African financial institutions hone abilities to access climate finance
Since 2015, the Green Climate Fund has made more than 250 investments to help fight climate change across more than 100 countries. Projects include drought-resistant goat rearing in Zambia, storm- and flood-resilient housing in Vietnam, and tools to support the shift to renewable sources of energy in Paraguay. The funding for these projects, and 80% of the fund’s investments, has flowed through accredited international entities.
The Green Climate Fund is intended to be the main conduit for global investments to help developing countries meet their climate action commitments under the Paris Agreement. It is structured to channel climate finance directly to developing countries, through national institutions, as well as regional and international entities. But its pipeline of country-owned proposals is limited. The fund is falling short of its stated commitment to channel 50% of all financing directly to recipient countries. In November 2023, the Green Climate Fund listed 59 accredited national entities. Countries with no direct access work with international organizations to submit funding proposals.
IDRC support to SouthSouthNorth contributed to increasing the number of accredited national entities, with a focus on Southern Africa. Two entities gained accreditation during the project: the Infrastructure Development Bank of Zimbabwe and the Zambia National Commercial Bank. They brought the total number of accredited Southern African institutions to six, while many other participating entities benefited from the training.
Overcoming the climate action funding gap in Southern Africa
While having produced few of the carbon emissions that contribute to climate change, sub-Saharan Africa is one of the most affected regions. According to the World Meteorological Society, climate change effects are interacting with conflict and other stressors to significantly increase food insecurity in the region.
Through the Paris Agreement, most countries have committed to reducing their greenhouse gas emissions while also taking steps to increase their resilience in the face of global warming. But the cost of these measures far exceeds current levels of financing. The Africa Development Bank recently estimated that African countries would need between USD2.6 and 2.8 trillion (between CAD3.6 and 3.8 trillion) by 2030 to meet their commitments.
Increasing the number of national institutions with direct access to the Green Climate Fund is an important piece of the climate finance puzzle. But accreditation demands significant time and resources, and the ability to link national priorities to funding criteria.
SouthSouthNorth worked closely with national development banks and other institutions in Botswana, Lesotho, Namibia, South Africa, Zambia and Zimbabwe. It brought these national institutions together to share knowledge and skills and provided them with tailored expert guidance. This combination of peer learning and technical support has helped institutions navigate the process of accreditation and develop bankable projects that address national climate action goals, while taking on board the unique needs of women and vulnerable groups.
Expert analysis helps institutions gain access to climate action funding
The Southern Africa Climate Finance Partnership (SACFP) — a multi-country platform facilitated by SouthSouthNorth — provided a way for institutions with less experience in climate finance to learn from others that have progressed further with their plans and proposals. This kind of peer learning and exchange can be difficult without formal agreements between institutions.
Thanks to its participation in the SACFP as well as guidance in gender mainstreaming and technical training on how to operationalize climate finance, the Infrastructure Development Bank of Zimbabwe gained accreditation to the Green Climate Fund in July 2021. Peer-to-peer exchanges that clarified the application process enabled the Zambia National Commercial Bank to also become accredited in October 2022.
Mainstreaming gender in policies and projects
Gender equality is an area of growing concern in climate action, with most climate investments currently going to male-dominated sectors such as energy and transport. However, Southern African financial institutions have had little experience with integrating aims for gender equity and social inclusion into climate change projects.
Through the SACFP, teams from all six countries received guidance in developing a project concept note for funding from the Green Climate Fund — a first for five of these teams. An important part of this process was thinking about how women and other vulnerable groups might benefit from or be affected by the proposed investments. With feedback from peers and experts, including a specialist on gender mainstreaming, two teams worked on formal submissions of their concepts to the fund. All six institutions are now mainstreaming gender into their policies and projects, thanks to three rounds of expert analysis on gaps in gender and social inclusion.
A wealth of research on climate finance
IDRC has supported research and capacity strengthening to increase developing-country access to funding for climate action since 2012. The following synthesis brief called Mobilizing knowledge and capacity to fund climate action in the Global South provides a summary of findings from this body of research, including on
- climate finance needs, barriers and opportunities
- private-sector funding, especially for adaptation
- capacity building on climate finance
- inclusive approaches to financing climate action
Contributor: Bhim Adhikari, senior program specialist, IDRC.
