Climate Change Financing and Aid Effectiveness Ghana Case Study - OECD. · PDF fileClimate...

Climate Change Financing and Aid Effectiveness

Ghana Case Study

Revised

April 2011

Catherine Cameron

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Agulhas Applied Knowledge

www.agulhas.co.uk

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Table of Contents

Acronyms ................................................................................................................................................ 3

Executive Summary.................................................................................................................................. 5

Introduction ............................................................................................................................................................. 5

Background .............................................................................................................................................................. 5

The Role of Government and private sector ...................................................................................................... 6

The Role of Donors ................................................................................................................................................ 7

The Nature of Climate Change Financing .......................................................................................................... 8

Ghana‘s performance against the Paris Declaration principles ....................................................................... 9

Conclusions ....................................................................................................................................... 10

1. Introduction ....................................................................................................................................... 12

2. Country Context ................................................................................................................................. 13

What development challenges is Ghana facing? .............................................................................................. 13

What climate change is Ghana experiencing? ................................................................................................... 14

What will be the expected future change? ......................................................................................................... 14

What social and environmental impacts of climate change can we expect? ................................................ 15

What is the context for making the most of external finance in Ghana? .................................................... 16

What has been the response to climate change? .................................................................................. 18

3. Ownership ......................................................................................................................................... 19

4. Alignment .......................................................................................................................................... 23

5. Capacity Development ....................................................................................................................... 27

6. Harmonisation ................................................................................................................................... 28

6. Managing for Development Results .................................................................................................... 30

7. Mutual Accountability ........................................................................................................................ 30

8. Conclusion/ Recommendations ......................................................................................................... 32

Disclaimer. The contents of this report are the authors‘ alone, and are not representative of the view of OECD/DAC or AfDB. The authors take no responsibility for any actions and decisions based on the contents of this report.

Acknowledgments: Sean Doolan, of DFID, recently of Netherlands Embassy for introductions, documentation, wider support and facilitation.

Acronyms

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AGI Association of Ghanaian Industries AfDB African Development Bank CDM Clean Development Mechanism CSO Civil Society Organisation DFID Department for International Development DP Development Partner ENRAC Environment & Natural Resources Advisory Council EPA Environmental Protection Agency EU European Union FCPF Forest Carbon Partnership Facility GBS General Budget Support GEF Global Environment Facility GECCA Ghana Environmental Convention Coordinating Authority GHG Green House Gases GNPC Ghana National Petroleum Corporation GoG Government of Ghana GSGDA Ghana Shared Growth & Development Agenda MDGs Millennium Development Goals MEST Ministry of Environment, Science and Technology MLNR Ministry of Lands and Natural Resources MOFEP Ministry of Finance and Economic Planning MRV Monitoring, Reporting & Verification NAMA Nationally Appropriate Mitigation Action NCCC National Climate Change Committee NDA National Designated Authority (of the UNFCCC) NIE National Implementing Entity (of the Adaptation Fund) NREG Natural Resources & Environmental Governance OECD DAC Organisation for Economic Cooperation and Development - Development

Assistance Committee PANJA Pan African Climate Justice Alliance REDD Reducing Emissions from Deforestation & Forest Degradation in Developing Countries UNFCCC United Nations Framework Convention on Climate Change

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Executive Summary

Introduction

This report is one of six that have been commissioned by the OECD/DAC and the African Development bank (AfDB) as part of a regional study on climate change finance1. It follows from (and is co-ordinated with) a similar set of case studies undertaken in Asia, initiated by the Bangkok-based Centre for Development for Development Effectiveness (CDDE) facility2 of UNDP,

again in collaboration with OECD/DAC. The process seeks to strengthen the management of funding for climate change using the framework of the internationally agreed Aid Effectiveness principles. The analysis is based upon a review of literature and data, supported by a number of stakeholder interviews in country, with government officials, donors, civil society and the private sector. This report can only begin to raise key issues and is meant to be a prompt for discussion. As well as setting out the current position, it identifies challenges and makes recommendations. This and the other African country assessments will be brought together into a synthesis report that will seek to stimulate debate in the region and internationally in order to strengthen how the continent responds to climate change. Findings from the country studies will be discussed in a workshop to be held during 2011, with a view to influencing the country and regional response. The vision is that the outcome of the regional African work will combine with that from Asia.

Background Ghana is a signatory to the UNFCCC and the Kyoto Protocol and has been an active participant in the Conferences of the Parties (COP) over a number of years, with a reasonable range of participation and has associated itself with the Copenhagen Accord. Ghana has signed all three of the Rio Conventions (climate change, biodiversity and desertification). Ghana has also produced a list of 55 Nationally Appropriate Mitigation Actions (NAMAs) which is it now working to prioritise down to an expected 5 NAMAs including for cooking fuel and sustainable forest management3. It has also recently drafted its Second National Communication to the UNFCCC and completed its Green House Gas (GHG) inventory. As it is not an LDC it is not required to produce a NAPA. In 2007 the government and donors signed the Ghana Joint Assistance Strategy (G-JAS). The strategy provided a medium-term framework for managing country level cooperation between the government of Ghana and development partners. It underscored a commitment to work jointly towards improved aid effectiveness. Development partners recognise the positive impacts G-JAS has had, particularly in aligning aid to national development priorities and enhancing government leadership for development management. Discussions are underway around the shape of a successor process of joint engagement. Donors currently have a cooperation matrix to

1 The others are Cameroon, Kenya, Tanzania, Morocco, and South Africa. 2 Supported by the Asian Development Bank, Government of Korea, Government of Japan, Swedish SIDA. More information can be found www.aideffectiveness.org 3 See http://unfccc.int/meetings/cop_15/copenhagen_accord/items/5265.php for the list submitted. See also

http://unfccc.int/meetings/awg/items/5928.php for the update by Ghana at the UNFCCC Bangkok meeting in April 2011.

http://www.aideffectiveness.org/

http://unfccc.int/meetings/cop_15/copenhagen_accord/items/5265.php

http://unfccc.int/meetings/awg/items/5928.php

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promote an efficient division of labour and shared understanding. The shared operating framework is provided by the Ghana Shared Growth and Development Agenda (GSGDA) 2010-2013 (which operates as the Medium Term Development Framework). Ghana is already experiencing an increase in extreme weather conditions with higher incidences and more prolonged periods of flooding and drought as a result of climate change. These impacts disproportionately affect the poor. Climate change in Ghana is projected to affect the country‘s vital water resources, energy supplies, crop production and food security. As one recent study noted “Climate change is projected to have significant impacts on Ghana..…it will suffer severe economic consequences.”’4

The Role of Government and private sector

Climate change appears across a range of official documentation, often prepared in response to the demands of the international climate change aid architecture. However, although there is a good understanding of the impacts of climate change on Ghana‘s development among a narrow group key engaged stakeholders in government and civil society, it is not clearly apparent that this is embedded more widely. The adverse impacts of climate change are already being felt in the private sector, particularly the primary exports of cocoa and timber. Discussion is generally at the level of immediate impacts rather than characterised in broader terms. It is less clear that there is any interest or engagement by or with the international private sector (primarily finance and communications companies). The drought in 2007, leading to power cuts due to inadequate hydroelectric power, stimulated widespread discussion of the impacts more broadly but this has not matured. There is some effort to work across sectors in Government, perhaps in part because this had been actively encouraged and supported by key donor partners. In the public domain (press and radio) environmental impacts now focus more on pollution issues particularly in relation to Ghana having just pumped its first oil and the question of gas flaring, along with issues of transparency and accountability and concerns about corruption and capture of oil revenues by a narrow group. The GoG has made a `no gas flaring‘ commitment but may be hampered by lack of alternatives at the practical level of infrastructure. This one example serves to highlight the all too frequent gap become Ghana‘s intentions/declarations/signature against its actual delivery. With the arrival of oil and gas, and associated infrastructure, the private sector could play an increasingly important role in Ghana‘s response to climate change. Neither the government nor donor partners seem to be equipped to address this at present, nor with the part that non-traditional donors might play. Climate change has its own chapter in the GSGDS. There is an evolving institutional architecture with the following broad outline. At the level of the Presidency the Vice President has the overall lead via his Chairmanship of the Environment and Natural Resources Advisory Council (ENRAC). The policy lead is the Ministry of Environment, Science and Technology (MEST) who are the focal point. Within MEST the Environmental Protection Agency (EPA) has the technical lead. The Ministry of Finance and Economic Planning (MOFEP) has a convening role for planning and budgeting. Other Ministries, Commissions and units have varying implementation responsibilities e.g. the Forestry Commission. The government, working with Donor Partners (DPs) has been in the process of finalising a National Climate Change Framework for the last year. There is a multi stakeholder National Climate Change Committee of 24 members including government, four

