS on flooding/drought events ZIMBABWE
Weather staGons & custom rainfall forecast system
Technical assistance, awareness, and training
TANZANIA Broadcasts climate resilient agri pracGces
NICARAGUA Planning and training on
agrosilvopastoral systems
Policies and regula.on
RWANDA NaGonal strategy for CC and LCD HONDURAS Water pricing reforms proposed – difficult to implement
Market & business
development
TAJIKISTAN Pkging, cert., & labeling to mrkt adapGve produce
CAMBODIA Govt. rehabilitated irrigaGon schemes to cover upfront costs
Partnerships and
coopera.ves
COOK ISLANDS
Tourism industry guidelines & stds. for CCA
AFRICA PPPs to disseminate climate info & provide access to markets for rural pops.
Financial instruments
TAJIKISTAN Microloans for agro-‐biodiversity enterprises
ZIMBABWE
Seed financing for businesses promoGng climate-‐resilient seeds
BARRIERS
INTERVENTI
ONS
&
EXAMPLES
GEF objec.ve: Global Environmental Benefits LDCF/SCCF: Objec.ve: Adapta.on Benefits
142 GEF eligible
countries
GEF $ allocated to countries
CC, BD, LD
IW, CD, POPs, ODS, Hg
Replenished on 4 year funding cycle (GEF-6 = >4 billion USD)
UNEP World Bank UNIDO FAO IFAD AFDB ADB IADB EBRD WWF CI
UNDP
GEF Agencies
TA for Project design and Implementation support
PIF
GEF has its own: Governance Trustees Policy and Programming Arrangements
Project + fee for services
Aims to finance a paradigm shift towards low-emission and climate resilient pathways
Is the largest single source of climate finance
Result areas
MITIGATION • Increase low emission energy
access and power generation
• Increase access to low emission transport
• Reduced emissions from buildings, cities, industries and appliances
• Reduced emissions form Land Use, deforestation, Forest degradation, SFM, conservation and enhancement of C stocks
ADAPTATION • Increased resilience and enhanced
livelihoods of the most vulnerable people, communities and regions.
• Increased resilience of health and well being and food and water security
• Increased resilience of infrastructure and the build environment to CC threats
• Increased resilience of ecosystem and ecosystem services
Five investment priorities
• Transforming energy generation and access – Renewables, energy efficiency, etc.
• Creating climate-compatible cities – Urban resilient infrastructure, urban water supply, etc.
• Encouraging low-emission and climate-resilient agriculture – Low-emission cultivation practices, resilient agricultural livelihoods, etc.
• Scaling up finance for forests and climate change – Sustainable forest management, forest degradation/deforestation, etc.
• Enhancing resilience in Small Island Developing States (SIDS)
– Coastal zone adaptation, drinking water supply and management, etc.
Six high level investment criteria
Potential to catalyse impact beyond a one-off project or programme investment
Potential to the achieve the Fund's objectives and result areas
Beneficiary country ownership of and capacity to implement funded activities
Economic and financial soundness of programme/ project; appropriateness of concessionality
Potential to provide wider benefits and priorities - environmental, economic, social, gender
Vulnerability and financing needs of the beneficiary country and target groups
Impact Potential
Paradigm Shift Potential
Sustainable Development Potential
Needs of Recipient
Country Ownership
Efficiency & Effectiveness
Open Discussion
• What challenges do you face in your countries to mobilize adaptaGon
investments? – Public Sector – Private Sector
• What lessons learned/experiences can you share with others on effecGve approaches to mobilize adaptaGon financing?
• How can the BMUB NAP Agriculture programme play a role in supporGng
your country’s efforts to mobilize investments for adaptaGon in the agricultural sector?
Accessing the Fund for Programming
20+ Accredited enGGes Any public or private enGty at naGonal, regional or internaGonal level approved by GCF Board following ‘fit-‐for-‐purpose’ approach (project size/E&S risk/investment type)
Projects and Programme Approval Process
Step 1 Call for funding proposals
Step 2 Concept development
Step 5 Board Decision
Step 4 Analysis and recommendaGon to the Board
Step 6 Legal arrangements for approved proposals
Step 3 Submission of funding proposal
Key factors for a successful proposal
• NDA engagement throughout the formulation process • Stakeholder engagement (women, indigenous/minority
groups, private sector, CSOs/NGOs) • Very clear argument for climate change rationale (for
adaptation) • Feasibility study • Social and environmental safeguards assessment • Sustainability and replication potential • Innovation • Sound economic and/or financial model
Current status
• First 8 proposals have been approved for funding ($168M)
Country Focus Value ($ million)
Type Public/Private
AE
Malawi Livelihoods and EWS 12.3 CCA Public UNDP
Maldives Water security 23.6 CCA Public UNDP
Peru Wetland resilience 6.2 Cross-cutting
Public Profonanpe (national)
Senegal EBA in salinized lands 7.6 CCA Public CSE (national)
Bangladesh Resilient infrastructure 40 CCA Public KfW
Eastern Africa CC venture fund for EBA and off-grid solar
25 Cross-cutting
Private Acumen (regional)
LAC EE green bond 22 CCM Private IDB
Fiji Urban water supply 31 Cross-cutting
Public ADB