Capacity Building on Climate Finance ESCAP Policy Dialogue on Infrastructure Finance Strategies

for Sustainable Development

Presented by: Md. Zahangir Alam

Joint Secretary , External Economic Policy Economic Relations Division, Ministry of Finance

Government of Bangladesh

26 January 2017 Kathmandu, Nepal

COUNTRY OVERVIEW Density: 1,090 people per sq.km Population: 156.6 Million Low-lying coastal zone : Sundarban (Satkhira, Khulna and Bagerhat West central coast: Barguna, Potuakhali, Barisal, Bhola and Meghna estuary East central coast: Noakhali and Chittagong South-eastern coast: Chittagong, Cox’s Bazaar & Teknaf

NATIONAL CLIMATE FINANCE AND INSTITUTIONAL ARRANGEMENT

Bangladesh Climate Change Trust Fund • Established under the Bangladesh Climate Change

Trust Fund Act 2010

• Objective: Implementing BCCSAP

• Allocation USD 400 million for seven fiscal year

(from 2009-10 up to 2016-17

• Nature of Fund: Block Budgetary Allocation

• Management : Formation of Trustee Board

• Lead Implementing Organization: Ministry of

Environment of Forests

• Operation through Board of Trustee and Technical

Committee

BCCTF GOVERNANCE ARCHITECTURE

PROJECT PLANNING AND APPROVAL

BCCTF FUND STATUS

BDT 3100 crore (USD 400 Mill) allocated till 2016

• 60% for funding projects

• 40% for responding to emergencies

As of June 2016, 440 projects have been undertaken

• 377 by Government, semi-government and autonomous body

• 63 by NGOs

BCCSAP THEMATIC AREA WISE FUND ALLOCATION

NOTABLE WORK DONE/IN PROGRESS

• 16.4 kilometres of coastal sea dyke constructed.

• 7218 cyclone resilient houses erected.

• 352.12 kilometres of embankments built.

• 156.792 kilometres of river bank protective work done

• 872.186 kilometres of canals excavated/re-excavated.

• 65 water control infrastructures including regulators/sluice gates have been constructed.

• 40.471 kilometres of drainage constructed in the urban areas to reduce water logging.

• 2849 deep tube wells, 30 pond-sand-filters (PSF) and 50 water treatment plants have been installed.

• 1050 water sources and 550 rain water reservoirs establish

• 144.20 million trees have been planted and 4971 hectares of forest land have been brought under afforestation.

• 7800 biogas plants have been installed.

• 528000 improved cook-stoves have been distributed.

• 17145 solar home systems installed in the remote off-grid areas.

• 111000 metric tons of stress tolerant seeds have been produced and distributed.

• 12000 floating vegetables bed in 210 villages are going to establish and 50% have already done.

• A community radio station has been set up for educating vulnerable communities

NOTABLE WORK DONE/IN PROGRESS

AWARDS

CHALLENGES IN ACCESSING CLIMATE FINANCE AND PROSPECTS TO MITIGATE

• Complex guidelines and financing system

• Institutional incapacity

• Weak implementation process due to

- reduced fund

- low ability

- inadequate technology

• Weak project proposal

• Inadequate control over different ministries

DISADVANTAGES OF BCCTF

ADVANTAGES OF BCCTF

• Under government control so can directly reflect national climate change priorities

• Benefits from having the scrutiny of the national parliament

• Uses the domestic public financial management system so avoids parallel systems

• Can be used to encourage capacity building investment in national systems

• Can enhance coordination of climate change activities. • Proper coordination of climate change activities can be

expedited

GREEN CLIMATE FUND (GCF)

STEPS TAKEN TO ACCESS GCF FUND

GCF Funding window

Adaptation

Private sector facility

Mitigation

The First step- - Environment Impact Assessment (EIA) guideline - improving institutional capacity

The second step - enhance the fiduciary standards and project

management capacities

The third step - well designed and credible bankable projects or

programmes

REASONS FOR SUCCESS IN ACCESSING CLIMATE FINANCE

Climate-Resilient Infrastructure Mainstreaming /GCF

• Identification and nomination of national entities to be accredited as NIEs (national implementing entities);

• Allow direct access modality through NIEs apart from regular indirect channel;

• Choose agencies considering its legal status, institutional system and track record for ensuring smooth implementation;

• NIEs demonstrates fiduciary standards and safeguards for accessing and mobilizing GCF. The five basic elements are:

– Core financial and administrative functions

– Good governance

– Procurement process and systems

– Transparency and integrity

– Project cycle management

STRATEGIES TO ATTRACT PRIVATE SECTOR

• Untapped source

• Direct financing projects

• Capacity building and awareness to Bangladeshi financial institutions

• Funding opportunities for both large scale institutional investors and Small and Medium Enterprises (SMEs) in Bangladesh.

• Launching of a SMEs pilot programme,

• Include green or blue bonds- medium/long term instruments; commercial paper- short term debt instruments for banks, sovereign funds and insurance companies

• Business case for private financial or banking institutions to become National Implementing Entities (NIEs) of the Green Climate Fund (GCF)

LESSON LEARNED (BEST EXAMPLES FOR OTHER COUNTRIES)

• Development of Bangladesh Climate Change Strategy and action plan (BCCSAP) 2009

• Enactment of Climate Change Trust Act 2010 • Designating the Economic Resources Division (ERD) to

be the National Designated Authority (NDA) for the GCF geared up finance system to mainstream climate finance with national development finance

• Ministries across the government enable to start mainstreaming it into their regular development plans

• Demonstrating good practice in transparency and accountability of climate funding will support Bangladesh to get more funding

THANK YOU