NDF Results Report 2017

Photo: Kamila Kozioł / Alamy

NDF results 2017 Summary report

Nordic Development Fund

Contents

Photo: NDF

1. Introduction p.3 2. NDF’s Results-based Management Framework p.3 3. Objectives and limitations of NDF’s results management p.3 4. Operational highlights in 2017 p.4 New funding commitments 2017 p.4 Small grants – big impacts p. 5 Intensified focus on the UN’s Sustainable Development Goals (SDGs) p.5 New ways to increase NDF’s impacts pioneered in 2017 p.5 5. Institutional level results p.8 6. Portfolio level results p.9 7. How results are assessed at project level p.9 8. Results of NDF-backed projects completed in 2017 p.10 9. Results of the Nordic Climate Facility p.18 10. Summary and conclusions p.21

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1. Introduction

T

his report summarises NDF’s activities and results during 2017 based on our Results-based Management Framework introduced in November 2016. It includes assessments made at the institutional level, at the portfolio level, and for individual projects. Institutional level results are presented using a set of indicators launched in 2016. Portfolio level results are primarily examined using NDF’s own Project Performance Rating (PPR) system. Assessments of individual projects completed during 2017 are mainly based on the projects’ final reports. This report also profiles NDF’s activities and results in relation to the United Nations’ Sustainable Development Goals (SDGs).

Photo: Daniel Roca

2. NDF’s new Results-based Management Framework NDF’s current Results-based Management Framework was developed during 2016 to combine existing tools into an expanded framework designed to help NDF report on results more systematically. The framework has five main pillars: 1. Indicators for Institutional Level Results are used to examine how well NDF’s activities are aligned with NDF’s current strategy.

3. Continuous Project and Programme Monitoring provides information on ongoing projects, which is critically assessed to help keep activities on track.

4. Project Performance Ratings (PPR) are assigned within NDF to build up a database illustrating how well projects are progressing with regard to their objectives and outcomes.

5. Evaluations of completed projects are carried out selectively.

2. Guidelines for Project Identification and Screening are used when projects are selected for support, to ensure that they focus sufficiently on goals related to climate change, development and other issues prioritised by NDF.

3. Objectives and limitations of NDF’s results management Objective 1: to promote accountability for the achievement of NDF’s strategic objectives by duly assessing the results, effectiveness, processes and performance of the stakeholders involved in NDF activities.

Objective 2: to promote feedback, learning and knowledge sharing between NDF and its partners with regard to results and lessons learned. This in turn will enhance future decision-making on policies and strategies, as well as programme and project management.

NDF’s business model is largely based on co-financing in partnership with multilateral development banks and other institutions providing financing for activities related to climate change in developing countries.

This co-financing model builds on the concept of the additionality of NDF financing, while seeking to avoid the duplication of activities or the creation of overlapping structures. NDF strives

to maximise synergies with its co-financing partners throughout results management, especially with regard to the structuring of monitoring and evaluation.

Since many NDF-backed activities are co-financed, it is sometimes impossible to directly attribute specific results to NDF’s financing; but wherever possible assessments focus on results that can be directly linked to NDF’s contributions. NDF’s own Project Performance Ratings examine the impacts of NDF financing.

Due to the nature of NDF’s activities, and the project management systems currently in use, the process that we use to profile aggregated, portfolio-based results is still evolving. This report profiles the results of completed projects based on the information available on the projects’ completion. We are still striving to further enhance the way we present our aggregated results.

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4. Operational highlights in 2017

88

ongoing projects in

16

countries

● At the end of 2017 NDF’s project portfolio consisted of 104 completed or ongoing projects launched under NDF’s current climate change and development mandate since 2009 (not including NCF sub-projects), with NDF providing funding totalling EUR 328 million. In 2017, 88 of these projects were ongoing, at various stages of implementation, in 16 countries across Africa, Asia and Latin America.

EUR 44.3 million of new funding for nine new activities

The share of new NDF funding provided in the form of equity rose to

29%

● During 2017 NDF’s Board of Directors approved financing amounting to EUR 44.3 million for nine new activities. These new commitments included EUR 13.0 million allocated as equity and EUR 31.3 million as grants. This means that about 29% of NDF’s new commitments were made utilising other instruments than grants. In 2016 the corresponding figure was 22%.

● Three of the new commitments were made through NDF’s Small Grant Facility (SGF).

SGF support, in the form of grants of up to EUR 500,000, is subject to same criteria as larger NDF investments. SGF projects often involve preparatory financing with high leverage potential and catalytic impacts.

New funding commitments 2017 Africa, regional

Africa Climate Resilient Infrastructure Facility

EUR 5.0 million grant

Africa, regional

Urban & Municipal Development Fund for Africa (UMDF)

EUR 4.0 million grant

Africa, regional

Off-grid Energy Access Fund

EUR 0.3 million preparatory grant through SGF

Africa, regional

Off-grid Energy Access Fund

EUR 6.5 million (6M equity; 0.5M grant)

Africa, regional

rAREH

EUR 7.5 million (7M equity, 0.5M grant)

Africa, regional

Energy and Environment Partnership (EEP), Trust Fund

EUR 10 million grant

Kikuletwa Power Station and Hydropower Training Center

EUR 0.5 million grant through SGF

NDC Pipeline Accelerator

EUR 10 million grant

Climate Resilience and Adaptation Finance and Technology Transfer Facility (CRAFT)

EUR 0.5 million grant through SGF

Africa, Tanzania

Latin America, regional Global

Total: EUR 44.3 million - EUR 13.0 million in equity (29%); EUR 31.3 million in grants (71%) 4

Small grants – big impacts NDF’s Small Grants Facility (SGF) aims to provide small-scale, upstream financing for innovative and exploratory projects related to climate change. SGF particularly targets projects which can discover new solutions and leverage additional financing from other public and private sources.

