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Supporting Direct Access at the Green Climate Fund

After speaking to over a hundred stakeholders, the WRI Finance Center is publishing Improving Access to the Green Climate Fund: How the Fund Can Better Support Developing Country Institutions. This paper explains what the direct access process was intended to do, as well as how it is currently going wrong.

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Supporting Direct Access at the Green Climate Fund

  1. 1. SUPPORTING DIRECT ACCESS AT THE GREEN CLIMATE FUND Gaia Larsen and Molly Caldwell
  2. 2. HISTORY OF DIRECT ACCESS AT THE GCF In 2010, when designing the GCF, direct access was central, as one board member stated: “Direct access is important to incentivize and empower developing countries to use their own skills and capacities to shift the business models of existing agencies to be more responsive to the needs of developing countries”
  3. 3. Research Question: How can the GCF improve its support for Direct Access Entities to better ensure that a diverse set of organizations can better obtain access to project funding?
  4. 4. DIRECT ACCESS FROM 2014-2020 • Adaptation Fund and to a lesser extent Global Environment Facility pioneered direct access. • Accreditation requirements at the GCF are “fit-for- purpose”, allowing for a wide variety of entities to become accredited. • Direct access entities at the GCF are a heterogenous group including government ministries and agencies, private for-profit, semi-public institutions, national or regional development banks, and non-profits.
  5. 5. PROJECTS APPROVED • More than two-thirds of direct access entities have not yet reached project approval.
  6. 6. PERCENT OF ENTITIES WITH PROJECTS
  7. 7. PROJECTS APPROVED • 82% of all finance has gone to international entities • While 80% of all projects have gone to international entities
  8. 8. PROJECTS APPROVED 2015-2020
  9. 9. UPCOMING BOARD MEETING • These trends are set to continue with 5 more direct access entities on track to become accredited next week, but only 2 out of 14 projects from direct access entities up for approval and zero full proposals from direct access entities.
  10. 10. 4 KEY PROGRAMS TO DIRECT ACCESS 1) Readiness Support 2) Project Preparation Facility 3) Simplified Approval Process 4) Enhanced Direct Access Pilot
  11. 11. READINESS SUPPORT
  12. 12. WHAT IS READINESS SUPPORT AT THE GCF? • Created in 2014 to help countries put in place the systems needed to access the GCF • Accessed primarily by NDAs and some DAEs • New 2020-2021 strategy provides countries with $1 million per year in funding for institutional capacity and $3 million for national adaptation planning
  13. 13. READINESS SUPPORT & DIRECT ACCESS • Significance to Direct Access: Direct Access Entities can access this form of financial support through Nationally Designated Authorities when they are working on accreditation or formulating project ideas.
  14. 14. DIRECT ACCESS ENTITIES & ACCESS TO READINESS SUPPORT
  15. 15. READINESS PROJECTS THAT HAVE SUPPORTED PROJECT DEVELOPMENT
  16. 16. READINESS SUPPORT KEY TAKEAWAYS • Focus is on for Natonal Designated Authorities over Direct Access Entities • Lack of support for concept note development
  17. 17. READINESS SUPPORT KEY TAKEAWAYS • Long timelines • Restrictions on funding for direct acess entity staff • Limits on covering delivery partner costs • Little flexibility causes delays
  18. 18. PROJECT PREPARATION FACILITY
  19. 19. WHAT IS THE PROJECT PREPARATION FACILITY? • $40 million allocated • Up to $1.5 million per project • As of November 2020- 37 requests approved totaling $23.4 million • Average of $633,000 per proposal
  20. 20. PROJECT PREPARATION FACILITY & DIRECT ACCESS • Significance to Direct Access: All entities are eligible, though designed with the need for entities without resources for project preparation to utilize. • 12 of the 62 Direct Access Entities have accessed the facility
  21. 21. PROJECT PREPARATION FUNDING AT CLIMATE FUNDS
  22. 22. PROJECT PREPARATION FACILITY KEY TAKEAWAYS • Has been accessed largely by entities that have already successfully gotten at least one project approved (68%) • A persistent hurdle for entities as they try to develop projects is getting a concept note endorsed by the GCF. This is a requirement they must meet before they can access PPF funds. • Long timelines (3-15 months)
  23. 23. SIMPLIFIED APPROVAL PROCESS
  24. 24. WHAT IS THE SIMPLIFIED APPROVAL PROCESS? • Launched in September 2017 • Developed in recognition of the barriers that accredited entities were facing in getting projects through the full proposal process • Use for projects under $50 million ($10 million GCF contribution)
  25. 25. SIMPLIFIED APPROVAL PROCESS & DIRECT ACCESS • Significance to Direct Access: Has a specific target for direct access entities of 50% of funding and is meant to streamline process for small low- risk projects
  26. 26. LONG AND EXPENSIVE PROPOSALS • Cost of drafting can range from $100- $150,000 and go as high as $400,000 • The 19 approved SAP proposals have averaged 62 pages (excluding annexes)
  27. 27. APPROVAL TIME FOR SAP PROPOSALS
  28. 28. SIMPLIFIED APPROVAL PROCESS KEY TAKEAWAYS • Similar steps in the review process for regular and streamlined processes • Similar proposal requirements for regular and streamlined proposals • Simplified Approval Process proposals are long and getting longer
  29. 29. ENHANCED DIRECT ACCESS
  30. 30. WHAT IS THE ENHANCED DIRECT ACCESS PILOT? • Approved in July 2015 along with other requests for proposals • Further devolves direct access • Originally had a target of approving 10 projects in 5 years, currently 2 projects have been approved.
  31. 31. ENHANCED DIRECT ACCESS & DIRECT ACCESS • Significance to Direct Access: First request for proposal that allocated resources for direct access entities.
  32. 32. ALL REQUESTS FOR PROPOSALS
  33. 33. ENHANCED DIRECT ACCESS KEY TAKEAWAYS • Additional operations and governance requirements to access funds • A lack of clarity around activities that qualify for funding • Funding size and type may be limiting interest • Advantages over regular project approval process are unclear
  34. 34. RECOMMENDATIONS
  35. 35. TRANSFORM READINESS & PROJECT PREPARATION SUPPORT One Application No Application
  36. 36. TRANSFORM READINESS & PROJECT PREPARATION SUPPORT • Allow preparatory funding to be used where it is needed most, including staff time • Ensure access to high quality information, expertise, peer exchange
  37. 37. PUT THE SIMPLE IN THE SIMPLIFIED APPROVAL PROCESS • Continue to streamline the Secretariat and ITAP review processes • Reduce information requirements by sticking to word and page limits and/or reducing questions in template
  38. 38. MAKE THE ENHANCING DIRECT ACCESS MODALITY EASIER TO ACCESS AND MORE REWARDING • Clarify the benefits of going through EDA – make a greater degree of autonomy than through regular funding window • Make attractive by also encouraging larger projects
  39. 39. THANK YOU
  40. 40. THANK YOU TO ALL INTERVIEWEES

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