4 Ghana Country study, Economics of Adaptation, World Bank, Netherlands, DFID, SDC

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from civil society and one donor partner5. The Committee has been supporting the finalisation of the Framework, but progress to date has been frustratingly slow. Two members of Parliament sit on the Committee including an MP and ranking opposition member. Interestingly a Bill for a National Climate Change Commission was tabled and withdrawn last year. The ENRAC was established in February 2010 in response to a lack of clarity at inter Ministerial level. It has since met three times, only once chaired by the VP. It is not yet clear how effective it will be. There is a limited group of over worked individuals in key posts that work to meet the requirements of the international architecture, with limited capacity without additional external support. The failure to complete the National Climate Change Framework and move forward to action plans is a particular case in point now.

The Role of Donors

With the exception of a multi donor sector budget support programme, the Natural Resources and Environmental Governance programme (NREG), progress to date has been more donor-driven, with a tendency towards the piecemeal and fragmented. There is informal ad hoc donor partner coordination on climate change, with a move to re-establish a donor-working group that has fallen into disuse. Funding for climate change is largely provided bi-laterally or through specific funds administered by the World Bank or UNDP and to a limited extent through global funding mechanisms. It is delivered as grants, loans and technical support including for building sustainable institutional capacity around climate change. Donors provide an estimated 40% of their support through general budget support in Ghana. The 2011 Paris Declaration survey for Ghana undertook a field survey of the most prominent PD principles with the following results: Box 1: Most prominent Paris Declaration principles in Ghana

5 Formerly of the Royal Netherlands Embassy, now with DFID, a trusted partner with in depth knowledge, thus

able to participate on the Committee.

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The Nature of Climate Change Financing

Ghana‘s response to climate change has been very good, if not to say outstanding, when measured by signature and in documentation to meet the external requirements of the international architecture. Unfortunately this is not yet matched by delivery in country. The government also has a very good awareness of the possibilities for future climate change financing, particularly via REDD+ and the Adaptation Fund. However the Ministry of Finance and Economic Planning (MOFEP) was recently rejected as the National Implementing Entity (NIE) for the Adaptation Fund. Efforts are underway internally to establish how this happened and to resubmit an application. It should be noted that only 3 countries qualified: Jamaica, Senegal and Uruguay, prompting some speculation that the approvals process is in part a filter mechanism to slow the access to funds from this quarter. However the failure to qualify was a shock to the government and provides a leading indicator of the mismatch between commitment and capacity, quality assurance and delivery. A number of individuals within government have benefitted from attendance, and in some cases, participation in international fora on climate change through the COP 15 and COP 16 processes, but information and awareness is currently not widely shared across government. Donor activities have not, to date, focussed on developing systemic ownership of the agenda across government although the key thought leaders in this group are more and more concerned with this challenge. The intent of NREG was to facilitate this process and this is still possible if the right stakeholders take action in the near term. Funding for climate change is largely at the project level. The notable exception to this is NREG a multi donor multi sector budget support programme of $25-30m pa for 5 years. The review of this programme highlighted that: “Sector support here is potentially game changing’6. Where Ghana is accessing global funding mechanisms, for example for REDD, donors are continuing to provide advice and support to manage these funds on behalf of the government. However funds received to date are not significant, more in the preparatory stage, leading some

6 ODI Mid term review of NREG, Neil Bird 2010

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frustration at government level at the long lead times and onerous reporting requirements that have been met at the international level. There is some talk of `mirage money.’ The work of the Energy Commission provides a rare instance of effective nationwide action taken on both mitigation and awareness raising. There was an energy efficiency drive after 2007 energy crisis resulting in a systemic switch from high energy to low energy light bulbs across the country. The first batches of light bulbs were distributed free with regulation put in place to ban the import of high-energy bulbs. Thus regulation and a one off subsidy have achieved nationwide change. The Commission also has a 20% green fund for installation of renewable energy. However there has been low take up so far – largely from education and civil society organisations and a few wealthy individuals. This is an example of an opportunity with potential that could be taken up more strongly by all parties: government, civil society and the private sector, with the support of DPs, to encourage widespread behaviour change, model best practise and reduce energy consumption that is dependent on less dependable hydro power. With the new buildings programme, which is being financed from oil revenue to come, there is an opportunity to widen the standards beyond electrical appliances to include building materials, standards, water use etc should the government choose to take this very practical response.

Ghana’s performance against the Paris Declaration principles The 2011 Paris Declaration Monitoring Survey has the following findings against the Paris Declaration principles: Ownership

`there has been modest improvement made in consultations and coordination....although stakeholders were of the view that these engagements hade been ad hoc and yet to be institutionalised.’ 7

Alignment

`The Government of Ghana should strive to improve its systems to build the trust of donors to also use them. Annual budget provisions and regular monitoring of progress with such country systems will gradually build trust and confidence in the systems to encourage its use by donors which will then lead to its perfection.’

Harmonisation ` As Ghana continues to develop and improves on its accountability systems, it is expected that DPs will provide significant amounts of aid that can help transform the structure of the economy to promote growth and poverty reduction. Donors should also increase aid to Ghana and ensure that aid is provided in a much more coordinated way whether in the form of projects or budget support.’

It also recommended to donors that they:

`Should also harmonize their aid procedures; the recent pace at harmonization is very slow. There should be a shift from project funding towards pooled or programme funding by ensuring

7 Evaluation of the implementation of the Paris Declaration on aid effectiveness: Phase II, 2011

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that the various projects are integrated into the GPRS to avoid stand-alone projects.’

Managing for development results

`modest improvement’ in the last two years particularly the way aid conditionalities have been developed transparently and in consultation with government and other donors.

Mutual Accountability

`Mutual accountability in terms of resource flow and achievement of results has recorded little improvement over the past two years and goes to confirm Ghana’s recent position on the Corruption Perception Index8. Evidence of improvements can be seen in terms of mutual trust and respect, open dialogue and flexibility between DPs and government.’