SGF strives to mobilise financing rapidly, through streamlined procedures, for projects that may include various activities related to climate change adaptation and mitigation. Individual projects are usually expected to also obtain co-financing from a partner agency, and if possible, from the country involved. But projects developed and coordinated by NDF, with NDF as the sole financier, may also be considered.

Individual projects are identified for SGF support using the same standards and requirements used for NDF’s other grant interventions at NDF, with project proposals discussed and reviewed by NDF’s administration, and funding decisions made

by NDF’s Management.

During 2017 six SGF-financed projects were completed (see section 8), and NDF approved financing for three new SGF interventions: the Kikuletwa Power Station and Hydropower Training Centre in Tanzania; the global Climate Resilience and Adaptation Finance and Technology Transfer Facility (CRAFT) (profiled on page 6); and an Off-grid Energy Access Fund covering Africa.

Intensified focus on the UN’s Sustainable Development Goals (SDGs) NDF is increasingly seeking to ensure that its activities contribute towards the achievement of many of the UN’s SDGs. The partners involved in NDF-financed projects are asked from the application stage onwards to consider and stipulate how their actions can work towards specific SDGs.

9 projects

3 projects

9 projects

7 projects

The nine new projects approved by NDF in 2017 particularly target the following SDGs.

2 projects

3 projects

2 projects

2 projects

9 projects

New ways to increase NDF’s impacts pioneered in 2017 NDF’s current strategy, launched in 2015, contains six selected strategic areas, which continued to guide our operations during 2017: • catalytic role and leverage • project preparatory funding • support for innovation • support for private sector development and linkages between the public and the private sectors, piloting of interventions with a high risk level • identification of emerging climate change issues

During 2017 we have striven to increase the impact of NDF financing in the following ways: • developing new business models • increasing our use of blended financing instruments • strengthening linkages between preparatory financing and follow-up investments • finding new ways to support action on emerging issues related to climate change

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Developing new business models To improve the leveraging impact of NDF’s financing we are seeking to engage in new business models and utilise a greater variety of financing instruments. This is exemplified by our new commitments to the Energy and Environment Partnership Trust Fund (EEP).

A new trust fund for the Energy and Environment Partnership (EEP) in Southern and East Africa The EEP is a multi-donor trust fund due to be relaunched under NDF’s direct management in early 2018. It aims to provide early stage and catalytic financing for schemes promoting clean energy and energy efficiency, primarily for private-sector-led projects in Southern and East Africa (SEA).

Over the last 7 years, the partnership has backed more than 200 pioneering projects leveraging innovative clean energy technologies and energy access business models to transform lives and livelihoods. With the launch of the EEP Trust Fund, NDF will ensure that this proven and effective model will remain relevant in a fast-changing energy financing landscape.

The trust fund will enhance access to clean energy in the SEA region, especially among poor communities, by providing direct financing, facilitating investment, supporting business development and sharing knowhow. In October 2017 NDF’s board approved a grant contribution of EUR 10 million towards the revamped EEP’s first round of fundraising.

Photo: eepafrica.org

Supporting action on emerging issues related to climate change During 2017 NDF has continued to seek opportunities to engage in financing initiatives which push the climate agenda further towards less explored areas. One such initiative is CRAFT – the first global investment fund for climate resilience solutions.

Expanding the private sector adaptation funding agenda The Climate Resilience and Adaptation Finance & Technology Transfer Facility (CRAFT) aims to exploit opportunities to rapidly mobilise substantial public and private capital to build up companies offering technologies, products and services that help to assess and manage risks and impacts generated by climate change.

CRAFT particularly aims to break down barriers that have earlier discouraged private capital investments in climate adaptation and resilience. In 2017 NDF issued a preparatory financing grant of EUR 0.5 million to the Lightsmith Group, who are building up the CRAFT concept into a uniquely targeted global private equity fund.

CRAFT has already gained significant international attention.

In December 2017 it was profiled as a key transformative and cutting-edge climate initiative at the One Planet Summit, hosted

by France in collaboration with the UN and the World Bank.

Photo: CC Jbdodane

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Increasing our use of blended finance instruments The demand for non-grant financing from NDF for private sector climate projects in our partner countries grew in 2017.

We aim to meet such demand by increasingly offering blended forms of finance, combining grants with equity, for instance, as in our contributions to the responsAbility Renewable Energy Holding (rAREH).

Blended finance to trigger viable renewable energy schemes To fill a gap in demand for financing for renewable energy schemes across Africa the private equity fund responsAbility Renewable Energy Holding (rAREH) was set up in 2013 by Germany’s Ministry for Economic Cooperation and Development, the German development bank KfW, and the Swiss-based development investment company responsAbility Investments AG. rAREH is a unique equity fund in that it owns, develops and runs its own projects, which are carefully screened to assess their climate and development impacts, and to ensure their long-term viability as investments for rAREH’s owners.

In 2017 NDF made an equity investment of EUR 7.0 million together with a EUR 0.5 million technical assistance grant. NDF sees rAREH as an innovative way to help build up small solar, hydro and bioenergy projects that might otherwise not get off the ground. Creating stable projects with positive cash flows will encourage private investors to provide further backing.

