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Making climate finance available to local actors

Climate change continues to be one of the greatest challenges for 21st century diplomacy, and is at the heart of current international governance discussions.

The 5th International Panel on Climate Change (IPCC) Report affirms that Africa is the continent most vulnerable to climate change, posing a serious threat to the region’s geopolitics, livelihoods and national cohesion” (IPCC 2014). The report predicts that “by 2020, crop yields from rain-fed agriculture may fall by up to 50% and 75-250 million could be affected by increased water shortages.”

The threat of climate change and associated disaster pose additional risks to sustainable development in Africa significantly the continents prospects of meeting the Sustainable Development Goals, Africa’s Agenda 2063 and the Paris Agreement on Climate Change. A number of constraining factors including lack of technological options, skills and information have further increased Africa’s vulnerability to climate change. Within the context of global challenges of food insecurity, climate variability, urbanisation and population explosion, Africa continues to have its own peculiar challenges particularly within the rural space. Africa faces unique challenges for the next decades in securing decent livelihoods and employment for young people in both urban and rural areas.

Accessing climate financing

According to the International Institute on Environment and Development (IIED), a preliminary estimate of financial resources earmarked for local climate activities puts the figure below 10% from key sources including international, regional and national climate funds between 2003 and 2016.

The Paris Agreement identifies means of implementation for the agreement, including finance, technology development and transfer and capacity building. An assessment of the Nationally Determined Contributions (NDCs) which are at the heart of the Paris Agreement indicated that about 30% of the NDCs will be implemented unconditionally whilst the remaining 70% will be executed based on the availability of additional funding outside government’s own resources. Access and effective utilisation of climate finance will therefore be critical in meeting both international climate change commitments and national priorities at all levels. Improving access to climate finance for local actors.

Putting local people at the heart of climate finance projects

Indeed, the Paris Agreement recognised the decisive role, the responsibility and the contribution of local and non-state actors in attaining the objectives of the Nationally Determined Contributions and the Paris Agreement.

Africa’s informal sector contributes significantly to the economic output and hold the key to accelerated development. Therefore a sustained access to financial services for informal operators especially in the agriculture, construction and other climate related sectors is important in unleashing Africa’s potential and growth. For instance, as agriculture is subject to high systemic risks, engaging with the sector has traditionally been challenging for financial institutions, which are often unable to adequately conceptualise and assess risk and therefore are unable, or reluctant, to develop sustainable financial products for actors in the agricultural value chain. Consequently, agricultural clients, notably smallholders, lack access to adequate financial services and therefore face severe growth constraints.

It is therefore imperative that an enabling environment be created to facilitate access to climate finance for non-state actors. The current process for accessing climate finance especially from international sources such as the Green Climate Fund (GCF), the Adaptation Fund (AF) and several others remain inherently complex therefore by default excluding a very important player, local actors from the climate finance pie. Specific allocation criteria needs to be built into the climate finance application processes to ensure that local communities and actors receive substantial resources to implement projects particularly those that are on a small scale to medium scale. Also the criteria for applications should be tailored to meet the needs and specific characteristics of local actors.

Access to information and networks

Access and effective utilisation of climate finance resources will be greatly enhanced through a system for identification, analysis and sharing of information on the various sources and characteristics climate funding. Sharing of information through networks and platforms will guarantee access to credible information and support processes for local actors to benefit from climate funding.

In the spirit of accountability and transparency local communities and actors should continually be involved in project appraisal, monitoring and evaluation processes. The situation whereby communities are only informed about the amount of funding deployed into local areas but without any means of verification have over the period become the norm rather than an exception. Therefore a participatory transparency and accountability framework for climate financing with clear guidelines and criteria for monitoring involving major stakeholder groups, especially local communities should be developed.

Conclusion

It is incumbent on policy makers both at the global and national level to ensure that local participation is genuinely included in the climate finance architecture. The ongoing climate negotiations whilst defining the rule book on the Paris Agreement should ensure that the needs of local communities are placed on top of the agenda and not treated as a minor constituent as has been the case over the years.

Article by Kwame Ababio, NEPAD Agency

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