Conclusions Climate change is, on paper, a priority for Government of Ghana and is of concern to key civil society organisations. However much of `the response‘ is in fact in response to the demands of the international climate architecture reporting requirements, which detracts from delivery. The strong supporting role of some DPs means that it is possible that climate change is a more donor driven agenda than is immediately apparent, supported by specific funding over the last few years, bolstered by the expectation of significant additional international funding in the near term. The majority of funding for climate change arrives through bi-lateral donor support and only small amounts of funding have yet been accessed from available global funding mechanisms so far. This is a source of some comment on Ghana, which feels it has met onerous reporting requirements in a complex and opaque system with very little direct benefit to show for it to date. Donors are also in principle aligned behind government priorities for climate change but in practice are `not very Paris like’ in their behaviour. NREG is notable exception and has consensus support across government, DPs and civil society. A recent study on the economics of climate change in Ghana concludes that the country has a large existing adaptation deficit that `requires urgent action’.9 The current response will need to be scaled up dramatically if Ghana is to meet the challenge. This will require government to take a strong political lead to drive the climate change agenda and create awareness for climate change activities across all levels of the government and promote systemic change in the key delivery partner that is the private sector, working alongside civil society. Only when the climate change framework is finalised and mechanisms for delivery are in place can the international community can begin to scale up financing to meet the country‘s needs. Until that point, assistance will likely remain too donor-driven and fragmented. There is a need for systemic approach to change which simply delivering flows of climate finance through the international aid architecture cannot address – a systemic response to the energy challenge will support water which will in turn support agriculture etc. An enabling framework would include a response with a number of components including pricing, standards, legislation,

8 Ghana ranks 62/178 in the 2010 CPI, with only South Africa on 54 higher than this of the 5 countries in this study. Morocco ranks 85, Tanzania 116 and Kenya 154. The highest ranked African country on the CPI is Botswana on 33. So it is possible that the PD survey assessment is somewhat harsh relatively speaking, especially when Ghana is compared with its near neighbours in West Africa. 9 Economics of Adaptation to Climate Change in Ghana, December 2010

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regulation, entry points including Chieftaincies and regional and district needs, with the role of a differentiated private sector recognised. Civil society also needs to make a systemic shift from an advocacy led role to widespread practitioner/demonstrator/collaborator and effective watchdog of both government and private sector practice. There is a golden opportunity now with the Economics of Adaptation study estimating costs of $300-400m pa and a very similar number in the anticipated oil revenues of $400m pa now and doubling soon, possibly for up to 25 years. This puts Ghana in a unique position to take leadership in its response to climate change, enabled by a one off windfall of limited oil revenues for a short period10.

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The Renewables Bill with Cabinet now is a case in point.

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1. Introduction Climate change financing has emerged in response to the need for ‗adequate, predictable and sustainable‘11 financing to address climate related issues, particularly in developing countries12. More than 20 global funds have been established since 2002 that seek to do this. Donor partners pledged around US $30 billion at the Copenhagen Conferences of Parties (COP) 15 as a

Fast Start programme for 2011‐2013, and committed to provide US$100 billion annually by 2020 to finance the response. Making the most of these and similar resources will require increased global capacity for coordination, implementation and monitoring. Equally, it will be critical to

put in place effective country‐level governance arrangements to properly manage these resources. The OECD/DAC and African Development Bank (AfDB) has commissioned a number of country level studies in Africa (Cameroon, Ghana, Kenya, Morocco, Tanzania and South Africa) to look at whether the management of the financing of the response to climate change needs to be strengthened, and how this might take place. Together these case studies provide a preliminary assessment of existing mechanisms for climate change financing. Each report provides an analysis of existing national arrangements and sets out country specific recommendations. Individual country reports will be brought together into a synthesis report that will provide an overview of the enabling environment for climate change financing across the continent, which will be discussed at a workshop to be held in 2011. This African work follows from and is co-ordinated with a similar set of case studies undertaken in Asia, initiated by the Centre for Development for Development Effectiveness (CDDE) facility13 of UNDP in collaboration with OECD/DAC. It is intended that the findings from all the case studies will be collated to support the strengthening of the global response to climate change. We have learnt much over the last decades about what makes external financing for development work better, and what inhibits it from doing so. This report places climate change financing within the wider development context, and in particular in relation to the Aid Effectiveness principles articulated in the Paris Declaration (PD) and the Accra Agenda for Action (AAA). It makes no judgement on whether the external finance is classified as Official Development Assistance or not. Rather it seeks to use the experience of how external financing works as articulated in the Paris Declaration, as a benchmark. In doing so it looks at existing climate change-financing mechanisms in Ghana and assesses the extent to which principles of aid effectiveness are being applied.

The analysis is based upon a review of literature and data, supported by a number of stakeholder interviews in country, with government officials, donors, civil society and the private sector. This was, however, a rapid exercise, and is not a comprehensive study. It can only begin to raise key issues and is meant to be a prompt for discussion. As well as setting out the current position, it identifies challenges and makes recommendations.

11 UNFCC 2007, Bali Action Plan 12 OECD 2009, Climate Change and Development: Key Principles to Inform Climate Change Financing 13 Supported by the Asian Development Bank, Government of Korea, Government of Japan, Swedish SIDA. More information can be found www.aideffectiveness.org

http://www.aideffectiveness.org/

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2. Country Context

What development challenges is Ghana facing?

Ghana was the first sub-Saharan African nation to gain independence from the UK in 1957. After an unstable period during the 1908s, Ghana has lately been seen as a model for political and economic reform in Africa. Indeed it has had something of a reputation as a `donor darling‘ over the last two decades. Ghana has had a solid economic growth rate of 5.2% (on average) over the decade 1998-2008, with a rate of 7.3% in 2008 and an expected growth rate of 9.5% for the period 2008-201214. The global economic recession in 2008 was followed by Ghana securing a $600m three-year loan from the IMF in 2009. Notably, Ghana plays an important regional role, particularly relating to peacekeeping role in West Africa; it has troops in Cote D‘Ivoire, Liberia and Sierra Leone and also the Democratic Republic of Congo. Politics in Ghana has been relatively stable in the last decade with President John Kufuor serving two four-year terms (2001-2008). The current President, John Atta Mills, succeeded him in January 2009. Mills had been the Vice President of Jerry Rawlings, who served as democratically elected President from 1993-2001 after coming to power originally through a military coup in 1989. President Mills has a tiny majority (less than 0.5%) and there is widespread expectation that he will not be re-elected in the elections scheduled for 2013. His Northern Vice President is popular and powerful with a higher public profile. Women remain underrepresented in public life, however the proportion of seats held by women in Parliament has risen from 6% in 2000 to 15% in 2009.

Box 2: Achievement of the Millennium Development Goals in Ghana MDG 1: Eradicate extreme poverty and hunger According to the WDI database the prevalence of undernourishment in the population has remained at 5% since 1990. Income data is incomplete thus it is hard to assess progress for this key indicator. The World Bank estimates 29% of the population are below the national poverty line with child malnutrition at 14%. MDG 2: Achieve universal primary education: Primary school enrolment was 100% in 1990. It dipped to 96% in 1995 and rose to 100% in 2009. MDG 3: Promote gender equality and empower women There has been parity in enrolment in primary school education, this falls slightly in secondary education with girls falling to 95% of boys and girls outnumber boys in tertiary education at 110%. MDG 4: Reduce child mortality Child mortality fell from 7 deaths per 1,000 live births in 2000 to 3 in 2009. MDG 5: Improve maternal health Maternal mortality rates are also low at 2 per 100 000 live births (on a modeled estimate).

14 World Bank devdata 2010

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MDG 6: Combat HIV/AIDS, malaria and other diseases The prevalence of HIV/AIDS is also low at 0.2% of the population aged 15-49. MDG 7: Ensure environmental sustainability CO2 emissions are low but will shortly rise with gas flaring and oil pumping. Forest area as a percentage of land area is apparently increasing slightly to 30% but much of this is very degraded. 100% of the population has access to a water source of some kind. MDG 8: Develop a global partnership for development Part of this MDG aims to make available the benefits of new technologies, including communications. In Ghana, the number of mobile phone subscribers has increased from 54 for every 100 people in 2000 to 123 in 2009.