Photo: rAREH

Paving the way from preparatory activities to wider investments Playing a catalytic role to leverage further investment is a cornerstone of NDF’s strategy. By issuing strategic preparatory grants with the potential to lead to larger investments, NDF strives to accelerate the transition from a project idea to a bankable investment.

Promoting access to off-grid energy across Africa During 2017 NDF initially provided a EUR 0.3 preparatory grant, issued together with a matching grant from the African Development Bank (AfDB), to support the establishment of the a new Facility for Energy Inclusion Off-Grid Energy Access Fund (FEI OGEF) covering Sub-Saharan Africa.

Later in the year, a further EUR 6 million of NDF equity financing was approved for the facility’s first project round, coupled with a technical assistance grant of EUR 0.5 million.

FEI OGEF is a blended finance debt fund designed to provide loans to off-grid energy suppliers. By facilitating the provision of affordable clean energy to rural communities, projects backed by FEI OGEF can be expected to reduce carbon dioxide emissions by up to 8 million tonnes during the fund’s lifetime. Its blended capital structure has been designed to rapidly attract additional investments from other development finance institutions and commercial investors.

Photo: eepafrica.org

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5. Institutional level results During 2017 we have increasingly emphasised the importance of NDF’s six strategic focal areas when assessing new financing opportunities. This policy is reflected in further improvements in our institutional level results compiled for a set of indicators selected in the beginning of 2017 to enhance our results management.

1. Projects focusing on low-income countries:

2. Projects focusing on countries in Sub-Saharan Africa:

76%

76%

100%

3. Projects focusing on climate mitigation, climate adaptation, or combined mitigation and adaptation (Rio markers 1 and 2):

33%

mitigation

11%

adaptation

56%

adaptation and mitigation

4. Projects with demonstrable catalytic or leverage impacts 5. Projects focusing on project preparation type of activities 6. Projects involving innovative features, support for innovation, or high risk activities applying emerging approaches 7. Projects that directly support to or link to private sector development, or build linkages between the public and private sectors.

8. Projects with strong gender focus or mainstreaming (OECD-DAC gender marker 1 or 2)

9. Consequent annual greenhouse gas emission reductions or sequestration after the completion of projects newly approved in 2017:

109,589 tonnes of CO2 equivalent

10. Ten of the twelve projects completed during 2017 were rated as highly satisfactory or satisfactory upon completion:

11. Projects in current portfolio rated as highly satisfactory or satisfactory (target = at least 75%):

83.3%

81%

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6. Portfolio level results NDF’s Project Performance Rating (PPR) system is used to monitor the activities we finance. It is the main tool used to report progress and results at the portfolio level. PPRs complement other project-specific reporting and information provided by the agencies responsible for project implementation, other partner agencies, and NDF’s own program managers, who regularly visit projects. PPRs focus on how well projects are implemented regarding their specific objectives and desired results.

Ratings and related brief descriptions are given for five separate aspects of projects: A: Preparatory activities B: Partner agency cooperation C: Implementing agency cooperation D: Implementation progress E: Outcomes and impacts (with three components: E1 = progress towards objectives; E2 = overall project progress; E3 = overall risk rating)

PPR ratings are given on a scale of 1-6: 6 = highly satisfactory, 5 = satisfactory, 4 = just adequate 3 = not quite adequate 2 = unsatisfactory, 1 = highly unsatisfactory

PPRs are conducted by the NDF program managers responsible for each project. To enhance comparability, a peer review system is used. This involves program managers working in pairs to review ratings. All recent NDF projects have been rated once a year since 2013, with results reported to the Board of Directors.

PPR ratings were conducted for 83 activities in late 2017.

This number differs from the total number of ongoing projects, since certain ratings are conducted on a facility level and some projects consist of two phases which may be covered by separate or combined ratings.

The ratings indicate that NDF’s portfolio is performing well overall. Approximately 81% of projects were classified as highly satisfactory or satisfactory regarding all three summary variables E1-E3. This means that 81% of NDF’s present portfolio is “green-rated”. In the 2016 Results report the corresponding figure was 77.1%. Only three projects were rated as unsatisfactory or highly unsatisfactory for one or more of these variables (compared to five a year ago). One of these projects, one was cancelled at the end of 2017. 13 projects are rated as “not quite adequate”, or “yellow”, for one or more of the summary variables due to potential problems that need to be closely followed-up.

This is normal for a maturing portfolio like NDF’s.

NDF takes active measures to deal with any projects rated as performing unsatisfactorily. Such actions may include intensified negotiations with project partners, or stronger support for procurement processes. In some cases delays or problems relate to aspects beyond NDF’s control, and projects may ultimately be curtailed or cancelled if this seems to be the best option.

7. How results are assessed at project level The various pillars of NDF’s Results-based Management Framework are utilised to assess results at project level.

As part of project preparation procedures, all NDF-backed projects are screened in advance using NDF’s Guidelines for Project Identification and Screening, to ensure that they should be able to fulfil requirements related to NDF’s focus on climate change and development, and that they are duly aligned with NDF’s other strategic focal areas.

Projects are then designed and implemented using Projectlevel Results Frameworks that facilitate the monitoring of project implementation and activities, the delivery of outputs, and progress towards objectives and outcomes. Quality checks assessing these project-level result frameworks are conducted to ensure that project management is driven by high-quality results frameworks.

During project implementation, results are monitored against these project-level results frameworks using written reports.

