NDF Newsletter 1/2014

NEWSLETTER Development

Fund

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/ 2014

Photo: Jørgen Schytte / Danida

Nordic

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New approaches to address climate change and transport NDF has recently approved two new transport adaptation projects that will develop adaptive capacity and integration of climate change aspects into planning and design of road transport infrastructure. In Mozambique, NDF, together with the African Development Bank (AfDB), will support the National Road Administration, and other key stakeholders, with capacity-building and additional tools to manage climate impact threats to road development. The NDF support forms part of the Nacala Road Corridor III Project and aims to make resilient road development plans, improve construction methods, and ensure an active and sustainable road infrastructure asset management.

NDF collaborates with the Asian Development Bank (ADB) and Ministry of Rural Development in Cambodia to follow up on

the previous support to rural roads and climate change adaptation project. The new Rural Roads Improvement Project II will focus on reducing climate vulnerability of a number of Mekong river villages clustered in Kampong Cham province in Eastern Cambodia. The project will pilot a multisectoral adaptation framework encompassing road infrastructure resilience combined with interventions on renewable energy, income generation, and disaster risk management.

NDF has recently approved a technical cooperation project with the ADB to establish a Transport NAMA Support Facility.

Nationally Appropriate Mitigation Actions (NAMAs) aim at cost-effective low carbon or even carbon-free transport strategies as a way of achieving sustainable development and climate-resilient transport systems. The project will

address barriers for NAMA finance; provide training for government staff, deliver information venues and operational guidance to stimulate NAMA advancement in the region.

The facility supports the development of the NAMA mechanism and will contribute to this innovative mechanism for climate finance becoming more widely accepted.

Photo: Aage Jørgensen

NDF was invited to participate in Transport Day 2013, which took place alongside the COP 19 Climate Conference in Warsaw, Poland.

Transport Day focused on rethinking transport and climate change. NDF presented its experiences from supporting adaptation in the transport sector in Cambodia, Nicaragua and elsewhere.

A major outcome was the endorsement of the Warsaw Statement on Low Carbon Transport and Sustainable Development. Together with 117 other organisations and 390 individuals, NDF signed the Statement that calls upon countries and governments to develop and strengthen policies, financial incentives, institutional capacity, and governance strategies to promote sustainable low carbon land transport to reduce carbon emissions and facilitate climate change adaptation.

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Focus on Partnerships

Cooperation with the African Development Bank

NDF has a history working together with the African Development Bank (AfDB) since 1995. In 2009 NDF decided to focus on providing financing for climate change mitigation and adaptation projects in lowincome countries.

NDF and the AfDB signed in 2013 an amendment to their co-financing agreement from 1995. The new agreement reflects better NDF’s current mandate and co-financing modalities, and therefore enhances possibilities for further cooperation in Africa. NDF has a strong focus on Africa and is looking for new, innovative forms of climate financing.

NDF’s management visited Tunis in the beginning of 2014 to discuss further collaboration with the AfDB. It also met with Mr Aly Abou Sabaa, Vice President Sector Operations in the AfDB.

Mr Aly Abou Sabaa, AfDB

1) How do you see that NDF could add value and support the bank and its client countries in reaching their targets? In which sectors or themes do you see that NDF financing could have best development impact and leverage?

NDF focus on financing climate change mitigation and adaptation is very much aligned to the Bank’s Ten Year Strategy (20132022) with its dual objectives of “inclusive growth” and “transition to green growth”. NDF can contribute to helping the Bank and its client countries achieve their targets by cofinancing projects which will provide sustainable infrastructure; enhance management of Africa’s vast

natural resources to better benefit its people; and support mitigation and adaptation activities to minimize the adverse effects of climate change. NDF financing can have best development impact in the agriculture, water, transport and energy sectors leading to “more inclusive” and “greener” outcomes. In this regard NDF already cofinanced a number of projects with the Bank and I am encouraged to see that it is considering co-financing a number of new projects in the 2014 lending programme in these sectors. NDF financed components could for instance cover the part of costs inherent to climate change mitigation and in some cases, this could consist of covering establishing early warning systems in the context of disaster risks management and enhancing the adaptive capacity of farmers.

