TWN Info Service on Climate Change (Mar14/02)
4 March 2014
Third World Network  

Green Fund discusses country ownership and readiness support

Bali, 4 March (Meena Raman)- An interesting and important exchange of views took place at the recent meeting of the Board of the Green Climate Fund (GCF) on the issue of country ownership and the role of the national designated authorities (NDAs) in relation to funding proposals to be forwarded to the Fund.

In a paper prepared by the Secretariat for the consideration of the Board at its 6th meeting in in Bali, Indonesia from 19-21 Feb, the Board was supposed to approve an initial “no-objection procedure for funding proposals”.

As stated in the paper, “the purpose of the no‐objection procedure is to ensure consistency with national climate strategies and plans and a country‐driven approach and to provide for effective direct and indirect public and private sector financing by the Fund. A no‐objection is a condition for approval of all funding proposals submitted to the Fund.”

In issue was a proposal by the Secretariat for a “tacit no-objection” after a time lapse of 3 weeks of the submission of a funding proposal by an intermediary or implementing entity to the NDA or focal point at the country level.

Many developing country Board members were opposed to such a tacit no-objection procedure and wanted funding proposals to be considered by the Fund only when there was an express and explicit support from the NDA/focal point for a funding proposal, with some suggesting a 60 day timeframe for the consideration of the proposal.

Another issue which was problematic and saw a divergence of views was a proposal in the Secretariat paper for the “Private Sector Advisory Group (PSAG) to make recommendations …for additional or special provisions regarding simplified procedures for certain activities or special types of projects.”

(The PSAG’s role is to make recommendations to the Board on the Fund-wide engagement with the private sector and is comprised largely of private sector representatives from developed and developing countries).

Several Board members from developing countries questioned the need for a “differential treatment” of proposals relating to the private sector, while some developed country Board members advocated the need for special treatment of proposals from the private sector. The Board member from Egypt said that a separate procedure for the private sector would confirm his “worst fears” that the Private Sector Facility (PSF) would be separate from the GCF.

These issues and other divergences prevented the adoption of a decision by the Board at the Bali meeting which then agreed to task a 4-member team to continue undertaking their deliberations on the issue and to report back to the Board at its next meeting (in May this year) with a proposal for decision. The team comprised of Board members from India (Dipak Dasgupta), Egypt (Omar El-Arini), Switzerland (Anton Hilber) and the United States (Alexander Severens).   

An important outcome of the Bali meeting was a decision on “readiness and preparatory support” which tasked the Secretariat “to elaborate a revised detailed programme of work” for the consideration by the Board at its next meeting.

Country ownership and the no-objection procedure (NOP)

On the issue of country ownership and the NOP, below are highlights of some of the views expressed.

Liang Zqian (China) said that he would not endorse the suggestion of a time lapse for a tacit NOP. The 3 week time limit is not sufficient as NDAs need to communicate with stakeholders on the funding proposal submitted to it. The NDA should reach agreement with the implementing entities as soon as possible and it has to present the no objection letter in writing to the Secretariat. Liang proposed that the Secretariat design a uniform no-objection letter.

David Kaluba (Zambia) questioned why the private sector should have special provisions. The NOP should be the same for all; otherwise, we are compromising the intention of such a procedure. He also stressed that there is need to minimise the top down approach in deciding which ministry or department in a country should host the NDA. Countries have different circumstances and the Board should not be limiting the ability of a cross-cutting authority like a President’s office by saying that the NDA should be in a ministry. Countries should be requested to come up with institutions with adequate authority. There are projects supported by the Global Environment Facility and the Climate Investment Funds (CIFs) who have identified focal points or designated authorities already and there is need to ensure that the GCF does not re-invent the wheel.

Sergio Serra (Brazil) was of the view that a tacit NOP is not acceptable. There needs to be written objections such as that which works well with the CIFs. He said that stakeholder consultations are important; adding that in Brazil, its climate change policy is subject to hearings. He expected the same with any project to be submitted to the GCF. Serra expressed misgivings on the proposal to have the PSAG make recommendations to the Board on the NOP, saying that the procedure should be homogenous. The same rules must apply whether for public or private sector projects, he added further.

Omar El-Arini (Egypt) reminded Board members on how the issue of the NOP came to be. He recalled that the Board was requested to develop a transparent NOP through the NDAs in order to ensure consistency with national climate strategies and plans for effective public and private financing by the GCF. The Board was also requested to determine this procedure prior to the approval of funding. The NDA will have to clear the funding approval. On the NOP proposed, he echoed China, Zambia and Brazil in opposing the tacit NOP.  Given that the process will involve continuous consultations especially if high officials are involved, he proposed a 60 day time frame for the NDA to give its views.

El-Arini added that when the private sector is mentioned, he thinks of the private sector in his country, which will be part of the national strategy to achieve the climate objectives. In the case of the international private sector, he did not see why they need to be involved through the PSAG in providing any inputs into the NOP.  He recalled that the Board had decided previously that the PSF is under the GCF and is not a separate fund. If a separate procedure is now requested, then it confirms “our worst fears that they (the PSF) is separate and will grow to be the Fund”, he stressed further. 

Monica Hidalgo (Ecuador) expressed reservations as regards the tacit approval proposed, adding that silence from national authorities can never be considered as consent, especially if their role is to ensure that any project or progamme is in line with national strategies or plans. A tacit approval would therefore be a threat to the role of the NDAs or focal points in their roles. Hildago was also concerned with the invitation made to the PSAG to make further recommendations on the NOP. She said this posed a clear conflict of interest as most of the members of the PSAG represent entities that may submit private sector funding proposals.

Pedro Garica Brito (Dominican Republic) agreed with El-Arini and Serra and called for a 60 day time period for the NDAs to consider the funding proposal.