The Project Performance Ratings (PPRs) conducted by NDF’s program managers are also useful in this context, especially when projects’ final PPRs are issued.

At the end of each project, NDF receives a project-specific Completion Report summarising the project’s results. An NDF Closing Report is additionally compiled to summarise the project’s outcomes, set out the lessons learned, and review the project applying the evaluation criteria defined by the OECD Development Assistance Committee on relevance, effectiveness, efficiency, impact and sustainability.

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8. Results of NDF-backed projects completed in 2017 Thanks to the NDF-backed projects completed during 2017‌

NDF co-financing has mobilised financial support totalling

EUR 159.5 million. >

14,000

12

countries have better integrated climate risk management into their policies and planning.

24

people are now better able to mitigate and adapt to climate change.

institutions are now better able to develop and run their own adaptation strategies and measures.

46

116,260

65,237

203,837

knowledge products designed to improve decision-making in climate-sensitive sectors have been developed and adopted.

people have gained year-round access to a reliable water supply safeguarded against climate events.

During 2017, a total of 12 NDF-backed interventions reached completion, including six financed through NDF’s Small Grants Facility. NDF financing allocated for these projects totalled EUR 20.1 million, and enabled a total financing stream of EUR 159.5 million to the developing countries concerned.

The completed projects relate to many different aspects of climate change and development. Two projects focused on

people are now less vulnerable to climate hazards.

people now have improved access to clean energy.

mitigation only, six projects had an adaptation focus, and four had both adaptation and mitigation targets and results.

Final Project Performance Ratings (PPRs) have been made for all of these completed projects. Ten of the twelve projects (83.3%) have been rated as satisfactory or highly satisfactory for all three summary PPR variables.

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of the 12 completed projects (83.3%) have been rated as satisfactory or highly satisfactory.

Photo: eepafrica.org

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Significant steps towards vital Sustainable Development Goals (SDGs) The twelve NDF-backed projects completed during 2017 particularly aimed to contribute towards the following SDGs:

Project NDF C26: Gender and Climate Change, Asia Regional Project NDF C17: Programme for Disaster Management and Climate Change, Nicaragua

Project NDF C60: Asset Adaptation to Climate Change in Poor Neighbourhoods of Tegucigalpa, Honduras

Project NDF C74: Climate Change and Health, Africa Regional

Project NDF C15: Adaptation Approaches for the Transport Sector, Cambodia

C74 C17 C60 C23

C77

C25 C15

C58

C77

Project NDF C23: Economics of Climate Change, LAC Regional

Project NDF C58: IDEAS Energy Innovation Contest, LAC Regional

C2 C49 C72

Project NDF C2: Increasing Access to Modern Energy Packages in Rural Areas, Uganda

Project NDF C77: Coastal Area Erosion and Adaptation, West Africa

Project NDF C49: Climate Smart Solutions for Small-scale Water and Energy Supply, Tanzania

Project NDF C31: Insurance Instruments for Africa Climate Adaptation, Africa Regional

Project NDF C72: Aquaculture and Climate Change, Mozambique

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Project NDF C2: Increasing access to modern energy packages in rural areas, Uganda NDF contribution: EUR 3.0 million Project implementation: 2010-2017 This project aimed to improve basic health care and the supply of clean water in remote, off-grid communities in Northern and Eastern Uganda. The project particularly financed solar photovoltaic energy packages enabling electrification at rural health centres, and the construction of solar photovoltaic powered water pumping stations and distribution grids.

The project exceeded its targets for the numbers of health centres electrified, the numbers of water pumping systems constructed, and the expansion of the clean energy supply. A total of some 18,400 people are estimated to have benefited from the project.

Supplying electricity to health centres is especially valuable, since it enables them to provide services after nightfall, and use equipment such as microscopes, ultrasound scanners, centrifuges, and refrigerators for vaccine storage, while also improving working conditions, safety and security.

Photo: Ivan Senfuma

Final project performance rating summary: satisfactory Progress towards objectives: 6 Overall project progress: 6 Overall risk rating: 5

Project NDF C15: Adaptation approaches for the transport sector, Cambodia NDF contribution: EUR 4.2 million Project implementation: 2011-2017 This project was one of the first within a larger portfolio of road transport adaptation projects approved by NDF over the period 2010-2016, and its somewhat mixed results have helped to guide subsequently initiated projects.

The vulnerability of roads to climate impacts was mapped in eight provinces. Combined with economic analyses of road design options, these findings showed that climate-proofing rural roads is a highly viable investment, and that climate risks should be incorporated into road design from the start, rather than climate-proofing roads after they have been constructed.

The project successfully provided training and curriculum development, including a course on climate change adaptation and mitigation measures attended by 140 students. The planting of trees alongside the project roads proved less successful, so this part of the project was re-designed to focus on the construction of pilot water evacuation and retention ponds, which proved to be more beneficial. Emergency management systems with information centres and flood shelters were set up in a number of villages.

Villagers received related training, but due to delays there was no time to run a planned live-drill during a rainy season.

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Photo: ADB

Final project performance rating summary: just adequate Progress towards objectives: 3 Overall project progress: 4 Overall risk rating: 3

Project NDF C17: Programme for disaster management and climate change, Nicaragua NDF contribution: EUR 2.5 million Project implementation: 2011-2017 This project clearly demonstrated that investing in smallholder farming can bring triple benefits, with farmers both increasing their income, and becoming more resilient to the impacts of climate change; while the consequent increased carbon sequestration in the soil also helps to mitigate climate change.

