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Investments in SIDS

Synopsis & commentary:

This report presents the findings of the Independent Evaluation on the relevance and effectiveness of the GCF’s investments in the Small Island Developing States (SIDS). It is structured around four key themes and the themes of private sector engagement and innovation in SIDS receive special attention as cross-cutting themes in this evaluation.

Small island developing states (SIDS) are countries where the majority of the natural resources they have access to come from the ocean and are characterized by small population size, remoteness from international markets, high transportation costs, vulnerability to exogenous economic shocks and fragile land and marine ecosystems. Some SIDS are least developed countries (LDCs), African States or both.

GCF Commentary

The GCF Board has decided that 50 percent of the readiness support be allocated to the particularly vulnerable countries, including LDCs, SIDS and African states (GCF B.08/11). 38 SIDS are receiving the GCF Readiness support, worth USD 122 million of approved funding, totalling 174 readiness grants (as of 10 Feb 2023). Of which, 23 grants are for the national adaptation planning support and 20 grants are for the capacity building and support for DAEs in SIDS.

GCF Open Data Library provides a brief on the GCF support for SIDS in the GCF Briefs – GCF Spotlight menu. The data provided in ODL are updated regularly.

Additional downloads

Brief

Final report

Executive summary

Country case studies

Evaluation brief

Management response

Spotlight on SIDS portfolio

KEY FINDINGS

- GCF’s response to the UNFCCC COP guidance on SIDS regarding private sector engagement, improved access, readiness and accreditation has been only partially effective. - Many international accredited entities are disincentivized by what they perceive as high transaction costs when working with the GCF on small SIDS projects. - SIDS commonly face a lack of capacity to develop concept notes and funding proposals to the GCF standards. The RPSP is helping to address this, but approaches are not sufficiently tailored to the human resource limitations in SIDS. - The GCF’s conception of the private sector does not correspond well to the micro-scale, low capital base and low risk capacity of businesses in SIDS. There is no context-sensitive strategy for the private sector within the GCF. The RPSP plays a central role in improving the relevance and effectiveness of the GCF’s investments in the SIDS. The primary recommendation of the report outlines how RPSP support can be enhanced to support SIDS’ direct access to the GCF and address their capacity constraints. In addition, attention is paid to the private sector where it is recommended an approach that reflects the characteristics of local private sector entities in SIDS is needed.

GCF Commentary

The RPSP has supported SIDS with direct access applicants and DAEs’ pre- and post-accreditation processes, worth USD 6.46 million as of 31 Dec 2021. The RPSP support for the development of strategies for transforming and attracting private sector investment for low emissions and resilience in SIDS has totaled USD 3.31 million as of 31 Dec 2021. The level of support in these outcomes for SIDS is higher than other vulnerable country groups, i.e. SIDS and African states according to the RPSP Annual Report 2021, annex III, GCF/B.33/07.

COUNTRY CASE STUDIES

The report is complemented by country case studies and they provide useful examples for those interested in the potential for RPSP support to improve national climate finance structure (Kiribati), capacity building materials (Marshall Islands), and stakeholder engagement (Belize).

KIRIBATI

One Readiness and Preparatory Support Programme (RPSP) proposal was approved for Kiribati in September 2017, delivered directly by the NDA. Disbursement began in July 2018. This support will cover a wide range of outcomes, including the development of a strategic framework and country programme for engagement with the GCF and the strengthening of the NDA.

A government informant noted the RPSP project has been important for helping promote GCF “principles and policies across all sectors in Kiribati”. The Australian DFAT and New Zealand MFAT have been the core facilitators of climate finance management capacity in Kiribati by delivering long-term support for the establishment of the Kiribati Ministry of Finance’s Climate Finance Division, which was established two years previously. Kiribati has used the RPSP to contribute to its national climate finance structure. Government informants reported that RPSP funds have been important for funding dedicated national staff to assist project development, especially in the Ministry of Finance’s Climate Change Division. The RPSP funds have also been instrumental in allowing AE staff to provide in-country support. These readiness funds piggy-back onto support from the Australian DFAT.

In relation to results accomplished, partners point to improved capacity in government ministries resulting from the GCF readiness grant, as well as the experiential observations of working with GCF to identify their own performance gaps. The latter is an experience of a regional AE partner, as well.

