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The Board of the Green Climate Fund (GCF) discussed modalities to enhance direct access on 26 March, the concluding day of the ninth meeting of the Board in Songdo, South Korea. No decision was reached given the lack of time.
The GCF Secretariat presented a paper to the Board that outlined the terms of reference for a pilot phase enhancing direct access to the GCF. The proposed decision for the Board’s consideration requested the Secretariat, in consultation with the Accreditation Committee, to launch a request for proposals to developing countries through their national designated authorities/focal points, for the implementation of five pilot projects with a total of US$ 100 million, including at least two pilots to be implemented in Small Island Developing States (SIDS), the Least Developed Countries (LDCs) and African states.
In the paper prepared for the Board, the Secretariat stated that “enhanced direct access is needed mainly because the decision-making on the specific projects and programmes to be funded will be made at the national or subnational level, and such direct access is a means to increase the level of country ownership over those projects and programmes. This implies that the screening, assessment and selection of specific pilot activities would be made at the national or subnational level…Unlike the traditional direct access track (where there is the submission to the GCF by the accredited entity of individual projects or programmes for financing by the Fund), in the enhanced direct access track, there will be no submission of individual project or programmes because decision-making for funding of specific pilot activities will be devolved at the country level.”
The Board discussed the modalities and members presented their views. Several developing country Board members expressed concerns about the number of pilot projects being too few and the amount of US $100 million as insufficient. They also felt that the implementation period of two years of the pilot projects was too short a time to ascertain results.
Dipak Dasgupta (India) raised these concerns, and was supported by Nojibur Rahman (Bangladesh), Ayman Shasly (Saudi Arabia), Jorge Ferrer Rodriguez (Cuba) and Angel Valverde (Ecuador).
Dasgupta (India) said that the initiative would stand in good shape since it has the opportunity to demonstrate what country ownership can do, not just in terms of resources but also in terms of trust in the national entities. He added that it should be made sure that at least two of the proposals or a substantial number are from low-income countries, SIDs and Africa. Dasgupta said further that US$ 100 million is not ambitious enough. He also objected to the two year duration as this was too little to see substantial results. He enquired if any proposal exists for much faster accreditation for such entities.
Nojibur Rahman (Bangladesh) said he would like the Accreditation Committee to have a more specific role and for them to oversee the draft preparation of pilots. He said that on the competitive process to select the ‘pilots’, the national designated authorities (NDAs) should be consulted. Rahman added that the size of the pilots needed to expand and recommended 15 pilots instead of the five proposed. He also said the money set aside needs to increase five or six fold. He added that there is apprehension that money from the pilot phase would go to intermediaries such as multilateral development banks. The apprehension stems from the fact that the multilateral agencies are getting fast track accreditation, he said.
Ayman Shasly (Saudi Arabia) said he agreed with other members on the size, magnitude and direction of the proposed decision, and that he had difficulty in referring to things as ‘pilot’. The idea should be to mainstream, he stressed. He said Board members should be considering a number of proposals in the region of US$ 100 million over two years or US$ 500 million over five years so that the Board members are able to assess the pros and cons of different approaches. Stressing on messaging, Shasly said that everyone is looking to the GCF as a US$ 100 billion fund and the GCF needs to show a reasonable size of projects or initiatives. “Five pilots will not do,” he added.
Jorge Ferrer Rodriguez (Cuba) too stressed that the duration and the allocation as well as the number of projects should be increased. Tosi Mpanu Mpanu (Democratic Republic of Congo) added that the pilot is welcome and called for greater clarity between direct access and enhanced direct access.
Angel Valverde (Ecuador) said the limit of the pilot phase is not clear, nor when financial decisions would be enhanced in the NDAs or the focal points. Valverde also sought clarity on the role of the NDAs vis-à-vis the implementing entities.
The developed country Board members on the other hand pointed to the need for strict monitoring and oversight as well as risk mitigation of such projects.
Andrea Ledward (the United Kingdom) said she supported the Secretariat paper while adding it needed more detail on monitoring and what recourse would the Secretariat take towards that. She added that at this stage, it was hard to know what the demand would be for such projects and what the absorptive capacity would be. She said the Board at its eleventh meeting in October 2015 could look at demand and absorptive capacity.
Leonardo Martinez (the United States) said he welcomed the paper in principle and that enhanced direct access was the cutting edge. He stressed on the need to better understand what is being delegated under enhanced direct access as well as to understand the risks to the Fund’s reputation. He sought clarification on the basis of the competitive process by the NDAs.
Martinez also added that the decision suggested asking entities to submit proposals and then be accredited. This puts the risk on entities to make proposals but not get accredited, he said. He also sought clarity on the timeline and said the two-year implementation phase seemed short. He wanted to get a better sense of the pilot from the “practical standpoint”. On the funding envelope, Martinez asked if it was a combined budget over the lifetime of pilots and said that no entity should take a disproportionate amount. He said that in the spirit of fairness, whoever could get proposals or accreditation first may get the money.
Ingrid-Gabriela Hoven (Germany) asked for a thorough review to be undertaken after the initial phase and sought clarity on the difference between accredited national entity and the enhanced direct access modality. “Are we creating an additional track for implementing projects at the national level, which would confuse NDAs and national entities?” she asked, adding that they should be “crystal clear” about proposals and their merits. She said that the learning component throughout the decision text should be strengthened.
Arnaud Buisse (France) said it was important to be crystal clear about this track with respect to other tracks. Buisse also sought clarification on whether the amount specified was a grant or a loan.
Responding to the comments by Board members, the Secretariat said that the NDAs would drive the proposals from countries and would come forth with the proposal, which would be consistent with best practices. The Secretariat said that they have tried to rely on the existing framework of the Fund, which includes the monitoring and accountability framework but this could be clarified further.
To ensure that the proposals are not on a first-come first-serve basis, the Secretariat said it has provisioned for the Technical Advisory Panel in the assessment of funding proposals to be included and added that the oversight and guidance of the Accreditation Committee was needed. On the number of projects, the Secretariat said that five was a “meaningful number to let us learn” and clarified that this is a pilot phase, which is meant to be a learning tool.
Towards the end of the discussions, Co-chair Gabriel Quijandria (Peru) said there was unanimity on the issue of enhancing direct access. He said he had heard issues of size, risk mitigation, monitoring and oversight, but no one was against the idea of enhancing direct access.
He suggested to take the draft decision back to the Accreditation Committee and to bring back a new version during the day while incorporating different views. However, the issue could not come up for discussion due to lack of time as the GCF meeting stretched into overtime, concluding in the early hours of 27 March.
It is expected that this issue will be considered by the Board at its next meeting in July.