CLIMATE CHANGE How to Access Relevant Funding Sources in Practice

Transcription

1 CLIMATE CHANGE How to Access Relevant Funding Sources in Practice A Contribution to the Africa-EU Climate Change Research Platform Workshop on Strengthening Research Capacities for the Uptake of Sustainable Agricultural Intensification. Mensvic Grand Hotel, Accra, Ghana 22 November, 2016

2 Contents AfDB High Level Policies and Climate Change Ten Year Strategy High 5 Priorities Brief on the Feed Africa Strategy Funding Opportunities (General) How to Access Funding Sources Conclusion

3 CLIMATE CHANGE AND BANK S TEN YEAR STRATEGY ( )

4 Strategy Objectives & Core Operational Priorities Two objectives to support transformation Three areas of special emphasis Inclusive growth Five core operational priorities Fragile States A continuum & regional approach Age Gender Geography Gradual transition to Green growth Infrastructure development Regional integration Private sector development Governance Skills & technology Agriculture & Food Security Gender Supporting value chains Economic empowerment, legal & property rights Building resilience Managing natural resources Sustainable infrastructure

5 about GREEN GROWTH It places emphasis on achieving development objectives and growth targets while seeking to: Maximize natural resource use efficiency (input) Minimize waste and pollution (output) Build resilience The Bank involvement in green growth in the RMCs is: The Strategic; and Project/investment levels.

6 about GREEN GROWTH At the strategic level we seek to Mainstream Green Growth into Development Planning. This is done through Provision of upstream technical assistance to RMCs in development planning processes Strengthen emphasis in Country Strategy Papers on maximizing resource use efficiency, minimizing waste and pollution, resilience building; and Promote leap-frogging to efficient, clean technologies in project level investments, strengthen risk mitigating components

7 about GREEN GROWTH At the project level we look at: Green projects: Maintain or increase a country s natural asset base Greening brown projects: Essential for a country s development, but associated with reduction of natural capital. Emphasis on improving natural resource use efficiency and waste management to reduce adverse ecological footprint Vulnerability reduction: Project level investments may be vulnerable to environmental or socioeconomic changes. Emphasis on risk assessment and implementation of adaptive measures

8 about GREEN GROWTH Entry Points Mainstream Green Growth into Development Planning Strengthen Enabling Environment Provide Financing Track Progress

9 HIGH FIVES AND CLIMATE CHANGE

10 AfDB s High 5 Priorities 1. Power and Light Up Africa 2. Feed Africa 3. Industrialize Africa 4. Integrate Africa 5. Improve Quality of Life of Africans 10

11 about High 5s Various Strategies have been/ are being developed for the High Fives Regional Integration Policy & Strategy (RIPoS ); Feed Africa Strategy for Agricultural Transformation in Africa ( ) Others Climate Change is a cross-cutting issue on all these strategies For the purpose of this presentation, I will narrow on the Feed Africa Strategy

12 Feed Africa Strategy for Agricultural Transformation in Africa ( )

13 Barriers crippling Africa s agriculture sector Underperforming value chains Limited coordination of research and development Insufficient utilization of inputs and mechanization Limited reach of extension to boost on-farm production Poorly organized postharvest aggregation and transport Inconsistent capacity for effective value addition Poorly developed market linkages and trade corridors Insufficient infrastructure Insufficient transport, energy, water, waste management and other hard infrastructure, leading to uncompetitive cost structures Undeveloped soft infrastructure including aging smallholder farmers and a lack of skills for commercial agriculture and agro-allied industries Limited access to agricultural finance Real and perceived risk limiting private sector investment High service cost due to small deal sizes, lack of credit data, and low capacity in agricultural lending Limited market attractiveness relative to perceived higher returns outside of the agriculture sector Adverse agribusiness environment Unfavorable market access and incentives limiting trade and capacity to produce high-quality products Ineffective sector regulation creating long lead times for new technologies and inconsistent trade policies Unsupportive business enabling environment restricting land tenure and general ease of doing business Limited inclusivity, sustainability and nutrition Insufficient inclusivity of women and youth in agricultural development Limited incentives to ensure sustainability and climateresilient practices Limited access and affordability of commodities with high nutrition levels

14 The imperatives for agricultural transformation: goals, status, targets Goals Become a net Contribute to the Eliminate hunger exporter of end of extreme and malnutrition agricultural 1 poverty 2 3 commodities 4 Move to the top of key agricultural value chains Status Today 49% of Africans or 420 million live under the poverty line of $1.25 per day (2014); Those living in poverty will rise to 550 million by 2025 if we do nothing 33% of African children live in chronic hunger; 40 million stunted children under the age of 5 years as at today Staggering net food import bill of USD 35.4 billion per annum (2015); Net Imports projected to increase to USD billion per annum by 2025 if we do nothing Low value addition to agricultural commodities and predominantly primary production; Africa s share in global production of cocoa beans is 73% vs. 16% share in ground cocoa Target by 2025 Contribute to alleviating poverty though job creation and providing sustainable livelihoods; ~130m lifted out of extreme poverty Food security for all Africans that are undernourished ; Zero hunger and malnutrition Eliminate large scale imports of commodities that can be produced in Africa, and selectively begin to export Africa s net trade balance $0 billion Africa share of market value for processed commodities ~40% (Example for cocoa grinding) 14