NDF could also support some of the Bank’s Special Initiatives and Trust Funds which focus on climate change mitigation and adaptation through financial contributions and collaborations with these initiatives. Your consideration to provide financial contributions to the ClimDev Africa initiative is a good example. Financing project preparations; technical assistance and knowledge exchange between NORDIC institutions and the Bank are other examples of how NDF could add value.

This type of support could for example be extended the newly established Africa Natural Resources Centre (ANRC) which could benefit from the vast experience of similar NORDIC institutions.

2) From AfDB point-of-view, what can NDF as an organization contribute - besides financing where there are other players with bigger resources and volumes - in the area of climate finance?

The Bank has already benefitted from the quick and flexible mode of operation of the NDF in past co-financed activities. This will be useful in future co-financing as well as for project preparation and

programme development activities. In addition, achieving the goals of the AfDB strategy for 2013-2022 will be reliant on the production and dissemination of highly relevant information and knowledge on best practices. It is essential for the Bank and its regional member countries to benefit from experiences and good practices that have been developed elsewhere and when possible build synergies.

NDF, through its network of partners all over the world can contribute to ensure that successful experiences are shared across continents and facilitate their adaptation and transfer. This can be made by the preparation of knowledge products but also through the facilitation of stakeholders’ interaction through exchanges.

3) Do you think NDF’s experiences from innovative climate financing could provide lessons learned for AfDB-NDF cooperation? If so, can you say more specifically what kind of innovative financing mechanisms the AfDB could be interested in developing together with NDF.

be provided in the form of grants, can be used to support small enterprises active in the local manufacturing of technologies for generating clean energy at the household level or rain water harvesting systems, etc. Also, some technical assistance may help financial intermediaries on the continent in “greening” their investment pipeline. While we are still looking at how these supports could materialize, we consider NDF, building on its experience on other continents, as a key partner.

4) Suggestions on how NDF could improve or enhance its approach and effectiveness of its collaboration with the AfDB? The collaboration between NDF and AfDB has been mainly oriented towards co-financing of specific projects in the transport, agriculture and the water sectors. Going forward the collaboration should be extended to include other areas such as energy, private sector development and the Africa Natural Resources Centre. Contributions and

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While we are still looking at how these supports could materialize, we consider NDF, building on its experience on other continents, as a key partner.

At the African Development Bank, we privilege knowledge and experience sharing with sister institutions working on other continents. We have been following the partnership between NDF and the Inter-American Development Bank, which led to the creation of facilities supporting private sector and SMEs on the continent. In Africa, seed capital is often lacking for financing the early stages of small and medium size businesses, which can have a positive impact on both livelihoods and supporting the continent move towards a greener development path.

This seed capital, which can

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support to the bank’s Special Initiatives and Trust Funds as well as providing technical assistance and knowledge exchanges are other ways of enhancing the collaboration.

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NDF has approved EUR 4 million to support adaptation actions to improve living standards in waterscarce rural communities on the Bolivian altiplano.

The NDF support is linked to a large water resources project financed by the Climate Investment Funds

and Inter-American Development Bank to supply fresh water to the metropolitan area of El Alto/La Paz. The objective of the NDF project is to develop and implement local adaptation action plans to increase the farmer households’ agricultural productivity and liv-

Enhancing Cooperation with the African Development Bank New NDF Strategy for 2014-2015 The Board of Directors has approved a new strategy document outlining the priorities and activities of NDF during the years 2014-2015.

NDF will strive to further sharpen its focus on certain geographical areas and themes particularly under the three broad clusters; infrastructure, natural resources and climate change capacity-building, by emphasising the impacts of interventions on private sector

development and on employing innovative ways and mechanisms to provide funding. The strategy also refers that NDF has found a role within the global development and climate finance arena and, as the only joint Nordic financial institution with a clear mandate focused on climate and development, NDF will continue to promote a broad scope of Nordic priorities.

