Insights from day two of GCF B.37
E Co’s Head of Consulting, Beverley Salmon, and Principal consultant, Marijan Gajsak have given us their on-the-ground insights for the second day, having been in attendance at this final board meeting of 2023.
On the GCF portfolio
The portfolio of proposals up for decisions at the GCF B.37 Board meeting represent 10 public sector proposals, requesting GCF funding of USD 395.1 million (54 per cent), and five private sector proposals, requesting GCF funding of USD 341.3 million (46 per cent) and with 70% for adaptation and 30% for mitigation.
Of all the project approvals occurring, we’re especially happy to see that the International Fund for Agriculture Development’s (IFAD) project ‘FP220: Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) for East Africa region‘ was approved. Marijan Gajšak, who took part in the development of FP220 alongside a team of E Co. experts, had this to say:
“I am very honoured to have been involved in the development of this amazing and important project that will be implemented in East Africa. The innovative adaptation-based loan mechanism is an amazing opportunity for all the beneficiaries, including the farming community, associated businesses, and financial institutions. It is very exciting to see IFAD’s ARCAFIM being approved by the GCF. E Co. led the development of the supply and demand analysis alongside the development of the macroeconomic model which served as evidence for the adaptation investment potential. We would like to congratulate the IFAD team on this amazing achievement and for putting your trust in E Co. to support you in this important project.”
On private sector investments
One project that is impressive in terms of size comes from a proposal from Mitsubishi UFJ Financial Group (MUFG). This project represents the largest private sector programme put forward to the Board, requesting over USD $152 million within a total finance mechanism of USD $1.4 billion. The output is a blended finance platform that enables long-term loans in 19 countries across Africa, Asia, Latin America and the Caribbean.
While being a crosscutting project, it has a strong focus on adaptation measures, with a strict minimum 70% of the portfolio expenditures going to adaptation interventions. Within this project USD $3.8 will be mobilised for every USD $1 contributed by the GCF. While this is an exciting project there were potential concerns around management and local country ownership and management across such scale.
Explore insights from day one of GCF B.37
Every day at one of the Green Climate Fund’s Board meetings brings new points of discussion to think on. If you missed the ongoings of day one, you can catch up in our article here.
On grants and loans
There are some concerns from the Board on SIDS receiving loans, with several members preferring to see more, and larger, grant elements. However, the private sector would make the argument that sustainably-scaled impact loans and equity are the most applicable finance mechanisms to achieve this.
However, many specialists believe that grants should not be given out so lightly, with the argument being that grants are not meant to solve climate change, but are meant to create market conditions so that the market might be ready for concessional loans at some point. The idea is to have a self-sustained market that can borrow on commercial conditions.
On the GCF system
There was a high level of support in general for the funding proposals that came to the Board, however, the single objection across a number of proposals was aimed at around wording in the proposals regarding ‘forced labour’. Many Board members raised this as a systemic issue and asked that it be addressed so that focus could be on the project content. However, the funding proposals were voted on and with only a single objection they were all approved.
We would love to connect with you if you are attending GCF B.37 and discuss our mutual projects. If you’re interested in catching up with Beverley or Marijan, feel free to connect with them directly on LinkedIn, or send us an email via: email@example.com.
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