15 A focused approach on integrated commodity value chains The Bank will pursue an agenda to transform key agricultural commodities and agro-ecological zones Wheat in North Africa Sorghum, millet, cowpea, and livestock across the Sahel Rice in West Africa Cassava in humid and sub-humid zones Maize, soybean, livestock, and poultry across the Guinea Savannah Tree crops (including cocoa, coffee, cashew, and oil palm), horticulture and fish farming across all of Africa In particular, Feed Africa will take a commodity-focused integrated approach simultaneously addressing multiple bottlenecks across entire prioritized agricultural commodity value chains and within related agroecological zones Agricultural commodity value chains and agro-ecological zones targeted by the Feed Africa

16 Orchestrate, design, scale and replicate transformation through 7 enablers 1 Feed Africa Enablers Increased Productivity Orchestrate / Design Scale/ Replicate AfDB Role TAAT: increase investment into agriculture research and technology dissemination Inputs finance and agro-dealer network development: expand input finance and connect farmers to buyers Mechanization Program: establish facility for on-farm mechanization leasing Develop agro-dealer supply systems Support wide-scale deployment of innovative farmer extension models 2 Realized Value of Increased Production Orchestrate / Design Scale/ Replicate Post-Harvest Loss Prevention Facility: invest in infrastructure and training to reduce on-farm and post-harvest loss Warehouse receipts systems (WRS): scale WRS as 1st step for commodity exchanges Agro-processing zones and corridors: increase and link production and processing capacity along key corridors Scale-up and replicate innovative models to organize and aggregate farmers Establish agricultural commodity exchanges 3 Increased Investment in Hard & Soft Infrastructure Orchestrate / Design Infrastructure Coordination: accelerate and coordinate development of enabling hard infrastructure (energy, water, logistics) Market infrastructure: build market centers and associated service infrastructure Farmer e-registration: launch large scale farmer e-registration systems

17 Orchestrate, design, scale and replicate transformation through 7 enablers (cont d) Feed Africa Enablers 4 Orchestrat e/ Design Expanded Agricultural Finance Scale/ Replicate AfDB Role Risk-sharing Facility: catalyze bank lending to the ag sector through risk-sharing facility Non-Bank SME Finance and Capacity-Building Fund: provide funding and capacity-building to SME funds as well as surrounding ecosystem (e.g. credit bureaus) Project Finance Facility: Increase long-term funding to agriculture SMEs Trade Finance Facility: scale up existing Soft Commodity Facility Sovereign Risk Support: Scale up Africa Risk Capacity (ARC) initiative (sovereign insurance solution to agro-ecological shocks) Diaspora Bonds: create lending products to attract diaspora and institutional capital Facilitate lower lending rates to agricultural players through Central Bank funds Deepen and broaden agricultural insurance markets 5 Orchestrat e/ Design Policy reform matrix: coordinate establishment of an Africa-wide policy matrix detailing the five groups of key policy changes required to enable transformation; key policy areas would be: (i) Land tenure, (ii) Input subsidies, (iii) incentives for local production and processing, (iv) financial sector deepening, (v) Regional integration and trade Improved Agribusiness Environment Scale/ Replicate Global Program for Improving Agricultural Statistics and Rural Development: improve statistical systems across African countries by building capacity in ministries and offering technical assistance Facilitate land tenure reform through the Africa Land Policy Center Provide technical advisory to governments to support agriculture development bank set-up / reform Strengthen capacity of private-sector actors (e.g. Chambers of Commerce) to advocate for favorable policies Support development of Agribusiness Environment indices

18 Orchestrate, design, scale and replicate transformation through 7 enablers (cont d) 6 Feed Africa Enablers Orchestrate/ Design AfDB Role AFAWA Facility: establish a facility to promote women-owned MSMEs Increased Inclusivity, Sustainability, Nutrition Scale/ Replicate Orchestrate/ Design Orchestrate/ Design Increase representation of women in agricultural research, and enhance gender-responsive research, monitoring, and evaluation Youth Jobs for Africa Agricultural Flagship Programs: establish facilities to increase youth employment and enhance skills in agribusiness (e.g. ENABLE Youth) Climate Resilience Funding: provide funds to support climate adaptation and climate smart agriculture practices Scale/ Replicate Encourage scale-up and replication of nutrition programs (through the Nutrition Trust Fund and other mechanisms) 7 Coordination Orchestrate/ Design Scale/ Replicate Partnership among key actors from the public sector, private sector and development institutions Support pan-african agriculture leadership initiatives (e.g. Leadership 4 Agriculture)

19 How are we going to Finance Expand use of existing climate and environmental financing instruments to lower transition cost (Strengthen internal/external awareness of AfDB instruments and their possible use); Promote development and access to more integrative financing mechanisms/platform; Facilitate upstream dialogue with RMCs on enabling environment for private sector and green growth FDI is increasingly exceeding ODA; and Facilitate access to risk mitigating instruments.

