African Development Bank, UN Capital Development Fund Showcase Non-Market Adaption Funding Options

Published on: 14 September 2022
by KnowESG
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During a joint event held on the sidelines of Africa Climate Week in Libreville, Gabon, on September 1, 2022, the African Development Bank and the UN Capital Development Fund (UNCDF) showcased two innovative mechanisms for scaling up adaptation action and finance.

The moderator, Gareth Phillips, African Development Bank Manager for Climate and Environment Finance, stated that current levels of adaptation finance are insufficient to meet developing countries' demands. However, he believes that the private sector and local governments could play an important role in bridging this gap.

He added that the African Development Bank and UNCDF could also help address the lack of credible adaptation metrics and indicators by developing and deploying methodological tools, creating incentives to encourage a diverse range of actors to participate in adaptation, and opening up new financial streams.

A presentation on the Local Climate Adaptive Living Facility (LoCAL mechanism) was given by Ludovica Amatucci, a programme analyst at UNCDF. The tool assists local governments and communities in accessing climate finance for locally-led adaptation, contributing to the implementation of the Paris Agreement's Nationally Defined Contributions, as well as National Adaptation Plans and Sustainable Development Goal 13. (Take urgent action to combat climate change and its impacts ).

According to Amatucci, the LoCAL mechanism enables inter-governmental fiscal transfer mechanisms that target adaptation efforts at the local level while increasing transparency and reporting through those systems.

The African Development Bank's Senior Climate Finance Officer, Kidanua Gizaw, stated that the bank is piloting an Adaptation Benefits Mechanism (ABM) as a non-market, results-based finance tool to accelerate investments that improve the resilience of vulnerable communities and ecosystems.

According to Ines Josten, Project Manager of the German Agency for International Cooperation (GIZ), increasing temperatures caused by climate change mean that traditional potato preservation procedures in Kenya are no longer adequate, and potato crops cannot be preserved as long as before. Keeping potatoes cold prevents the crop from decaying.

The first approved ABM methodology, "Potato storage using green cooling technology," developed by Perspectives Climate Group and funded by GIZ, provides a way to measure and quantify the benefits of modern, clean energy-based storage solutions in terms of saved wealth due to reduced risk of potato rotting. Applying this methodology to an ABM project would demonstrate its added value and aid in the mobilisation of funds for clean technologies to secure the livelihoods of smallholder farmers in Kenya and the region.

Omar Saleh, Managing Director of Zephyr Consulting, spoke on behalf of SLAMDAM, a Dutch private sector company, and presented the innovative ABM methodology, "Flood damage reduction using a mobile flood barrier," which was based on an ABM demonstration project in Lagos, Nigeria. The ABM methodology facilitates fund mobilisation by linking adaptation benefits to investments in the mobile flood barriers.

Mr. Kouassi Amani, a Project Lead of the “Cocoa Climate Resilience” ABM demonstration project implemented by the International Agroforestry Centre (ICRAF) in Cote d’Ivoire, illustrated how the project can use the ABM to incentivise private sector investment in cocoa agroforestry for climate change adaptation in West Africa.

ICRAF has tapped into the rich climate change knowledge within their organisation to prepare a new ABM methodology for resilient and sustainable cocoa production, using a participatory approach involving a broad range of stakeholders, including the local smallholder cocoa farmers and women's organisations.

Africa Climate Week is part of a series of regional climate weeks being held globally. Participants came together to outline Africa’s objectives for the upcoming COP27 in Egypt and unify and amplify the African voice to ensure action.

Source: African Development Bank Group

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