World Development Indicators database December 2010

Perhaps the most significant challenge, however, facing Ghana is how it will adjust to managing the revenue from the developing oil finds, which came on stream in December 2010. A recent report suggests that these finds (which although are large are not on the same scale as those of Nigeria) will increase annual growth rates up to 12%.

Ghana enjoys a high degree of media freedom with press and broadcasters operating without significant restrictions. The private press is active, with criticism of government policy and performance common. Radio stations carry satirical coverage of recent events with lively phone in programmes on, for example, citizen‘s concerns around corruption and transparency related to the country‘s potential oil revenues. There are moderate levels of Internet penetration at 43 per 10015 and adverts in the national press encouraging the uptake of new technology to strengthen personal education and advancement.

What climate change is Ghana experiencing?

`Drought and crop failure are causing frustration and despair.’16

Ghana is already experiencing an increase in extreme weather conditions, with higher incidences and longer periods of flooding and drought. Temperatures have warmed by 1°C over the past 30 years.17 Ghana has a warm and comparatively dry south east coast, is hot and humid to the south west and hot and dry in the north. From 20 year observed data, temperatures in all zones are rising, whereas rainfall has been reducing and becoming increasingly erratic. The seasonal distribution of rainfall is particularly important for the maintenance of the ecology and current agricultural production.

What will be the expected future change?

`Climate change is projected to have significant impacts on Ghana.’18

The Government notes that `Ghana‘s climate is already unpredictable and the country can

15

But note that 2008 data from the UN country profile says 4.3 and World Bank 2010 country profile says 43.1. Other data are also inconsistent e.g. on access to water. Some of the reported data also looks somewhat optimistic. 16 Ghana Talks Climate, BBC World Service Trust, May 2009 17

Ghana 2nd National Communication to the UNFCCC, February 2011 18

World Bank Economics of Adaptation, Ghana country study, December 2010

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expect more intense weather events, such as torrential rains, excessive heat and severe dry winds as a result of climate change.‘19 Temperatures in Ghana are already high with a mean annual temperature above 24°C. Average figures range between 24°C and 30°C although temperatures ranging from 18 – 40°C are more common20. There will be warming for all regions, particularly the three Northern regions with increases of between 2.1-2.4°C by 2050. This falls to 1.7-2°C for the Central regions and to 1.3 to 1.6°C for the southern regions. The forecast for precipitation gives a cyclical pattern over 2010-2050 for all regions, with high rainfall levels followed by drought every decade or so. Changes in run off and stream flows will increase the risk of floods and/or droughts in both rural and urban areas. Since most of the changes in river levels will result from climate change in upstream areas outside the territory of Ghana, the government has identified the need for increased regional dialogue in the management of shared water resources.

What social and environmental impacts of climate change can we expect?

`Severe economic consequences from climate change.’21 The predicted changes in climate will have adverse social and environmental impacts including on human well-being, food security and water availability. The high dependence on agriculture poses serious socio- economic consequences, particularly given the importance of cocoa to both export earnings and farmers‘ livelihoods (cocoa remains the dominant crop across much of the country). Damage to the coastal zone in the form of flooding, land loss, and forced migration is projected to be $4.8 million per annum by the 2020s, rising to $5.7 million per annum by the 2030s. The total economy wide impacts are estimated at US$158-765 million per year. (The range of estimates by sector include Agriculture up to $122m, transport up to $630m and hydroelectric up to $70m). Incomplete partial equilibrium modelling puts economy wide adaptation costs in a mid range of $300-400m per annum.22 There is an interesting mirror here in the numbers anticipated from oil revenues to government (some $400m per annum in the initial phase, expected to double and possibly last for some 25 years). These cost and revenue estimates have only recently been published and it is therefore too soon to determine how government will respond. Without a clearly specified approach for building up climate change resilience, it is unlikely that future escalations in economic and social costs can be avoided. A ‗last resort‘ response will include migration in search of better land and livelihoods. The migration and relocation of population from rural to urban areas will raise demand and put pressure on municipal services—including water supply and sanitation, public health, energy, transportation, and housing services. Such higher demand coupled with weak or inadequate infrastructure and lack of or poor services will slow economic growth and development. Migration is likely to occur not only within the country, but also from countries to the north of Ghana, which will also become hotter and drier. Those most likely to be affected by climate change impacts are the poor, both in rural and urban areas, who are unable to access the resources needed to adapt. People‘s health will also be affected by climate change, for instance through the increasing incidence of malaria and

19

Ghana 2nd National Communication to the UNFCCC February 2011. 20

Op.cit. 21

World Bank Economics of Adaptation, Ghana Country study, December 2010 22

Economics of Adaptation to climate change: Ghana country study, December 2010

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increased or prolonged periods of rainfall could lead to epidemics of dysentery, cholera and meningitis.

The Second National Communication lists the Government of Ghana‘s main concerns as follows:

Box 3: Potential impacts of climate change identified by Government of Ghana

Increased pressure on water, reducing the potential for hydropower

The impact on agriculture, with reduced yields leading to more poverty and food insecurity, and the loss of national revenue from cash crops such as cocoa

Increased migration, that will add to the pressure on urban services

Deteriorating health as a result of increased disease and reduced access to water and food compounded by the disruption to the delivery of health services, e.g., flooding of health facilities, and the loss of transport infrastructure

Severe impacts on land use, leading to loss of biodiversity and soil fertility, land degradation and increased deforestation.

The impact on women, who are particularly vulnerable to the impact of climate change, given their higher levels of poverty and their responsibilities for household water, food and fuel.

What is the context for making the most of external finance in Ghana? The country‘s medium term development strategy is captured in the Ghana Shared Growth and Development Agenda (GSGDA) for 2010 – 13. Its predecessor, GPRS23 II, was supported by the Ghana Joint Assistance Strategy (G-JAS) from 2007-2010, as the Development Partner‘s (DP) commitment to better cooperation and joint programming. Development partners recognise the positive impacts G-JAS has had towards increasing aid effectiveness, particularly in aligning aid to national development priorities and enhancing government leadership for development management. A review of joint working is currently underway, including discussions around the shape of a successor process of joint engagement. Donors currently have a cooperation matrix to promote an efficient division of labour and shared understanding. They currently meet on an ad hoc basis to coordinate their actions. It is notable that at the time of this case study several respondents observed that there was an apparent waning of commitment amongst traditional donors to providing ongoing support to the principles of the Paris Declaration. It is also notable, and of some concern, that newer donors/lenders are not part of this process. e.g. China. It is not clear if this is because newer players are less interested in the more traditional DP ways of working or if traditional DPs regard the incomers as outside their scope. The current review of joint working is expected to make specific recommendations on how DPs might co-ordinate in the future.

Box 4: Principles of the Paris Declaration Ownership

Ownership is the foundational principle of the Paris Declaration. Development is something that must be done by developing countries, not to them. Policies and institutional reforms will be effective only so

23

Ghana Poverty Reduction Strategy

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far as they emerge out of genuinely country-led processes. External assistance must be tailored towards helping developing countries achieve their own development objectives, leaving donors in a supporting role. Alignment Under the Paris Declaration, the principle of alignment refers to two important changes to aid practice. The first is that donors should base their support on the partner country‘s development priorities, policies and strategies (‗policy alignment‘). The second is that aid should be delivered as far as possible using country systems for managing development activities, rather than through stand-alone project structures (‗systems alignment‘). Harmonisation Harmonisation refers to cooperation between donors to improve the efficiency of aid delivery. Donors are aware that multiple initiatives by different donors, each with their rules and procedures, can be very draining for developing country administrations. To reduce the transaction costs of aid, donors have been developing a range of new approaches, including programme-based approaches, pooled funding arrangements, joint country plans and other common arrangements. Managing for Results Managing for results is a general principle of management that involves using information about results systematically to improve decision-making and strengthen performance. In the development field, it means ensuring that all development activities are orientated towards achieving the maximum benefits for poor men and women. It means ensuring that all initiatives, from individual aid projects through to national development strategies, are designed so as to generate performance information and use it for continuous improvement. Mutual accountability Mutual accountability is perhaps the most controversial of the Paris principles, and the most difficult to put into practice. It suggests that, in a true development partnership, there are commitments on both sides of the relationship, and both donors and partner countries should be accountable to each other (‗mutual‘ accountability) for meeting those commitments. However, there are also many other accountability relationships involved in the development process that need to be taken into account.