Photo: Aage Jørgensen

Adapting to water scarcity in rural Bolivian communities

ing standards in spite of the limitations in water availability. The measures to be considered include less water-intensive agricultural techniques, improved water harvesting and storage methods and efficiency in water use for irrigation and consump-

tion. Special attention will be paid to integrated watershed management taking into consideration the long-term impacts of climate change. The IDB/ NDF support forms part of the Pilot Program for Climate Resilience in Bolivia.

NDF visited the African Development Bank (AfDB) in Tunis at the end of January to explore co-financing opportunities and to seek ways to expand current cooperation between AfDB and NDF. A number of opportunities for cooperation were discussed ranging from water-related topics to transport in several African countries. NDF is currently

supporting, for example, the AfDB-managed all-African climate fund, ClimDev Special Fund. Climate-sensitive sectors have not considered managing ‘climate risks’ because of a lack of appropriate climate information.

Therefore, climate change has rarely been connected to development. Cooperation with AfDB is expanding.

Knowledge sharing in Mekong During a recent visit by NDF management to the Mekong region, NDF engaged with other donors who finance climate change programs in the Greater Mekong Subregion. It was highlighted that there is a need to enhance mechanisms for assessing the effectiveness of climate change interventions, and to strengthen monitoring and evaluation mechanisms at both the pre-screening and post-project stages. The visit also provided a possibility for NDF to present its climate change activities both in the region and globally, as well as to advance discussions on pos-

sible replication in Asia of some of its innovative financing schemes elsewhere.

NDF also met officials in Cambodia to discuss NDF’s cooperation with the country.

The visit confirmed that the joint activities have potential for both national and regional scaling up and lessons learned to be applied in other regions also. In Cambodia, NDF currently has activities in the transport and water sectors as well as in climate-friendly bioenergy including pilot activities in sustainable agriculture.

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Strong interest for the Nordic Climate Facility The fourth call for proposals for the Nordic Climate Facility (NCF) was closed at the end of January and generated 93 applications from all the Nordic countries. The applications will now be pre-screened and short-listed by the NCF team. The shortlisted applicants will be invited, tentatively by the end of March, to submit their full proposals.

NCF provides partial grant financing for climate-

related projects in lowincome countries in Africa, Asia and Latin-America.

The facility is financed by the Nordic Development Fund and administered by NEFCO. Financing can be granted to Nordic institutions, organisations, companies and authorities that have established cooperation with a partner in a low-income country. The theme for the Fourth Call was “inclusive green growth contributing to private sector development”.

Nordic - C l i m at e F a c i l i t y Nordic Development Fund • Nordic Environment Finance Corporation

Photo: Maija Saijonmaa

NDF celebrates 25 years At the beginning of February 2014, NDF celebrated its 25th anniversary. Throughout the year, in various activities, NDF will be acknowledging the anniversary and lessons learned during the past years.

From its beginning in 1989 until 2005, NDF provided almost 200 credits to a total value of EUR 1 billion to low-

income countries in Africa, Asia and Latin America.

With the new mandate in 2009 to provide grant financing for climate change mitigation and adaptation, NDF has allocated EUR 184 million to 66 new project grants for climate change interventions in low-income countries.

FINANCING FOR CLIMATE CHANGE PROJECTS IN LOW-INCOME COUNTRIES The Nordic Development Fund (NDF) provides financing for climate change interventions in low-income developing countries. NDF is the joint development finance institution of the Nordic countries—Denmark, Finland, Iceland, Norway and Sweden—and finances projects in cooperation with other development institutions.

Nordic Development Fund NORDIC DEVELOPMENT FUND, P.O. Box 185, FIN-00171 Helsinki, Finland (Visiting address: Fabianinkatu 34), Tel: +358 10 618 002, Fax: +358 9 622 1491, E-mail: info.ndf@ndf.fi, www.ndf.fi NDF Newsletter presents NDF's operations. The newsletter is published as needed. Layout Kubik, print Libris Oy.