ADB Group Partnership Forum

Mr. Abou Sabaa,Chairman

AfDB Climate Change Coordination Committee

Tunis

23 March 2012

Towards the creation of the Africa Green Fund (AfGF)

Structure1. Background

2. Rationale

3. The AfGF Platform

4. The Fund Objectives Linkages with Green Climate Fund Scope

5. Implementing and Financing Arrangements Eligibility and Accessibility Financing Procedures and Conditions

Structure (cont’d)6. Compliance and Reporting

8. AfDB Institutional capacity

9. Expected role of AfDB

10. Consultation Process

New and additional fast-track resources - $30 billion by 2012

Mobilizing additional $100 billion annually by 2020 to address needs of developing countries

Africa’s leadership requested climate change resources flows for Africa region to be managed by the African Development Bank.

The Africa Green Fund is a response to this request.

Background

Sub-Sahara Africa received only 12% of Bilateral Funds and just 4% of Multilateral Financing in 2009-2011

Global funds hosted, governed and administered outside Africa

Funds have cumbersome access procedures and lack balance between mitigation and adaptation

Lack of African voice in decision making and funding priorities

Africa’s priorities now relate to implementing the Rio+20 Sustainable Development Goals including transition towards Green Growth

Rationale for the Fund

AfGF Platform The African Green Fund is part of a Platform that seeks

to enhance Africa’s access to existing and new climate finance.

Enhance Access to Existing CC Instruments

Block 1 (internal

governance)

AfGF AfGF InstrumentInstrument

Block 2

Block 3 (Scaled up AfGF Instrument)

The Platform is flexible enough to grow overtime and adjust to the future climate finance architecture.

The focus on short and medium term is on Block 1 of the Platform

AfGF Platform (Block 1)Enhance Access

to Existing CC Instruments

Block 1 (internal governance)

AfDB will establish a framework to:

Streamline and harmonize existing thematic funds managed by the Bank (AWF, CBFF, SEFA, ClimDev-Africa).

Simplify operational procedures and improve access.

Create a new facility to support RMCs to transition towards Green Growth

AfGF Platform (Block 2)

AfGF AfGF InstrumentInstrument

Block 2(external

governance)

Block 2 involves creation of a new instrument which is part of long-term strategy for climate finance

AfGF could be either independent of AfDB decision-making structure or ADF type of governance structure both of which involve equitable donors and African countries.

The instrument seeks to receive, manage and deliver resources from Fast Start funds and long-term pledges under Cancun Agreements and other sources.

AfGF Platform (Block 3)

Scaled up AfGF Instrument (Block 3)

Block 3 is a scaled up Africa Green Fund.

It will seek to receive, manage and deliver funds to Africa at scale, to be designed and operationalized after establishment of the Green Climate Fund (GCF).

AfGF will seek to become one of conduits for climate finance and preferred channel over medium term.

The goal of the AfGF is to support country-owned and country-led climate compatible development in Africa Facilitate access for African Countries to existing and

Bank internal resources Promote direct and immediate access to fast-start

funds Support the development of a Low-carbon and

Climate Resilient Economy with transition towards green growth

Strengthen national institutions and support the use of country systems for direct access to the Fund

Complement other multilateral/bilateral financial mechanisms

AfGF Goal and Objectives

GCF is a global mechanism while AfGF will focus on Africa specific concerns and priorities and give greater priority to adaptation.

COP 17 in Durban adopted the establishment of the GCF. AfGF will seek to become one of the conduits for

resources from GCF without compromising access of eligible African countries to GCF.

AfGF will provide resources to build capacity and readiness to access future resources.

