Trialling Demand-led Climate Finance in Ethiopia: Is DFID onto a Winner?

Climate Change and Food Security Marketplace, University of Cambridge, 13 June 2014

Jules Siedenburg, Freelance Consultant

CLIMATE FINANCE: SUPPORT NEEDED

Climate change poses a huge threat to developing

countries, esp poor and vulnerable communities.

Outside support is desperately needed.

Climate finance initiatives respond to this need by

providing funding for ‘climate smart’ initiatives

TRANSFORMATIVE POTENTIAL

Potentially, such support can create transformative

opportunities for poor countries and communities

Helping vulnerable groups capture technological

and managerial innovations that deliver livelihood

advances that are climate resilient and sustainable

LANDSCAPE PROBLEMATIC

Yet this landscape remains problematic...

Schemes employ strict mechanisms to ensure

rigour and accountability of their finances

National stakeholders often possess limited

capacity, despite their dynamism and potential.

End result is a dilemma: Finance is often inaccessible

to those who most need it & could make best use of it.

DILEMMA WIDELY RECOGNISED

Dilemma is widely recognised, and potential solutions are being explored

These have merit, and could prove fruitful in time.

Yet currently the difficulties faced by stakeholders from developing countries remain

POTENTIAL SOLUTIONS TO THIS PROBLEM

Potential solutions Rationale Problems

Streamlining access

modalities

Makes existing funds

more accessible to

applicants from

developing countries

Modalities remain

complex, and access

remains elusive for

national stakeholders

Establishing national

climate funds

Provides a vehicle for

enhanced access that

responds to national

needs and priorities

Difficult to set up, donors

reluctant to channel funds

via NCFs, may deprioritise

initiatives by non-state

actors

Securing direct access to

funds

Provides a vehicle for

enhanced access that

responds to national

needs and priorities

Generally involves

securing access via a

country-based multi-

lateral donor office, so

access remains difficult

Table 3: Potential solutions to difficulties accessing funds

SCIP OFFERS POTENTIAL SOLUTION

The Strategic Climate Institutions Programme Fund

(SCIP) offers a potential solution to dilemma

1. Take seriously the needs and concerns voiced by

diverse national stakeholders re this challenge

2. Address barriers and thus enable these stakeholders

to take full part in their country’s CC response efforts

Premise that these stakeholders are key clients, since it

is their actions that will ultimately determine whether or

not LDCs respond effectively to climate change.

MID-TERM REVIEW FINDINGS

Began with initial diagnosis of the needs and

concerns voiced by diverse national stakeholders.

Mid-term review:

Overwhelmingly positive about basic design, but

saw implementation challenges

Had captured imaginations, and was seen as

suited to addressing critical gaps in the

institutional landscape

COMMENTS FELL INTO 3 CATEGORIES

Categories corresponded to SCIP’s three key innovations:

empowering stakeholders

fostering partnerships

bolstering government

For each innovation, the gist of these comments is summarised then sample quotations are cited.

FIGURE 1: SCIP’S THREE INNOVATIONS

Table 3: Potential solutions to difficulties accessing funds

(a) Empowering stakeholders (b) Fostering partnerships (c) Bolstering government

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EFFECTIVE CLIMATE CHANGE RESPONSE ACTIONS

INNOVATION 1: EMPOWERING NATIONAL

STAKEHOLDERS

Virtually all raised concerns about the limited

capacity of national stakeholders

Stressed the need for opportunities to ‘learn by

doing’ via financial support coupled with TA.

TA critical to ensure access & effective use.

A key benefit would be to empower and mobilise

diverse national actors, thus expanding the range

of voices and engaged stakeholders

INNOVATION 1: EMPOWERING NATIONAL

STAKEHOLDERS

Examples include...

“The capacity of key Ethiopian institutions is still low, and without this CRGE (i.e., Ethiopia’s climate change response) won’t work. One critical gap that must be addressed is the ability to produce strong proposals.”

“We spend lots of time preparing proposals but few are successful, which is extremely frustrating. If those writing proposals are unsuccessful they become discouraged, but we need to ‘activate’ as many of these people as possible to help deliver CRGE, including at lower administrative levels. Of course, the issue is not just preparing proposals, but also implementing them. At present, access to technical support in both these areas is a critical gap.”