The project’s final evaluation and impact study, carried out in 2017, showed that thousands of local farmers have become more aware of climate change, and also better able to tackle its impacts thanks to new agricultural practices. The farmers affected by the project have increased their agricultural production by more than 18% on average, with farms’ annual revenues growing by nearly USD 200 per hectare.

The project’s other significant positive impacts have included: • training in environmental restoration systems management for nearly 5,000 farmers • soil management enhanced and tree cover increased in more than 22,500 hectares of farmland • more than 4,400 water collection schemes realised, increasing water catchment capacity by a total of nearly 300,000 cubic metres • 51 flood mitigation works constructed, reducing the vulnerability of around 50,000 people • 42 municipal and local disaster prevention, mitigation, and response committees strengthened

Photo: Aage Jørgensen

• more than 7,700 people trained in risk management, environmental conservation and climate change Final project performance rating summary: highly satisfactory Progress towards objectives: 6 Overall project progress: 6 Overall risk rating: 5

Project NDF C23: Economics of climate change, Latin America NDF contribution: EUR 500,000 (Small Grants Facility) Project implementation: 2012-2017 This study project, co-financed by NDF and the Inter-American Development Bank, aimed to develop policies and procedures to assess the economic and social consequences of climate change, with an emphasis on health and food security for poor rural communities across Latin America, while also identifying economic and other measures to promote low carbon development and adaptation to climate change.

The project produced valuable evidence that can serve to increase the awareness of key decision makers concerning ways to address climate change in their planning and policies. It has also demonstrated the value of using existing regional organisations to promote experience sharing and learning.

Publications produced through the project included a wide-ranging handbook on Climate Change in Central America: Potential Impacts and Public Policy Options (2015), as well as several country-specific and topical reports and guidelines.

The project also provided training for more than 500 officials through 15 national and regional workshops. The project’s results, including valuable data, have been extensively disseminated through webinars and virtual courses.

Photo:Aage Jørgensen

Final project performance rating summary: satisfactory Progress towards objectives: 5 Overall project progress: 4 Overall risk rating: 5

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Project NDF C26: Gender and climate change; Lao PDR, Cambodia & Vietnam NDF contribution: EUR 2.4 million Project implementation: 2011-2017 This project was designed to promote the mainstreaming of gender considerations into national and sub-national climate change related policies, to facilitate the participation of women in decision-making processes related to climate change, and to support the development of equitable carbon revenue distribution policies. Support particularly targeted the most relevant national and sub-national government agencies. Assessments conducted at the end of the project indicated that its main goals were duly achieved.

In Lao PDR, a working relationship was fostered between the national Department of Disaster Management and Climate Change and the Lao Women’s Union (LWU) to build a wider understanding of links between climate change and gender issues.

The LWU consequently joined the national Technical Working Group on Climate Change, and climate action plans were revised to incorporate gender issues. The project also supported the establishment of fuel-efficient stove production and marketing centres led by local women.

In Cambodia, capacity-building measures targeted the Gender and Children Working Group, and climate issues were mainstreamed into gender policies. Women were trained to sell and distribute climate-friendly biomass stoves. In Vietnam, climate change mitigation and gender considerations were built

Photo: Daniel Roca

into a revised city climate plan, and women were trained to lead the construction and marketing of bio-digesters.

Final project performance rating summary: satisfactory Progress towards objectives: 5 Overall project progress: 5 Overall risk rating: 5

Project NDF C31: Insurance instruments for climate adaptation, Africa NDF contribution: EUR 500,000 Project implementation: 2012-2017 This project focused on the development of climate insurance instruments for specific climate risks in Africa. In its first phase, a broad survey of climate risks and insurance options across Africa was conducted, while the second phase focused on the key role of the hydropower sector in future risk mitigation with regard to insurance instruments.

Hydropower accounts for more than 20% of the electricity generated in Sub-Saharan Africa, and some countries are almost entirely dependent on hydropower. The hydropower study used data and results from two earlier NDF-backed studies: NDF C28 Enhancing the Climate Resilience of Africa’s Infrastructure (ECRAI) and NDF C45 Hydropower Sustainability Assessment for Tanzania.

A workshop held in November 2017 brought together international experts and many participants from African Countries whose energy supply is vulnerable to hydrological risks. Its results will be published in 2018 as a flagship publication on Insurance Instruments for Climate Adaptation in Africa.

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Photo: NDF

Final project performance rating summary: satisfactory Progress towards objectives: 5 Overall project progress: 4 Overall risk rating: 5

Project NDF C49: Climate smart solutions for small-scale water and energy supply, Tanzania NDF contribution: EUR 500,000 Project implementation: 2015-2017 This project involved the rehabilitation of essential rural and urban water schemes. Problems requiring resolution included unrepaired leaks, the high cost of diesel fuel for generators, and the mismanagement of community water system funds. Field trials were run to determine the viability and sustainability of solar water projects, and to demonstrate the potential of Smart Water Dispensers (SWDs) that can apply the latest prepaid metering technologies to enhance the financial accountability of water schemes.

The project successfully developed a sustainable financial model for solar pumped water supply schemes. Such a model has been urgently needed, especially due to the high upfront costs of solar pump equipment. The new model demonstrated that income from water fees, collected through smart mobile phone payment systems, can sufficiently cover equipment operation, maintenance and replacement costs – and that people are willing to pay a reasonable price for water.