One of the innovative aspects of the Paris Declaration is that commitments are reciprocal in nature, applying both to donors and to developing countries. This is an advance on its predecessor, the Rome Declaration, where the commitments were all on the donor side, and to traditional aid practices where the obligations were mostly on recipients. Reciprocal commitments create for the first time the possibility of mutual accountability.

Ghana has participated in all three Paris Declaration Monitoring Surveys in 2006, 2008 and 2011. Conclusions from the latest survey indicate that Ghana has made moderate progress in terms of Ownership, significant improvement in Alignment, mixed improvement in Aid Harmonisation, (with reservations about the largely separate role of the BRICS), modest improvement in Managing for Results and little improvement in Mutual Accountability. At a global level the 2008 Paris Declaration Monitoring Survey found that progress being made on aid effectiveness was insufficient to meet international commitments and targets by 2010. Recommendations focused on strengthening country ownership and capacity, increasing accountability over development resources, more cost effective aid management, for example

through Programme‐Based Approaches (PBAs), and a stronger division of labour24. It is

24 OECD 2008 Survey on Monitoring the Paris Declaration

http://www.oecd.org/dataoecd/54/50/31451637.pdf

http://www.oecd.org/dataoecd/54/50/31451637.pdf

18


important to draw on this evolving policy direction when considering recommendations for strengthening the governance arrangements of climate change financing25 (see below). The following principles have been developed by the OECD/DAC to encourage lesson learning from previous development experience and ensure complementarity between development and climate change objectives in the future26. Box 5: OECD DAC Key Principles to Inform Climate Change Financing

Ownership

Activities in response to climate change should be country‐driven and be based on needs, views and priorities of partner countries. National sustainable development strategies and climate change policies should be taken into account where they exist. Recipient countries should lead in establishing and implementing their climate change strategies in a broad consultative process ensuring full integration into policies, plans and programmes in all relevant sectors.

Alignment

Climate change financing needs to be integrated into countries‘ own planning and budgeting mechanisms to ensure genuine ownership. Where possible, new and additional climate change financing is channeled through countries‘ existing financial allocation systems.

Capacity Development

Capacity development is critical to ensure that recipient countries have the sufficient capacity to absorb and manage climate change financing.

Harmonisation

To reduce administrative costs, it is important that the international community coordinates their actions, simplify procedures and share information to avoid proliferation and duplication of funding mechanisms. A shift to programmatic approaches can help.

Managing for Development Results

The Bali Action Plan acknowledged the challenge of yielding actual results on the ground and stressed the need for actions to be undertaken by Parties to implement the convention to be ―measurable, reportable and verifiable (MRV)‖

OECD Factsheet October 2009

The following considers Ghana‘s current activities in the light of these principles.

What has been the response to climate change? The government‘s response to climate change has been highly visible at the international level. Ghana is active in many negotiations - e.g. vulnerable countries/ Maldives, Cartagena, St Petersburg dialogue - and in African Group and ECOWAS planning. Ghana is in active discussion on Green Africa Power27. However at the national level, the response is less clear, with an apparent contrast between action and documented intent. There is limited evidence of climate change as part of the political discourse. It remains a largely technical issue. There is little knowledge or demand for the challenge to be dealt with systemically or at the level of transformational change required. The response would thus appear to be more externally driven to date. Donor efforts to encourage a shift to more systemic and integrated action are manifest in the

25 See for comparison Nigel Thornton 2010, Climate Change Financing and Aid Effectiveness: Cambodia Country Analysis 26 Climate Change and Development: Key Principles to Inform Climate Financing, OECD DAC, 2009 27

Green Africa Power is a new multilateral mechanism being developed to mobilise private investment for the construction of power plants in

Africa based on renewable energy. The facility is to be a not-for-profit company that buys electricity produced by independent power producers for a price that reflects real costs, and resold to African national utilities.

19


2008 Natural Resources and Environmental Governance (NREG), a multi donor budget support sector programme over 5 years. Donors include Agence Francaise de Developpement (AFD), DFID, the EC, the Netherlands, and the World Bank, pledging $77m over the period. This pooled funding is channeled through the Ministry of Finance and Economic Planning (MOFEP) to support the forestry and wildlife, mining, and environment protection ministries. MOFEP then distributes the funds to relevant recipients such as MEST, the Forestry Commission and Mining Commission. Prior to this the Ghana Environmental Sector study (SNV, 2007) highlighted that in 2005/06 ten international agencies were supporting 28 separate projects implemented by the Environmental Protection Agency. These projects had different reporting, contracting and procurement standards making it difficult for donors to be well coordinated. At the same time they duplicated government‘s own systems. A review by ODI, subsequently highlighted in the report to Committee found that for NREG:

`Two years into the implementation of the programme, there is an emerging consensus among both government and development partners that strong progress is being made. This progress is both broad ranging across all three sub-sectors involved, and is tackling some of the more challenging aspects of environmental governance, related to natural resources revenue flows and reducing social conflict around natural resource utilisation.

Perhaps most importantly, there is a sense within the participating government agencies of ownership over the programme. This is in contrast to some preceding externally supported initiatives in the sector. This sense of national ownership provides the best foundation upon which future environmental protection can be built.’28

Without this programme the response of both government and donor partners would look much more incremental and externally focused rather than the transformational and country focused approach that is required.

3. Ownership

The 2011 Paris Declaration Monitoring Survey noted that:

`there has been modest improvement made in consultations and coordination.... although stakeholders were of the view that these engagements hade been ad hoc and yet to be institutionalised.’ 29

Ghana is a signatory the UNFCCC, the Kyoto Protocol and the Copenhagen Accord. The UNFCCC requires that each country have a National Focal Point and a National Climate Change Committee. Ghana has also produced a list of 55 Nationally Appropriate Mitigation Actions (NAMAs), which it is now prioritising. The intention is for the focal points to act as a point of engagement with the global agenda, and also that they seek to ensure the domestic response is co-ordinated. The Focal Point for REDD is the Director, Forestry Commission which comes under the in the Ministry of Land and Natural Resources. The Environmental Protection Agency (EPA) within the Ministry for Environment, Science and Technology (MEST) has shouldered much of the reporting burden as the UNFCCC focal point, producing for instance the Second National Communication and the GHG inventory most recently.30 The

28 ODI submission to Environmental Audit Committee `The impact of UK overseas aid on environmental

protection and climate change adaptation and mitigation.‘ Written evidence submitted by Neil Bird

29 Evaluation of the implementation of the Paris Declaration on aid effectiveness: Phase II, 2011 30

The key member of the EPA has recently moved to the UNFCCC in Bonn.