20 AfDB Green Investments: Instruments AfDB Statutory Resources Panel AfDB-managed Donor Resources (TFs, programs, etc.) Additional External Resources Non-sovereign Operations Sovereign lending SCAF ACSP SEFA Strategic Climate Funds CTF GEF Debt Equity Guarantees Concessional Grants Non-concessional Other Initiatives: FAPA, AWF, CBFF, NEPAD-IPPF, RWSSI, ICA, AFP, ClimDev Africa, etc. SREP PPCR FIP Link with Private Sector: - Reduce Investment Costs & Risks - Address Additionalities - Build PPPs

21 Adaptation Finance Main multilateral funds Climate Fund Adaptation for Smallholder Agriculture Program (ASAP): To channel climate and environmental finance to smallholder farmers, scale up climate change adaptation in rural development programmes and mainstream climate adaptation into IFAD s work. Green Climate Fund (GCF) will allocate 50% of its USD 10.2 billion in initial resource mobilization to adaptation. Adaptation Fund (AF) is a financial instrument under the UNFCCC that has been established to finance concrete adaptation projects and programmes in developing country Parties to the KP Amount pledged Billion USD Eligibility 0.37 Countries = 5 By 2020 = 25 per year Project / Programs 0.49 Project Bilateral funds: Germany s International Climate Initiative, UK s International Climate Fund, Japan Hatoyama Initiative (Fast-Start Financing)

22 Mitigation finance Main multilateral funds Climate Fund The Green Climate Fund (GCF) will allocate 50% of its USD 10.2 billion in initial resource mobilization to mitigation. GEF Trust Fund - Climate Change focal area : is intended to cover the incremental costs of a measure to address climate change relative to a business as usual base line. The Scaling-Up Renewable Energy Program in Low Income Countries (SREP) is a targeted program of the Strategic Climate Fund (SCF), designed to demonstrate the economic, social and environmental viability of low carbon development pathways in the energy sector. Partnership for Market Readiness (PMR) is a partnership of developed and developing countries administered by the World Bank, established to use market instruments to scale up mitigation efforts in middle income countries. Amount pledged Billion USD = 5 By 2020 = 25 per year GEF-5 = 1.35 GEF 6( )= 1.1 Eligibility Projects / programs Projects / programs 0.5 Pilot countries 0,13 Countries Bilateral funds: Germany s International Climate Initiative, UK s International Climate Fund, Japan Hatoyama Initiative (Fast-Start Financing).

23 Mitigation finance REDD+ funds Climate Fund The Forest Carbon Partnership Facility (FCPF) consists of a Readiness Fund and a Carbon Fund created to assist developing countries to reduce emissions from deforestation and forest degradation (REDD+). The BioCarbon Fund Initiative for Sustainable Forest Landscapes supports developing countries efforts to reduce emission through testing jurisdictional approaches that integrate reducing deforestation and degradation with the climate smart agricultural practices to green supply chains. Amount Pledged Billion USD Eligibility 0.83 Countries 0.36 Projects / programs The Forest Investment Program (FIP) supports developing countries efforts to reduce deforestation and forest degradation (REDD) that leads to emission reductions and the protection of carbon reservoirs. The UN-REDD Programme, brings together UNDP, UNEP, and the FAO to support REDD+ activities, with the governance structure giving representatives of civil society and Indigenous People s organizations a formal voice. Congo Basin Forest Fund (CBFF) is a multi-donor fund set up in June 2008 to take early action to protect the forests in the Congo Basin region. Green Climate Fund (GCF) focuses efforts at least in part on scaling up results-based financing for land use change and forests, which has been identified as having potential for climate change mitigation, alongside benefits for ecosystem services and livelihoods. 0.6 Pilot countries 0.26 Countries 0.16 Projects in CB = 5 By 2020 = 25 per year Projects / programs Bilateral funds: Germany s International Climate Initiative, UK s International Climate Fund, Japan Hatoyama Initiative (Fast- Start Financing), Australia's International Forest Carbon Initiative, Norway s International Climate and Forest Initiative (NICFI), Norway Central African Forest Initiative (CAFI)

24 HOW TO ACCESS RELEVANT FUNDING SOURCE AfDB Statutory Resources Sovereign Lending Non- Sovereign Lending AfDB-managed Donor Resources Additional External Resources

25 CONCLUSION CC is an important consideration in all Bank interventions; The Bank provides opportunities for financing related knowledge and investment products; The opportunities exist in AfDB Statutory Resources, AfDB-managed Donor Resources and Additional External Resources that are tied to projects/programs or countries.

26 THANK YOU FOR YOUR ATTENTION Contact: Tabi Karikari Agric. & NRM Officer Ghana Field Office Accra