Thanks to the excellent results from this project, a large upscaling project is already being prepared, aiming to provide community-owned equipment for 280 Tanzanian villages. The World Bank will meet 50% of the investment costs, and the remainder will be financed through loans from private banks.

Photo: Grundfos Lifelink

Final project performance rating summary: satisfactory Progress towards objectives: 5 Overall project progress: 4 Overall risk rating: 5

Project NDF C58: IDEAS Energy Innovation Contest, Latin America NDF contribution: EUR 200,000 (Small Grants Facility) Project implementation: 2013-2017 The Energy Innovation Contest (IDEAS) is an Inter-American Development Bank initiative designed to support innovative projects promoting renewable energy, energy efficiency, biofuels, and energy access in rural areas.

NDF’s co-financing of the 2013 contest led to the provision of financial backing for the implementation of three innovative projects in Central America selected through the contest, which focused on: * Rice bran oil as a biofuel (Nicaragua) * Demand-based grid-balancing and societal co-benefits (Nicaragua) * Biomass briquettes (Honduras) Two of the three projects were successfully implemented, but the project in Honduras was not fully completed, due to problems with the required co-financing. In addition to the project-specific results, experiences gained through NDF’s involvement in IDEAS have been useful in shaping the work of the Nordic Climate Facility.

Photo: Aage Jørgensen

Final project performance rating summary: satisfactory Progress towards objectives: 4 Overall project progress: 5 Overall risk rating: 4

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Project NDF C60: Asset adaptation to climate change in poor neighbourhoods of Tegucigalpa, Honduras NDF contribution: EUR 240,000 Project implementation: 2014-2017 This project has successfully demonstrated how poor urban households can become more resilient to severe weather events by improving the protection of their property, and by enhancing the rebuilding of properties after destructive events.

The NDF grant enabled experts from the Global Urban Research Centre of the University of Manchester to work with Honduran NGOs and municipal authorities to develop asset adaptation plans. A new participatory approach to urban adaptation applying impoverished residents’ own perspectives was consequently demonstrated and disseminated.

• Asset adaptation plans for poor neighbourhoods benefitted 23,633 residents.

• Five manuals featuring low-cost adaptation solutions were produced and distributed among households, community groups, local NGOs and the relevant authorities.

• Various low-cost adaptation solutions were demonstrated in practice.

• 23 large water harvesting systems were installed in schools and community centres.

• 63 women and 46 men from nine urban neighbourhoods learnt how to operate and maintain these water harvesting systems.

Photo: Aage Jørgensen

Final project performance rating summary: satisfactory Progress towards objectives: 5 Overall project progress: 5 Overall risk rating: 5

Project NDF C72: Aquaculture and climate change, Mozambique NDF contribution: EUR 5 million Project implementation: 2015-2017 This project, run by the World Bank supported by co-financing from NDF, was set up to develop a model for a public-private partnership on aquaculture in Mozambique. The model, named Aquaparque, was to involve an out-grower scheme linked to a private aquaculture company, enabling the company to expand production while also benefitting the local population through improved food security, employment, income and environmental management.

This project started with a preparatory phase due to involve technical and socio-environmental studies, business model design, training seminars and workshops, and legal agreements.

But due to problems including serious delays, particularly with a land transfer agreement for the Aquaparque, the World Bank and NDF decided not to continue with the implementation of the project beyond the preparatory phase to actual investments and the realisation of the business model.

Photo: Aage Jørgensen

Final project performance rating summary: unsatisfactory Progress towards objectives: 2 Overall project progress: 2 Overall risk rating: 2

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Project NDF C74: Climate change and health, Africa NDF contribution: EUR 500,000 (Small Grants Facility) Project implementation: 2015-2017 This project was designed to develop an approach for the World Bank’s engagement on linkages between climate change and health. Activities included assessments of regional risks and opportunities that resulted in a detailed report on Geographic Hotspots for World Bank Action on Climate Change and Health, as well as a new approach and action plan to be applied across the World Bank.

Country-level diagnostics were piloted in Mozambique, and a health dimension was consequently integrated into Mozambique’s climate change strategy. Other activities focused on the scoping of sector-specific guidance and the development of synergic partnerships.

The project effectively promoted international interest in the emerging issue of important linkages between climate change and health. A related seminar organised by NDF, the World Bank and the World Health Organisation in Helsinki attracted more than fifty participants, including representatives from key donors and technical organisations.

Final project performance rating summary: highly satisfactory Progress towards objectives: 6 Overall project progress: 6 Overall risk rating: 6

Project NDF C77: West Africa coastal area erosion and adaptation (WACA) NDF contribution: EUR 500,000 Project implementation: 2015-2017 By enabling an analysis of the economics of climate change together with multi-hazard risk assessments and cost benefit analyses for Benin, Togo, Ghana, and Ivory Coast, the WACA project has improved the regional knowledge base on climate change adaption in the coastal zone.

Key results such as cost estimates for coastal zone degradation will help the targeted countries to select and prioritise adaptation solutions to meet development challenges along their coasts. The project has also facilitated the design of technical interventions to be realised under the related WACA regional investment project, which was recently spotlighted as a praiseworthy cutting edge climate adaptation solution at the One Planet Summit in France.

The WACA project is a good example of NDF’s efforts to leverage further investments and narrow the gap between project ideas and bankable investments. The wider WACA Platform ultimately aims to leverage public and private financing totalling USD 2 billion. NDF’s grant has already directly leveraged more than USD 6.5 million of further financing.