In relation to GCF projects being transformational on a national scale, the evaluation notes that the only funded project in Kiribati, the STWSP (FP091), will have a profound impact in the project location but only covers the country’s main island group. This may be justified on the grounds of being located where the majority of the population resides and as a proof-of-concept project. However, these justifications only hold if future projects intend to secure a water supply to vulnerable outer islands.

MARSHALL ISLANDS

Readiness and Preparatory Support Programme (RPSP) proposal was approved for RMI in December 2017, which was delivered by SPREP. Disbursement began in April 2018, and activities have been extended to complete in November 2020. This support covers a wide range of outcomes, including strengthening the NDA function, educating national stakeholders about GCF and development of a GCF project handbook and formation of the RMI GCF Country Programme. With support from SPREP, RMI has submitted a proposal for a second RPSP with which to pursue capacity-building towards establishing a national DAE.

The RMI Climate Change Directorate (CCD) hosts the NDA and RMI’s ongoing RPSP grant. Four benefits were reported by government stakeholders. 1. First, the funding enabled the NDA to employ a project manager to oversee all GCF preparation activities. 2. Second, CCD utilized the RPSP to introduce and explain GCF to diverse government stakeholders; apart from national ministries, this awareness-raising included mayors as well. These actions increased the visibility of GCF and its parameters among government officials. 3. Third, RPSP funding has been allocated to develop RMI’s GCF Handbook, which is intended to assist RMI stakeholders in navigating GCF funding proposal stages and requirements. 4. Fourth, CCD is utilizing RPSP funding to commence the development of a national DAE. However, DAE accreditation will be more directly pursued with support from SPREP under a planned second RPSP grant. Initial work to support RMI to identify and prepare a national entity for DAE accreditation was funded and supported by an external partner, USAID’s Pacific Climate Ready Program. As an example of complementary funding, RPSP provided the funding for the RMI government to build upon the foundation of USAID’s work.

BELIZE

Belize has several national and regional Readiness and Preparatory Support Programme (RPSP) grants approved. These include requests for NAP support related to the fisheries and coastal sector and the water sector. Discussions are also under way between the NDA and PACT to submit requests for NAP support for other sectors such as forestry, tourism and housing and urban development.

Country ownership and stakeholder participation in GCF-funded activities has been moderately strong in Belize, with a well-capacitated NDA and current RPSP grants seeking to further improve stakeholder engagement. There are opportunities to strengthen coordination across ministries and to strategically link the RPSP to a longer-term climate finance approach.

The NDA is viewed as responsive and reasonably well-capacitated compared to the others in the Caribbean region; Belize has established no-objection procedures using a GCF Steering Committee and nomination procedures for RPSP delivery partners and DAEs. Human resource has been a significant constraint for the NDA, because the NDA is also the Chief Executive Officer of the MEDP and has myriad other responsibilities. Capacity has been built over time, including through the assignment of a full-time technical focal point and the use of GCF readiness support to hire a consultant for two years to assist the NDA and focal point. Interviewees indicated that the regional RPSP grants emerged from a participatory and country-led process. Indeed, one regional RPSP grant focuses on improving civil society organization (CSO) engagement with the GCF, and another regional grant targets private sector engagement. National RPSP grants have also created opportunities for more effective stakeholder engagement, including building awareness of the GCF among local private sector actors in Belize. One interviewee noted that the GCF model of working through the NDA puts a lot of influence in the hands of the NDA, in terms of how local stakeholders are engaged and RPSP grants are identified and pursued. Through its no-objection procedure, the NDA facilitates the review of GCF proposals by other entities, including the NCCO.

A key message emerging from multiple interviews with private sector actors is that the private sector must first be aware of the GCF in order to pursue opportunities; private sector awareness of the GCF in Belize is currently perceived as low. In Belize, this is being addressed through GCF-funded RPSP support focused specifically on private sector engagement. The country benefited from an earlier regional RPSP grant, led by Jamaica, that focused on private sector awareness and readiness. Although a country level analysis of Belize was performed, the regional scoping report was not comprehensive “… possibly due to limited engagement with the private sector”. Belize followed up with an approved proposal for a national private sector RPSP grant delivered by CDB, with the assistance of the Belize Chamber of Commerce and Industry (BCCI).

Two other RPSP grants in Belize also provide complementary support for private sector engagement; one through accreditation support for the development bank of Belize, DFC and one supporting the development of a CN for a CRAF, that would aim to provide incentives for local financial institutions (like DFC) to provide additional lending to MSMEs for renewable energy and energy efficiency projects in the Caribbean.