Since 2009, developing countries have been promised funding and increased national self-determination over climate projects. But the climate funds' strict requirements for control and governance make it difficult for many countries to gain direct access to project support. The climate funds need to be more flexible and look up from short-term project cycles to more long-term goals for sustainable climate measures, writes Annie Sturesson, former technical expert at the Ministry of Finance in Uganda.
At the UN Climate Conference in Copenhagen in 2009, high-income countries undertook to contribute a total of USD 2020 billion annually to climate action in developing countries through global climate funds from 100 onwards. Developing countries were also promised increased direct influence over how climate action is designed and implemented in line with national priorities - so-called national ownership.
One of the developing countries that is still waiting for increased influence over climate finance is Uganda. As a technical adviser at the Ministry of Finance, I supported the ministry's work to mobilize funding from climate funds. Despite their innovative ambitions, the Climate Funds face traditional development assistance challenges, not least in terms of the balance between requirement on results and control and goal on increased national ownership and aid effectiveness.
Direct financing - efficient but rare
National ownership is a basic principle for aid effectiveness. In practice, however, it has been difficult for many aid actors, not least the climate funds, to respect this principle. The Global Environment Fund (GEF), established in 1991, was based on providing all project support to developing countries through multilateral organizations such as the United Nations Development Program, UNDP. With the UNDP as an intermediary and responsible for financial management and project coordination, the influence of developing countries on the design and implementation of climate measures was limited.
The Adaptation Fund for Climate Adaptation (AF) was launched in 2009 as a more innovative financing instrument. In order to reduce project costs and strengthen national ownership, the fund introduced so-called “direct access” to project financing for national actors. This means that an authority in a developing country can have access to project financing without a multilateral organization as an intermediary. The scheme has been copied by the Green Climate Fund (GCF), which is expected to be the main channel for climate financing. The possibility of direct financing was welcomed by many developing countries, but so far few have been able to take advantage of it.
Uganda's process for obtaining direct funding from GCF and AF began in 2014-2015. The process consisted of a comprehensive control of national institutions' financial systems, management of financial, environmental and social risks and transparency systems. Uganda, like many other countries, required costly reforms to try to bring national systems into line with international standards. AF's strict requirements have, however, been increasingly questioned. One study by the climate research institute WRI shows that for most developing countries it does not pay to try to reach the requirements for direct funding. Instead, countries are advised to continue to rely on UNDP and other intermediaries.
Ownership builds capacity
Uganda's protracted process with AF highlights the challenge of combining national ownership and international standards. The main responsibility for strengthening systems and institutions lies with the state, but donors also have a role to play. Because if donors continue to use intermediaries to carry out climate projects, how can the national systems be strengthened? Donors and climate funds need to be ready to compromise more in terms of control and governance and to look beyond short-term project cycles to more long-term goals of institution building and sustainable climate action.
Several studies recommends that the climate funds apply a more flexible approach with realistic minimum levels that national institutions need to reach. The funds are also considered to be able to learn lessons about flexible working methods from the Global Fund against AIDS, Tuberculosis and Malaria, which divides responsibility for projects between national actors and international organizations. Great focus is placed on the specific needs of institutions, and to assist capacity building to gradually increase countries' responsibilities for administering and implementing projects.
Distrust of donors complicates climate work
To administer a climate project, organizations such as UNDP charge a fee 8,5 percent. As national capacity is strengthened and more national institutions are approved for direct funding, intermediaries end up in a kind of competitive situation. At the Ministry of Finance in Uganda, I noted a certain distrust of the UNDP, which is tasked with supporting national capacity building while the organization is financially dependent on assignments as a project administrator to keep offices rolling. My colleague who was the contact person for AF at the ministry questioned UNDP's motives:
“UNDP's business model is based on our institutions having weak capacity. It is not in UNDP's real interest to help and strengthen our institutions to be able to carry out projects on their own. ”
Even if this conflict of interest does not exist in practice, mistrust of the UNDP and the working methods of the climate funds makes the implementation of climate measures more difficult.
Uganda and many other developing countries are becoming increasingly impatient. The strict international standards of the Climate Funds set the threshold for increased national ownership. In order for the climate funds to be able to live up to the expectations of increased influence for national actors, more flexibility and increased focus on long-term capacity building is required. It is also crucial for more long-term and sustainable climate action.