Photo: Erick Kaglan, Togo

Final project performance rating summary: highly satisfactory Progress towards objectives: 6 Overall project progress: 6 Overall risk rating: 5

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9. Results of the Nordic Climate Facility The Nordic Climate Facility (NCF) is a challenge fund set up by NDF to finance early stage innovative climate projects.

NCF financing is allocated on a competitive basis with calls for proposals arranged annually. Proposals are screened by an Evaluation Committee before a number of projects are selected for NCF grant support. NCF’s portfolio currently comprises 68 projects, including 51 closed projects1 and 17 projects still under implementation.

All completed projects in the NCF portfolio have been administered by the Nordic Environment Finance Corporation (NEFCO) and financed by NDF. The active portfolio is administered by NDF. NCF’s portfolio – regional distribution of projects

1

Closed projects include completed, partially completed and discontinued projects.

New cook stoves in Kenya. Photo: Heli Sinkko/NEFCO

Results from NCF projects closed in 2017 The 14 NCF projects completed in 2017 have contributed to the following climate and development impacts:

53,000 people

have directly benefitted from NCF-funded projects (63% of these beneficiaries are women).

13,000 people

have had their livelihoods improved or gained new income-generating opportunities (75% women).

Annual greenhouse gas emission reductions and carbon sequestration generated by the completed projects are expected to amount to

134,000 tonnes of CO2 equivalent.

EUR 3.75 million

NCF’s financing has leveraged a total of of additional co-financing for climate change projects, of which 70% has come from the private sector.

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new green business concepts have been tested.

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Highlights from individual projects: 550 householders (500 women, 50 men) in Senegal have earned a total of EUR 40,000 in additional revenue by selling non-wood forest products such as tamarind, shea butter and honey.

30,000 people in Ethiopia, including 18,000 women, have gained access to microcredit, enabling them to acquire clean energy technologies such as improved cook stoves, solar home systems or solar water pumps.

5,300 subsistence farmers in Western Kenya have been trained in sustainable agriculture land use management methods.

3 Nationally Appropriate Mitigation Actions (NAMAs) have been developed for the following national sectors: - the steel industry in Bangladesh - the waste management sector in Mozambique - the livestock farming sector in Honduras (created together with a low carbon development strategy for Nicaragua’s livestock farming sector).

5 renewable energy businesses have been set up by women’s groups in Tanzania, taking advantage of entrepreneurship training and a related loan scheme.

Projects currently under implementation At the end of 2017 a total of seventeen NCF projects were under implementation in Africa, Asia and Latin America. NCF has committed a total of EUR 7.9 million to the 17 ongoing projects, while an additional EUR 4.5 million is to be leveraged in co-financing.

The following ten new NCF projects commenced in 2017: Bolivia

Indigenous forest management for climate change mitigation and adaptation in Northern La Paz

Bolivia

Increased resilience to climate change though enhanced local green growth development

Burkina Faso

Promotion of solar photovoltaic cooling in Burkina Faso

Mozambique

Energy efficient cold storage for artisanal fisheries in Mozambique

Nepal

Reducing vulnerability to climate change in rural Nepal by supporting local business development based on forest-land-management and renewable energy initiatives

Rwanda

Promoting sustainable agriculture in a changing climate in Bugesera District

Uganda

Climate resilience and diversification of livelihoods in Northern Uganda

Uganda

Improving climate resilience for small-scale coffee farming systems in Uganda through modelling of adaptation and mitigation potential in the coffee value chain

Uganda

Growing resilient agricultural enterprises

Vietnam

Improving rural livelihoods in the North Central region in Vietnam through innovative development of supply chains for energy-efficient cook stoves and wood from sustainable sources

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Calls for proposals NCF’s seventh call for proposals was launched during 2017 under the theme Climate as business - testing innovative green business concepts. This 7th project round was marketed through more channels than previously, particularly through a “Nordic roadshow” run in the Nordic capitals. The roadshow presented NCF to around 200 organisations.

A total of 138 concept note applications were received in response to NCF’s 7th call for proposals. By the end of the year,

25 applications had been shortlisted, with applicants invited to prepare full project proposals. NCF’s 8th call for project proposals will be issued to attract applications during the third quarter of 2018, and a 9th call will follow during 2019. For each of the forthcoming rounds NCF 8&9, funding totalling EUR 6 million will be available for investments in suitable projects.

Reporting principles for NCF In NDF’s results-based management framework each NCF project round is considered as a single project for the purposes of NDF’s institutional level indicators and project performance ratings, which are not used to rate individual NCF projects. The performances of individual projects are nevertheless monitored

on a regular basis through progress reports provided by the project implementers. In addition, the final reports of closing NCF projects are used to assess each project’s final results compared to expected outcomes and outputs.

Application processes streamlined NCF’s application procedures were thoroughly revamped during 2017 to make the whole application and evaluation process simpler, more streamlined, and thus more functional and attractive for potential applicants. Examples of the related improvements include: • a new online application system • new comprehensive guidelines and templates • a project implementation manual • a glossary of frequently used terminology

• new procedures for a simpler first “concept note” stage of the application process • an improved evaluation process, involving the provision of individual feedback on all applications.

NCF will continue to enhance its processes and communications in 2018, especially with regard to the further streamlining of project implementation and monitoring processes. An independent website will also be developed for NCF. See NCF’s Results Report for 2017 for further information on the facility’s results and progress.

Solar-powered lighting in Ethiopia.