20


EPA is small and heavily stretched and has recently lost its key stakeholder to the UNFCCC in Bonn. Given the very scarce staff resources the external reporting requirements have had the perverse effect of diverting effort from a focus on action within country. Informally, as elsewhere, the process of climate change negotiations has also provided some individuals, including elected officials, with an opportunity to benefit in terms of status, allowances and international exposure. This has skewed incentives for political engagement around climate change. Across the administration, the Minister of Environment, Science and Technology champions climate change. There is a cross-sector and multiple-stakeholder National Climate Change Committee (which includes some MPs) and the theme is also formally overseen across the administration under the Environment & Natural Resources Advisory Council (ENRAC – officially chaired by the Vice President).31 Whilst other consultative structures have also been established (notably the Carbon Credit Trading Committee) it is not clear how functional they are in practice and to what extent they truly encourage national ownership for climate change. For instance, ENRAC has met only 3 times since 7th May 2010 when it was inaugurated, and only once has it been chaired by the Vice President (at inauguration). However, it should be noted that there has been an effort by government to improve outcomes around climate change by the agreement to channel funding through MOFEP and to set up ENRAC, and it could be early days in the development of a co-ordinated response. Whilst outside of government citizens in Ghana are becoming increasingly aware of climate related issues (for example the changing seasonality and intensity of rainfall, reduction of water sources impacting on availability of hydropower, and the impacts of sea level rise, decline in cocoa production) they make little distinction between environmental degradation and climate change. Their concern is not climate change itself, but what these particular environmental impacts mean for their day-to-day existence. The 2009 BBC World Trust ‗climate hearings‘ in Ghana32 reported that while citizens do not link environmental impacts to changes in global weather patterns or carbon emissions; other explanations are often provided. These include changes being ― Will of God‖ or caused by tangible local activity such as deforestation.

`There is a strong tendency for Ghanaians to hold themselves individually and collectively responsible for local changes in weather.’

They believe that their own activities, such as cutting down trees and burning the bush, have directly brought about these changes‘. Climate change terminology is poorly understood and does not have standard translations into Twi and Dagaare. ―Opinion leaders agree on the need to raise awareness of climate change. Yet there has been a tendency to focus on addressing the causes of climate change rather than adapting to its impacts.‖33 As a result, there is not a broad demand from constituents for politicians to own the response agenda to climate change, and thus little or no domestic accountability pressure for achievement. A lack of political accountability to citizens allows climate change in Ghana to be more driven in response to internationally-led agendas and dominated by the interests of the few technical

31 ―Membership should be ten or eleven in number including Vice President, Ministers of Food & Agriculture, Local Government

and Rural Development, Environment Science and Technology, Lands and Natural Resources, Finance and Economic Planning, Energy, Water Resources, Works and Housing, Representatives of the Private Sector, President of the National Hose of Chiefs and a Representative of Civil Society‖ 32 Daniel, L (Ed) 2009 “Ghana Talks Climate: the public understanding of climate change‖. BBC World Service Trust, British Council 33 Ibid

21


experts rather than linked to pressing national priorities experienced and expressed by Ghanaians themselves. Specifically, international reporting requirement have largely led the institutional response to climate change thus far. However, there does appear to be cross-party political support for climate change emerging at a general level with both the main parties being represented on the National Climate Change Committee. Yet, while supportive of Ghana having a response, as noted, politicians are not yet playing a role in setting the policy agenda for Ghana‘s response to climate change with the exception of the Minister for MEST and possibly the Vice President. The Minister is keen to promote a low carbon growth policy, following advice from the US-based management consultancy McKinsey‘s last year, but there is an absolute lack of clarity within government about how this is to be achieved now that Ghana is pumping oil and may have to flare gas, in spite of a no gas flaring policy. As a recent World Bank mission report points out `Ghana is a low carbon economy.‘34 However the recent GHG inventory shows a marked transition, with both the loss of previous forest carbon sink (the subject of REDD/FLEGT instruments) and rapid rise in emissions, especially energy and transport. These do not yet reflect the more recent rapid growth or the oil and gas stimulus. It should also be noted that while this is important, the popularity of the low carbon growth concept in some quarters appears to detract from any serious efforts to also put in place a systemic response to the adaptation challenges identified by the population in the World Service work, the recent Economics of Adaptation country study and in feedback received by civil society organisations such as Friends of the Earth or IUCN. A number of national NGOs work on climate change issues, usually with DP support around very specific themes or events rather than more broadly. Climate change merits a chapter in the medium term GSGDS after strong efforts by the EPA in MEST. The document includes some helpful wording on, for example, sustainable natural resource management. However broader policies relating to climate change are not yet sufficiently developed or integrated into the work of line ministries and their sector programmes. Where programmes or discussions have included these individuals at the Ministerial level, there has again been partial engagement, and little evidence of a systematic approach to climate change that could really begin to drive wider government awareness and incentives for engagement. A national climate policy framework is under preparation by the National Climate Change Committee. Progress has been frustratingly slow. A report is outstanding from a recent workshop to take the process forward, with some stakeholders searching for a more coherent process. The extent to which the private sector will be consulted is unclear. The donor and government mantra is for greater engagement with the private sector but in practice there is little differentiation between the very different segments and drivers within this group or consideration of where the most useful entry points might be. Ideally the climate framework will provide clear leadership on adaptation, mitigation and the need for cross-sector financing of climate change activities. However a formulaic approach involving seven pillars (rather than a strategic look at who does what best, what the risks and opportunities are and the best entry points) is not initially encouraging. Challenges are expected, not least in relation to the current lack of capacity within government to identify additionality. Ghana has yet to qualify for any CDM projects. This is a source of some frustration as several

34

Ref

22


have been under development over the last few years.

Box 6: Additionality

1. In Kyoto project‐based mechanisms (i.e. Clean Development Mechanism and Joint Implementation projects) additionality describes that a carbon dioxide reduction project would not have occurred had it not been for concern for the mitigation of climate change. It is thus beyond ―business as usual‖ project. To qualify funding, a project has to demonstrate additionality. 2. Additionality for climate change financing can also refer to donors providing funds beyond ―business as usual‖ ODA levels, in order to enable communities and countries to adapt to climate change impacts. This means identifying the additional cost to development programmes and projects that adapting to climate change will require. It is also an area of considerable international debate, since developing countries argue, as they did at COP15 in Copenhagen, that this financing should not be classed as ODA.

Advocacy on climate change at the regional level is being driven through the Pan-African Climate Justice Alliance (PACJA), which networks African civil society from 43 countries. PACJA seeks to advocate, lobby and create awareness on the need to integrate climate change into laws, policies and practices in broader sustainable development and poverty reduction strategies in African countries35. International organisations with country offices provide a vital link to an alternative perspective, beyond the international reporting requirements of the UNFCCC and donors. Friends of the Earth and the International Union for the Conservation of Nature (IUCN) play such a role in Ghana. Such organisations, whether working with PACJA, could provide an important platform for discussion and lobbying around e.g. cross-border resources. Without the growing international focus on climate change and the stringent demands of the international climate change architecture, it is unlikely that climate change would feature as a political issue in Ghana. The lack of real domestic political salience means that policy development, co-ordination and implementation are fundamentally constrained. It is not yet widely owned. Challenges to increased ownership include:

Knowledge and awareness around climate change is narrow and needs strengthening

National framework for climate change still under preparation

Climate change is largely an externally driven agenda, with existing mechanisms built around international architecture

Focus remains access to finance, not achievements in support of Ghana‘s development.

Opportunities for increased ownership include:

The debate around oil and gas is highlighting the lack of clarity about national policies, providing an opportunity to widen public debate

35

Pan African Climate Justice Alliance Website, 2010

23


Building on the leadership of MEST and agreement to channel funds through MOFEP and encourage completion of the policy framework

Increasing donor and civil society awareness of the need to work with the private sector

Broadening the understanding of different entry points e.g. Energy Commission, use of standards, regulation and legislation and other measures less reliant on external financing.

