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Tracking climate finance

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(This article has originally been published on The Daily Star and can be accessed here)

At the global level, developed countries have pledged to provide $100 Billion every year starting from 2020 to developing countries to tackle climate change through both adaptation as well as mitigation activities. They have also agreed on setting up a new Green Climate Fund (GCF) to allocate the funds through its own supervisory Board and have pledged to start funding with over $10 Billion before 2020. The secretariat of the GCF is based in Korea and the Board has been set up and has started functioning. Bangladesh is a member of the GCF board representing the Least Developed Countries (LDC) group.

The Economic Relations Division (ERD) of the Ministry of Finance has been made the Designated National Authority (DNA) for Bangladesh to the GCF. They will now have to select National Implementing Entities (NIEs) who will be have to register with the GCF in order to submit funding proposals.

At the same time Bangladesh has already disbursed over half a Billion US Dollars worth of funding to several hundred projects both within the government as well as through civil society. This was done through two separate climate change funds, one with funding from the Government of Bangladesh and the other with funding from international sources. Both the funds have supported activities identified under the Bangladesh Climate Change Strategy and Action Plan (BCCSAP). 

Bangladesh is thus at a critical juncture as it moves from having set up parallel funding structures to initially kick-start climate change activities, now moving towards mainstreaming climate change into national planning and finance.

The Planning Commission has already started looking at ways to mainstream climate change into the seven five year plan, currently in the preparation stage, while the Finance Division has developed climate tracking financial systems which will be put in place soon.

Over the next decade it is very possible that the level of global funding to support developing countries to tackle climate change may outstrip the Official Development Assistance (ODI). However, Bangladesh will have to compete with other developing countries to get a fair share of those global funds. The allocation of such global funds will not be made solely on who is most vulnerable but rather on which country is able to use funds most effectively.

Thus effectiveness of fund utilisation will be the key criterion for accessing funds in future. Hence, if Bangladesh wishes to access global funding to tackle climate change it needs to set up systems to demonstrate that it can absorb, handle and use climate funds effectively.

 

Of the number of criteria to measure and monitor the effectiveness of fund utilisation, the first and most important indicator is to ensure transparency of where funds come from at the global level and track them within the country. This obligation to provide information on what is being received and who is getting what applies to donors, recipient governments, NGOs, research institutes, consultancy companies and anyone either providing or receiving climate funds.

The next most important element is to have good and credible systems to monitor the activities being funded. At the national level the Implementation Monitoring and Evaluation Division (IMED) of the Planning Commission is the department responsible for monitoring government and donor funded programmes and projects and they will need to be capacitated to include climate funded activities in the mandate.

There is also a need to have monitoring of bilateral and multilateral donors funding climate activities both globally as well as in Bangladesh.  And finally the NGOs’ activities also need to be monitored by credible third parties.

After money has been spent and activities have taken place, it is necessary to audit the accounts and evaluate the outputs on the ground. Here the Auditor General (AG) has a very important role to play along with IMED. Both agencies will need to be capacitated to develop knowledge and expertise about climate related funding and activities.

All the above criteria require upgrading of the capacities of many key ministries and agencies within government as well as external agencies to be able to set up a “\Climate Finance Ecosystem that is robust and credible. 

At this early stage of planning and implementing such an ecosystem, the two priority actions are capacity building through appropriate and targeted training and taking lessons from early actions and activities. This means training and research institutions and universities can play a key role in this regard.

Dealing with climate finance and tackling climate change through adaptation and mitigation might seem simple and something that people involved in regular development and development finance already know about. However, it would be a mistake to assume that is the case. The analogy I would use is that normal development finance is like playing football while climate finance is a game of cricket. Both games are played by a team of eleven members and a ball but after that the similarity ends. So it would be wrong to assume that because we are good at football, we would be able to play cricket. We will need to learn how to play the climate finance game effectively. If we can do that over the next few years then climate finance may eclipse development assistance for Bangladesh.

 

Written by: Dr. Saleemul Huq, Director, ICCCAD

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