Photo: Paula Tommila/Gaia Consulting Oy

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10. Summary and conclusions This report sets out the results of NDF’s activities during 2017, highlighting how we have been able to focus our activities in line with our current strategy.

At the end of 2017, NDF was implementing a portfolio of 88 projects in 16 countries. Project Performance Ratings conducted in late 2017 indicated that approximately 81% of the portfolio is performing at least satisfactorily. The summary assessments and final ratings of the twelve projects completed in 2017 confirm that eleven of them successfully achieved all their intended objectives and results. One of the projects, which was severely at risk of falling short of its objectives, was terminated before it could be finalised.

The information in this report shows that NDF’s results during 2017 at the institutional, portfolio and project levels can all be described as highly satisfactory overall. Key highlights and findings are summarised below.

New projects approved during 2017 NDF’s current strategy, developed in 2015, continued to guide our operations during 2017, particularly with regard to its six selected strategic focus areas: • catalytic role and leverage, • project preparatory funding, • support for innovation, • support for private sector development and linkages between the public and the private sectors, piloting of interventions with a high risk level, and • identification of emerging climate change issues.

During 2017 NDF has also striven to increase the impact of NDF financing in various ways: • by developing new business models • by increasing our use of blended financing instruments • by strengthening linkages between preparatory financing and follow-up investments • by finding new ways to support action on emerging issues related to climate change During 2017, NDF’s Board approved financing for new 9 projects with a total value of EUR 44.3 million. Of these financial commitments, EUR 13.0 million (about 29%) was allocated as equity; while the remaining EUR 31.3 million was allocated as grants. The proportion of new commitments made through other instruments than grants rose considerably from 2016, when the corresponding figure was 22%.

NDF’s institutional level indicators are used to illustrate how well our activities are aligned with our current strategy. These indicators reveal that the projects newly approved during 2017 are very strongly aligned with all of NDF’s strategic focal areas.

This is a result of our intensified focus on comprehensive strategic compliance.

NDF aims to finance climate-related projects that promote adaptation to climate change as well as climate change mitigation.

This is clearly reflected in the large share (56%) of all new financing commitments that have a dual focus on both adaptation and mitigation. Project preparation type activities (100%) and projects with strong catalytic impacts (100%) are also prominent in the 2017 portfolio. A strong focus on activities with private sector involvement and activities supporting linkages between the public and the private sector is also evident in new commitments.

In line with NDF’s clear mandate and strong strategic focus regarding the financing of projects with innovative features, support for innovative and high risk activities is also clearly visible.

All of the projects newly approved in 2017 reflect these objectives.

The indicator on gender focus and gender mainstreaming also stands at 100%, since gender equality is included as significant or primary objective in all of the newly approved activities.

For the first time, this results report additionally profiles NDF’s activities in relation to the Sustainable Development Goals (SDGs).

Ongoing projects NDF’s Project Performance Rating (PPR) system is used to monitor the activities we finance. It is the main tool used to report progress and results at the portfolio level. PPRs complement other project-specific reporting and information provided by the agencies responsible for project implementation, other partner agencies, and NDF’s own program managers, who regularly visit projects. PPR ratings focus on how well projects are implemented regarding their specific objectives and desired results. Ratings and related brief descriptions are given for five separate aspects of projects, including a summary assessment of outcomes and impacts consisting of three components: E1 = progress towards objectives; E2 = overall project progress; E3 = overall risk rating.

The PPR ratings assigned to projects in late 2017 indicate that NDF’s portfolio is currently of good quality. Approximately 81% of ongoing projects were classified as highly satisfactory, satisfactory or just adequate, regarding all three summary variables E1-E3.

The corresponding figure a year ago was 77%. Only three projects are currently rated as unsatisfactory or highly unsatisfactory for one or more of these variables. One of these projects was terminated at the end of 2017.

At the end of 2017 a total of 17 projects from NCF’s project rounds 1-6 were ongoing.

NDF projects completed during 2017 At the end of each project, an NDF Closing Report is compiled to summarise the project’s outcomes, set out the lessons learned, and review the project applying the evaluation criteria defined by the OECD’s Development Assistance Committee on relevance, effectiveness, efficiency, impact and sustainability. These Closing Reports primarily focus on the results of NDF financing, examining how it has contributed towards projects’ overall objectives.

They are typically harmonised with other project-specific final

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reporting conducted by partner countries or NDF’s co-financing partners.

During 2017, twelve NDF-backed climate-related projects reached completion. Brief summaries of the results of these projects are set out in this report. More detailed reporting on all completed projects is available through NDF’s website. The final Project Performance Ratings assigned to these projects rated eleven out of the twelve projects (83%) as highly satisfactory or satisfactory regarding all three summary variables (E1-E3: progress towards objectives; overall project progress; and overall risk).

Photo: Anja Nystén

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Results from the Nordic Climate Facility in 2017 Results from the 14 NCF projects completed during 2017 reflect successful outcomes with regard to the projects’ respective objectives in terms of climate adaptation and mitigation, and a wide range of desired development impacts. Such impacts include jobs, new opportunities for income, capacity building, water supply improvements, the adoption of climate-smart agricultural methods, increases in the use of renewable energy, and reductions in firewood use, as well as consequent health benefits.

Surveys have indicated that for the vast majority of NCF projects the activities initiated during the projects should be able to continue viably and sustainably after NCF’s involvement ends.

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Photo: Kari Hämekoski

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Latin America.

Layout and graphic design: Rebekka Grรถhn