4. Alignment

As in most African countries, external funding to Ghana operates on three levels; global funding streams (which may be from global funds or out of donor headquarters), local bilateral funding, and regional programmes (notably those funded by the IDRC). The 2011 Paris Declaration Baseline Survey for Ghana showed total ODA as a percentage of GDP at 12.8%. Of this some 41% of this was budget support and 56% as project aid, indicating a poor to moderate level of alignment between donor strategies and financing and government priorities as set out in the GSDA. The actual numbers are shown in the table below.

Table 1: Ghana ODA Envelope in Millions US$ (2003-2010) 2003 2004 2005 2006 2007 2008 2009 2010

Total 1003.0 1130.1 1205.8 1471.8 1656.5 1649.6 2102.5 1896.8

IMF 76.6 38.7 38.2 116.6 0.0 0.0 200.0 200.0

Debt Relief Grants HIPC MDRI

154.2 154.2

0.0

174.1 174.1

0.0

196.9 196.9

0.0

307.3 209.8 97.5

342.7 246.1 96.6

229.5 158.4 71.1

289.6 191.9 97.7

235.8 168.8 67.0

Budget Support MDBS SBS Swap Earmarked

277.9 277.9

0.0 0.0 0.0

316.7 309.0

7.7 0.0 7.7

313.2 281.9 31.3 0.0

31.3

349.3 312.2 37.2 0.0

37.2

386.7 316.6 70.1 12.1 58.0

473.1 368.1 104.9 15.2 89.8

700.4 525.2 175.2 86.9 88.2

619.2 451.2 167.7 81.2 86.5

Project Aid 494.4 600.6 657.5 698.6 927.0 947.0 912.5 841.8

GDP Total ODA (% of GDP)

7621 13.2%

8853 12.8%

10726 11.2%

12729 11.6%

14984 11.1%

16085 10.3%

14385 14.6%

14870 12.8%

Despite improvements in financial management systems a number of challenges remain that continue to impact upon the use of country systems by donors, particularly in accounting and financial reporting, especially at the local levels. Some 41% of all external funding is general budget support, which is fully integrated in the national budget process. The rest is implemented in Ministries or at local level. There are gaps between actual disbursements and the annual budget estimates, resulting from problems with tracking expenditure, in particular the non-GBS funds provided through basket and project funding. Donor assessments indicate the need for further strengthening of capacity in government institutions and systems. The recent Paris Declaration survey recommended that: `The Government of Ghana should strive to improve its systems to build the trust of donors to also use them. Annual budget provisions and regular monitoring of progress with such country systems will gradually build trust and confidence in the systems to encourage its use by donors which will then lead to its perfection.’ These capacity problems, and more clearly the lack of a finalised national climate change framework continue to hinder alignment of external climate change financing behind government priorities. However, a core group of donors are supportive in principle (those

24


supporting the 5 year NREG). There is, however, recognition that developing a framework and implementing it are different things. Action plans are proposed once the framework is agreed. The lack of a domestic climate change framework, and the different mechanisms of finance provision, result in a minority of external funders promoting both their individual interests and projects at the same time as supporting the international mechanisms and vertical funding channels, e.g. GEF, in which they are stakeholders. This incoherence can result in the creation of parallel activities and funding streams for similar activities. The donor approach in Ghana to date has been more supply driven than is preferable. It has not, fundamentally, built wider local ownership around which external support can co-ordinate nor sought to build domestic accountability that will drive alignment and ownership. The international climate change architecture has played a perverse role in this dynamic, with central allocations for specific purposes (for example for REDD) often being time-bound offers and subject to pressure from international capitals. Whilst Ghana is a signatory (and therefore participant in) the international conventions and mechanisms such as the UNFCCC36 and UN REDD37, as an individual country it has limited power to influence the global ―rules of the game‖ for climate change financing. The global mechanisms governing how countries such as Ghana access funds (for instance the Clean Development Mechanism, REDD, the Adaptation Fund, the Global Environment Facility Funds) are arguably set in international capitals. The mechanisms for access to the range of climate funds available are all managed out of international agencies based in northern capitals. The dominant institutions are the UN (particularly the UNDP), the World Bank and the EU. Ghana has to initiate specific processes and implement structures defined by these international organisations if it wishes to participate in the global response, and access the available funds. However, donors are beginning to provide technical assistance to line ministries to help build the capacity of individuals and systems to manage the response to climate change. The following sets out examples of current or recent climate change activities, with funders where known. Samples of the completed activities are referred to in the main text of the report.

Table 2: Examples of Climate Change related activities

Keywords Description Recipient/Implementer Start End

Co

mp

lete

d

Adaptation Netherlands Climate Change Studies Assistant Programme (NCCSAP) Ghana Phase One

IVM 01-Jan-96 31-Dec-00

Adaptation Netherlands Climate Assistant Programme (NCAP) Ghana Phase Two

ETC International 01-Jan-04 31-Dec-07

Adaptation Economics of adaptation to climate change World Bank 11-Dec-07 31-Mar-10

Energy efficiency Transformation of lighting market from incandescent to CFL bulbs

Energy Commission 01/01/2007

31/12/2007

Climate strategy Initial National Communication (INC) UNDP 16-Dec-97 31-Jan-01

Transport Vehicle emissions programme EPA 01-Jun-05

On

g

oin

g

Adaptation CARE Adaptation learning programme for Africa (ALP)

CARE 01-Jan-10 31-Dec-14

36

Untied Nations Framework Convention on Climate Change 37

United Nations collaborative initiative on Reducing Emissions from Deforestation and forest Degradation

25


Table 2: Examples of Climate Change related activities

Keywords Description Recipient/Implementer Start End

Agriculture Innovative Insurance Products for Adaptation to Climate Change (IIPAC)

GTZ 01-Dec-09 30-Jun-13

Adaptation Africa Adaptation Programme UNDP 15-Dec-08 14-Dec-11

Adaptation CC DARE – Climate Change and Development Adapting by Reducing Vulnerability

UNDP 01-Aug-09 30-Nov-10

Forestry and land management

Sustainable Land Management in Ghana MEST 11-Jun-10 31-Oct-15

Water management

Ghana Urban Water Project Unknown 27-Jul-04 31-Dec-12

Social development

Ghana Community-Based Rural development MLGRD - Ministry of local government and rural development

29-Jul-04 30-Jun-11

Climate change Integrating Climate Change into the Management of Priority Health Risks

MoH 01-Oct-10 31-Dec-13

Water management

Ghana Sustainable Rural Water and Sanitation Project Community Water and Sanitation Agency (CWSA)

23-Jun-10 30-Jun-16

Energy efficiency Promoting of Appliance Energy Efficiency and Transformation of the Refrigerating Appliances Market in Ghana

UNDP/GEF Trust Fund

01-Jan-11 31-Dec-13

Renewable energy Ghana Energy Development and Access Project GEDAP (formerly) Development of Renewable Energy and Energy Efficiency

ECG 26-Jul-07 30-Nov-13

Renewable energy Integration of renewable energy sources into the national energy grid mix (in preparation)

Unknown 2011

Renewable energy Solar PV Systems to Increase Access to Electricity Services in Ghana

GoG 10-Oct-08 31-Dec-11

Transport Ghana Urban Transport MRH/GEF Trust Fund 21-Jun-07 31-Dec-12

Transport Transport Sector Project GoG 30-Jun-09 30-Jun-15

Climate strategy Natural Resource and Environmental Governance Program (NREG)

GoG 01-Sep-08 30-Sep-12


Growing Forest Partnership (GFP) IUCN


Forest Investment Program (FIP) Unknown 01-Jul-09


Voluntary Partnership Agreement (VPA) MLNR 2009


Ghana Readiness Preparation Proposal (R-PP) FC

31-Jan-10


REDD+ R-PP Implementation FC 01-Jan-10 31-Dec-13


Ghana Cocoa Carbon Initiative NCRC

Climate strategy Technology Needs Assessment (TNA) update UNDP 01-Nov-09 30-Apr-12

Climate strategy Second National Communication to UNFCCC (to be finalized)

EPA

Source. Climate and Development Knowledge Network Donor Ghana mapping study 2011

Spending on these activities has been aggregated into two thematic areas; adaptation and low carbon growth and summarised in the pie charts below. It should be noted that the following funding levels are only indicative, as there is incomplete information on funding for all initiatives covered here. Equally, not all the initiatives covered here have climate change adaptation or low carbon growth as their single or main focus. Total funding for the initiatives covered and for which information was accessible is $1,288m, of which $493.6m was for adaptation related

26


activities and $794.7m for low carbon growth related initiatives. The information from Table 2 is summarised in the pie charts below using the same key words, hence column two Keyword, Adaptation, also appears under the thematic Adaptation pie chart. As the description of these largely project based activities implies funding is at the project level rather than through the budget, with the notable exception of NREG where funding is put through the budget via MOFEP.