Zaheer Fakir (South Africa) said that country ownership is not just about endorsing funding proposals but has to go beyond that to reflect the broader developmental and economic context of a country. He asked if the NOP is a way to entrench country ownership or if Board members were merely addressing it because the Governing Instrument of the GCF says so. Fakir said that the Secretariat paper was theoretical. There were a lot of guidelines for the NDAs but this approach does not work. Guidelines may be good but countries are not homogenous and that needs to be taken that into consideration.

Marisa Lago (United States) said that there should be a right balance between getting country ownership and for the NDA to not unnecessarily hold up the funding proposal. She expressed concern for “an affirmative determination” by the NDA. There is need to distinguish between the public and the private sector funding proposals, she added further.

Per Callesen (Denmark) said that the main message of the Secretariat paper was as if country ownership is viewed negatively; that it is to block or stop projects from being funded. Country ownership is all encompassing and is positive; as the engagement of country authorities and partnerships is to the benefit of everyone. He was however fine with the proposal made by the Secretariat paper on the NOP.

Readiness and preparatory support

The Executive Director of the GCF, Héla Cheikhrouhou informed the Board of contributions from Germany and South Korea in support of the readiness activities.

It is learnt that the two governments have committed to contributing a total of US30 million in this regard. Many of the Board members stressed the need for the GCF not to duplicate the initiatives or activities of other UN agencies or MDBs who are carrying out readiness efforts but to build upon them.
Highlights of some exchanges in this regard are set out below.

Omar E-Arini (Egypt) said that the Board is yet to have any project eligibility criteria and there is also no programme for readiness. He said that Secretariat is still short of staff, while there are United Nations agencies which a have track record in doing readiness activities. He said the Secretariat could engage one or more of these agencies to help. El-Arini suggested that the Secretariat concentrate on 25-30 countries that ensures geographic and economic balance. He stressed the importance of support for the establishment of the NDAs. He called for a work programme for the Board to approve.

David Kaluba (Zambia) expressed agreement with El-Arini and the need to build on existing readiness initiatives and not to reinvent the wheel. The Secretariat could use the experience of others to reduce the costs and not to duplicate efforts.

Norbert Gorissen (Germany) also agreed on the need for the GCF to link to on-going readiness activities. He said the Secretariat could play a role as a clearing house in the mapping of activities and as a one-stop agency; it could further develop the work plan and consult with those who are already doing work in this arena. He wanted the work not to be delayed and proposed that the Secretariat comes back with a more elaborated work plan for the next meeting.

Patrick McCaskie (Barbados) said that readiness support is crucial for the small-island developing states (SIDs) for strengthening their capacities for resilience both economically and socially. He said the priority areas should be well defined and should target the different steps of engagement viz. the selection of NDAs; to proposal development and project and programme delivery. Results monitoring should also be considered as a core element. There should also be support for strengthening in-country capacity and data collection as well as management systems. He recommended that the Fund work coherently at the national, regional and international levels. Initiatives that already exist should be supported and built upon. The GCF programme should be about coordination; be an information hub, a catalyser and multiplier. Readiness should be a strategic priority of the Fund and that should be reflected in its staffing. 

Liang Ziqian (China) speaking also for South Korea (who is his alternate), said that it is important to avoid duplication and overlaps among different types of readiness projects which are conducted by MDBs, UN agencies etc. He said that it is crucial to mobilise local consultants when delivering support. He also called for a revised work plan with clear modalities and with initial readiness activities. 

Tosi Mpanu-Mpanu (Democratic Republic of Congo) wanted the readiness support to develop the capacities of institutions especially for the NDAs and for processes for multi- stakeholder engagement. He also supported readiness activities to help small and medium sized enterprises as larger enterprises have sufficient resources. Support measures include capacity building efforts. The PSAG should not have a role in readiness as this would be an overreach of its mandate and could involve conflicts of interest.

Jan Cedergren (Sweden) said he would like to see the GCF and the Secretariat as a clearing house that will be helpful for actors in the field. Readiness activities are also a good area for south-south collaboration with the linking of useful experiences. He would like to see technical assistance and capacity building as part of project and programme budgets of countries rather than as separate budgets for preparedness activities.

Kentaro Ogata (Japan) also stressed the importance of not duplicating other efforts and agreed that the Secretariat should be primarily a clearing house. 

Following the interventions, the following decision was adopted by the Board:

“(a) The Secretariat is requested to elaborate a revised detailed programme of work, for consideration by the Board at its seventh meeting, that includes the following:
-  Readiness activities to be undertaken in countries based on requests for support resulting from a consultation with countries and stakeholders;
-  A delivery plan for the implementation of these readiness activities. The delivery plan will be developed in consultation with countries and existing initiatives. It will include a timeline and modalities for implementation;
-  Options for entering into partnerships with existing initiatives, including of
sub-national, national, regional and international actors, in order to implement the readiness activities supported by the Fund;

(b) Decide that from the resources available or to be made available in the Green Climate Fund Trust Fund, the allocation of funds in the amount of US$ 1 million to the Secretariat for the preparation of a detailed programme of work...;

(c) The Secretariat is requested to seek transparency, complementarity, and coherence amongst existing initiatives, and to establish and maintain an information-sharing platform and dialogue and facilitate South-South exchanges;

(d) The Secretariat is requested to review the modalities for the delivery of readiness support once the Fund’s accreditation and allocation policies are approved, with a view of ensuring consistency with the other established operational modalities of the Fund, for consideration by the Board…;”

The next meeting of the GCF Board will be in Songdo, South Korea, where the GCF Secretariat is located and is scheduled to take place from the 18-21 May, 2014.