INNOVATION 2: FOSTERING

PARTNERSHIPS BETWEEN INSTITUTIONS

Most strongly supported SCIP’s emphasis on fostering collaborative partnerships between institutions.

Two types of partnerships

Between national institutions

Seen as a way to break down historic barriers between institutions and to harness potential synergies.

Between national & overseas institutions.

Desirable, provided that they build the capacity of their national partners.

INNOVATION 2: FOSTERING

PARTNERSHIPS BETWEEN INSTITUTIONS

Examples include:

“While the government leads in providing services and managing resources, CSOs can help. Suitable roles for CSOs include engaging with communities and translating insights and lessons learned into policy.”

“It is fine to leave SCIP open to overseas bidders as long as their bids include an Ethiopian partner institution, in order to ensure that Ethiopian capacity is developed.”

INNOVATION 3: BOLSTERING

GOVERNMENT

Many saw SCIP as an unambiguous boon for government Helps lay institutional groundwork for climate action.

Naturally complements planned national climate fund

“Achieving the CRGE vision will be very difficult, since the climate change challenge is huge and complex. Diverse actors are needed to assist government, and SCIP ensures diverse actors are capacitated and mobilised.”

INNOVATION 3: BOLSTERING

GOVERNMENT

Others perceived the relationship between SCIP and the CRGE Facility as more complex. Govt suggested be temporary to avoid duplication with government,

NSAs highlighted the merits of retaining SCIP over the longer-term.

“The SCIP Fund is an ideal precursor to the new CRGE Facility, since it generates useful lessons on various levels. But it must complement government’s initiatives and avoid becoming a parallel structure.”

“If climate finance goes exclusively through government channels, then actors like CSOs, research institutes, the media may not have access to it, since there is no evidence of this having happened previously in Ethiopia.”

THE SCIP FUND DESIGN

SCIP is demand-led in two distinct senses

Distributes grant funding based on soliciting proposals

from across Ethiopian society.

Provides this support in a way that responds to the needs

and priorities voiced by Ethiopian stakeholders.

Design includes both responsive and proactive

components

THE SCIP FUND DESIGN

Table 3: Potential solutions to difficulties accessing funds

SCIP Fund Distributes finance

Provides technial assistance

GA 3

NGO / CSO

(+ Partner)

Development

agency

(+ Partner)

Private

consultancy

(+ Partner)

Research

institute

(+ Partner)

GA 2 GA 4

Government agency (GA) 1

GA 5

PROACTIVE SUPPORT

RESPONSIVE SUPPORT

Government

agency

(+ Partner)

THE SCIP FUND DESIGN

SCIP’s focus is its responsive component, which supports proposals

submitted by national applicants or overseas institutions with Ethiopian

partners. This component solicits proposals, then evaluates them

against a set of criteria. Proposals pitch ‘bottom up’ project concepts

borne out of the experience and insights of applicants.

SCIP also conducts targeted outreach and engagement via its proactive

component. Outreach efforts help partners identify capacity gaps then

develop proposals for submission to SCIP. Such proposals must

undergo the same rigorous and independent evaluation as other

proposals in order to be awarded funding.

SCIP delivers two services to its clients. It finances selected projects

and provides interactive TA to help qualifying applicants transform

promising proposals into ‘bankable’ ones and to ensure successful

implementation of projects.

STAKEHOLDERS’ COMMENTS ABOUT SCIP

Table 3: Potential solutions to difficulties accessing funds

Views of SCIP voiced by

interviewees

Percentage of stakeholders expressing

this view (%)

Addresses key capacity building

needs

56%

Helps mobilise diverse national

actors

33%

Fosters valuable collaborations 56%

Inherently complementary to CRGE 78%

Has good potential, but design

problems remain

56%

Not needed / fundamentally

problematic

0%

SUMMARISING D-LED CLIMATE FINANCE

Supporting national stakeholders to develop ‘bankable’ proposals via interactive TA

Generates alternative approaches and solutions, since identifying viable climate resilient livelihood pathways is a walk into the unknown

Supports organisations with a long-term commitment to vulnerable countries & communities

Harnesses the dynamism, local wisdom and diverse perspectives already existing in these societies