AfGf will also assist Bank’s RMCs to develop their Green Growth Framework

Linkages between AfGf and Green Climate Fund

Adaptation Sustainable Land & Water Management Climate Resilient development Natural Disaster management

Mitigation Renewable Energy and Energy Efficiency Sustainable Transport Sustainable land and Forestry

Cross-Cutting Assist with state of readiness and preparatory

phase and Capacity building Transition towards Green Growth Technology development and transfer; capacity

building Collaboration with UNFCCC, UNCBD and UNCSD

Scope of the Fund

Access:

African Countries through Direct Access

African Regional Organizations

Recognized public and private enterprises in RMCs

AfDB, other MDBs and International Organizations operating in Africa

Eligibility criteria:

Development Impact, Potential scale up for adaptation and low carbon, cost effectiveness and demonstration potential, national priorities

Implementing and financing arrangements

Implementing and financing arrangements Financing procedures An accredited Implementing Entity (IE) shall submit a

Request for Funding to the Secretariat, following some requirements : Each operation will be approved and administered in

accordance with the applicable guidelines of the concerned accredited Implementing Entity;

The accredited Implementing Entity will conclude an agreement with the beneficiary, expressing the terms of financing and acknowledging the source of finance;

Eligible expenditures under individual financing will be determined in accordance with the policies and procedures of the respective accredited Implementing Entity.

Each IE will apply its own appropriate procedures in developing operations.

Instruments include concessional and non-concessional lending, grants, guarantees and equity Grants for Adaptation activities and Capacity

development Concessional for investments to support low-carbon

economic development that have internal rates of return just above the normal market threshold

Gurantees for credit, regulatory or technology risk

Details will be provided in the Operations Manual of the Fund.

Financing Instruments

AfDB institutional capacity

Bank’s total lending volume for 2008-2010 was US$ 24.8 billion from its own resources; cumulative approvals from 1967-2010 amounted to US$ 89.6 Billion; cumulative disbursement of US$34.1 Billion.

The Bank is also managing US$ 5.46 billion on behalf of over 50 funds

The Bank will put its experience to provide technical and advisory support to the AfGF

Bank as a Trustee Bank has experience being a trustee of climate

change funds (NEPAD, CBFF, ClimDev, etc.) and hosting several bilateral trust funds

Bank’s responsibilities as trustee shall include fund management, financial reporting and the execution of legal agreements.

Additional staff will be recruited to help with resource mobilization

Bank as a Secretariat Bank has the requisite experience Additional staff will be recruited to work in the

Secretariat Bank as one of the Implementing Entities (IE)

The Bank will apply to the Fund, as with other accredited entities

Expected Role of the AfDB

Fudiciary Standards including Audit AfGF fiduciary standards will be developed, including

criteria for accreditation as implementing entities Country systems will apply for direct access when

national entities meet basic standards Countries’ institutional capacities will be

strengthened, where needed National entities borrowing from the AfGF are

responsible for carrying out an audit of their operations

Environmental Safeguards including Gender A set of E&S safeguards shall be established The AfGF shall enhance the capacities of countries to

meet minimum safeguards standards Gender equality shall be part of selection criteria and

M&E system

Compliance and Reporting

Compliance and Reporting (cont’d) Reporting and Disclosure of Information The Bank shall present to the Governing Council an

Annual Report on AfGF activities Information on AfGF’s operations shall be regularly

posted on the AfGF website Monitoring and Evaluation A M&E system shall be developed for the AfGF. Establishment of national M&E systems to support

Direct Access operations. An Independent Evaluation Mechanism will be

established to carry out periodic independent evaluation of the Fund

A detailed results framework will be developed, with key indicators and targets

Consultation Process Planned and completed consultations:

Consult with AGN in Durban (August 2011) Consult with African representatives in Transitional

Committee in Geneva (Sept 2011) African Ministerial Conference of Environment (Sept

2011) AfDB Board seminar (Jan 2012). Donors and potential contributors to the Fund

(ongoing); Civil Society and Private Sector;

AfGF Framework Document will continue to be revised based on further consultation in response to post COP 17 response to emerging issues.

For tails:

Further information:

www.afdb.orgclimatechange@afdb.org

Thank you