Ousseynou Nakoulima is Director of Country Programming for the Green Climate Fund and here shares his insights on climate finance readiness with CDKN’s Mairi Dupar. This article first appeared on www.climatefinanceready.org – the Knowledge Exchange for Climate Finance Readiness that is co-sponsored by the Adaptation Fund and CDKN.
- What does it mean for a country to be ‘climate finance ready’?
In the context of the Green Climate Fund, readiness relates to the ability of countries to access the resources of the Fund quickly and effectively. This requires the capacity to formulate transformative climate-related projects and programmes well integrated into country development strategies. It also implies the engagement of all relevant stakeholders throughout the project cycle to ensure true country ownership without inflating the transaction costs.
- What range of activities do you see developing countries taking to get climate finance ready and how does this look different depending on whether it’s a low-income or middle-income country?
Fortunately, developing countries are already in the midst of many readiness-related initiatives. The challenge they are facing is to ensure that these efforts converge to a consistent strategic framework. Middle-income countries (MICs) generally have the advantage of strong institutions capable to translate their plans in well formulated projects and programmes. Many of them are in the process of adapting their regulatory framework to make good use of private sector capital and skills. Many low-income countries (LICs) have this willingness but need capacity building to do so. For this reason, the GCF readiness programme is aiming at spending 50% of its resources for LDCs, SIDS and African States. Furthermore, we have ambitious plans to foster South South exchange.
- What, in your experience, are proving to be some of the greatest hurdles to attracting climate finance from foreign sources?
Beyond the challenge of project formulation, countries are concerned about the fragmentation of climate finance sources which generate high transaction costs. On the other hand, the hurdles to FDI flows also apply to climate finance. This include governance issues and capacity to regulate effectively private sector participation in the delivery of public goods.
- Do you consider that the availability of climate finance is a driver for climate compatible development strategies and plans or the other way around?
Countries are in different stages regarding the elaboration of climate compatible development plans. While availability of climate finance can be a good incentive in this direction, I believe leadership and awareness of multiple stakeholders are stronger predictors of the motivation of a country to climate-proof its economy. This is the reason why country ownership is a key principle for the Green Climate Fund. We want to establish strong relationships with countries and support the leaders of change.
- What do you consider to be some best practices in mobilising finance for climate compatible development in developing countries, which others could learn from?
We can learn a lot from country experiences and once again leadership of top government officials play a key role. Setting up a clear objective in terms of percentage of electricity production from renewable energies has unlocked private sector investment in this sector in some countries in Asia and Africa. These countries were successful in meeting their goals by preparing the ground through capacity building of the government entities in charge of running the programmes, especially in public private partnerships. In other cases, the involvement of local governments was an important factor in channeling resources to adaptation projects
- You have mentioned at ‘Development and Climate Days 2014’ that the Green Climate Fund is considering how to provide climate finance to the subnational level – will you allow for direct access by subnational implementing entities in the future?
The Governing Instrument of the Fund already allows direct access from subnational implementing entities. They will have to be nominated by their country through the national designated authority and also meet our fiduciary standards and environmental and social safeguards. We are of course very keen to identify entities capable of identifying and implementing transformative projects at local level, including in cities which seem to be a high impact area of mitigation and adaptation activities.