The Ministry of Finance and Economic Planning has a dedicated unit to deal with climate change and environment/natural resources (as well as oil & gas unit) and is keen to include

USD 18,400,000

USD 336,200,000

USD 800,000

USD 135,200,000

USD 3,000,000

Adaptation Adaptation

Social development

Disaster risk management

Water management

Agriculture

USD 239,900,000

USD 20,800,000

USD 315,000,000

USD 217,900,000

USD 1,100,000

Low-Carbon development

Forestry and land use

Energy efficiency

Transport

Renewable energy

Climate strategy

27


climate change in national budgeting guidelines. MOFEP, MEST and the Forestry Commissions are fully aware of the potential funding available and of how much money Ghana could be receiving for climate change activities, leading to some friction between stakeholders as they position themselves to gain from such funds. The access to and predictability of donor funding remains an issue for climate change financing in Ghana. Many donors report they must demonstrate tangible results through active projects on the ground. Whilst donors have committed huge amounts of financing for climate change on the global stage, how these commitments translate down to the country level remains unclear. This is a source of frustration to officials in Ghana who feel that they have complied with onerous reporting and institutional architecture requirements, but have yet to see significant resource flows into Ghana, only smaller sums for international consultants to facilitate access to these bigger funds, that have acquired a `mirage’ status, always further in the distance, the amounts varying, but never arriving. Challenges to increasing alignment:

Lack of a finalized framework makes alignment problematic

Actions plans are not yet drafted

Focus on low carbon growth at the expense of adaptation

Small group of donors are fully aligned, others less interested in this agenda. Vertical funds do not necessarily support alignment.

New donors e.g. BRICKs are not part of this dialogue

Opportunities for increasing alignment:

Strengthen commitment by all donors to support national priorities

Strengthen civil society to provide an effective role to promote this purpose

Decentralise management of funds to allow more local co-ordination

Improve the ability to identify climate finance through earmarking.

5. Capacity Development Whilst Ghana has met the reporting requirements of the climate change international aid architecture it has notably not been successful in accessing some of the funds available. This is in part owing to issues of capacity. The few professional staff with technical expertise are over stretched. The box below highlights efforts to access the Adaptation Fund, CDM and REDD to date.

Box 7: Examples of Ghana’s access to climate change funding Adaptation Fund The Parties to the UN Framework Convention on Climate Change (UNFCCC) established the Adaptation Fund. It is mandated to finance concrete adaptation projects and programmes in developing countries that are Parties to the Kyoto Protocol and to allow direct access to the Fund. The funds to be made available for eligible developing country Parties will depend on the market-based monetization of Certified Emission Reductions (CERs), which are the AF's main source of revenue. By 2012 the total available resources is expected to be between US$ 250-350 million.

28


Ghana has recently failed to qualify as a National Implementing Entity for access to the Adaptation Fund. This came as something as a shock to government as it had played an important role in the negotiations for countries to have direct access to these funds. Only three countries have been accredited as NIEs: Jamaica, Senegal and Uruguay. These countries were identified by the Board as meeting the fiduciary standards required. (Note that Senegal, Jamaica and Uruguay are all Board members of the Adaptation Fund, Ghana is an alternate). Within government there was some dismay at this failure. It appears that the submission to the Adaptation Fund Board may not have included some of the relevant institutional steps that Government was taking on climate change. However, difficulty in accessing documentation suggests a lack of dedicated resources, accountability and transparency about who had submitted what documents when, whether or not they had been quality assured. Donor partners were also unable to respond further since assistance had been offered to help with this and similar processes but had not been taken up to date. Measures are now underway to resubmit an application. The government also observed that the number of qualifying NIEs is very low and that the accreditation of Multilateral Implementing Entities and attendant projects told a story about direct access funding that is at the heart of global negotiations over funding. CDM and REDD Ghana has not yet qualified for any CDM projects although there are a number in the pipeline. This is a source of some frustration for both government and donor partners. Government has pointed out `the perverse incentives of the international architecture, particularly the CDM.‘ Analysis of the CDM experience and structures in Ghana has indicated systemic weaknesses and overload on individuals that do not appear to be addressed in current Government discussion on its emerging carbon credit policy. Government officials are now concerned that with expectations running high re access to REDD funding that these too will be disappointed with other countries accessing these funds more successfully. E.g. Indonesia with its very high rates of absolute deforestation `We are not doing well in terms of accessing international funds. We will miss the Green Fund as well if we are not careful.’ There is also concern that in accessing GEF and other more recent sources of funding via the World Bank and other international sources there is another, different set of conditionalities to be met. (Note that the rules in accessing Climate Investment Funds are consistent with Paris/Accra Principles but actual Government delivery against these requirements has been slow to date.) Capacity within the Government is heavily dependent upon a small group of individuals with a high burden of responsibility in meeting international reporting and qualifying requirements, as well as servicing fragmented projects. This has an adverse impact on an ability to develop or implement at the national level, including integration of climate change into the national Budget guidelines. Officials are well aware of this paradox and have observed that `a systemic response remains challenging.’

6. Harmonisation

The 2011 Paris Declaration Monitoring Survey found that:

29


` As Ghana continues to develop and improves on its accountability systems, it is expected that DPs will provide significant amounts of aid that can help transform the structure of the economy to promote growth and poverty reduction. Donors should also increase aid to Ghana and ensure that aid is provided in a much more coordinated way whether in the form of projects or budget support.’

It also recommended to donors that they:

`Should also harmonize their aid procedures; the recent pace at harmonization is very slow. There should be a shift from project funding towards pooled or programme funding by ensuring that the various projects are integrated into the GPRS to avoid stand-alone projects.’

Harmonization thus remains an ongoing challenge and in the specific context of climate change the NREG stands alone as an example of harmonised donor partner behaviour, which at the same time seeks to promote and encourage a cross sectoral response from Government of Ghana. There is as yet no common forum where donors meet with government around climate change. Nor is there yet

common donor framework for coordinating assistance. There is informal and ad-hoc donor partner coordination on climate change, with a move to re-establish a donor working group that had fallen into disuse. More broadly there is a suggestion that donors had an informal arrangement for division of labour regarding sectors and thematic areas, but, like the meetings this is now less clear and with the arrival of the BRICKs, less relevant. The recent mapping study (see above), finalised in early 2011, has provided a practical tool for identifying where challenges and opportunities for scaling up climate change activities across government might exist. This will help to identify areas of overlap and ongoing gaps. Stronger donor harmonisation would reduce transaction costs for both government and donors, promote clarity and shared sense of vision and encourage the shift towards action for both adaptation and low carbon growth rather than more discussion on impacts or the challenges of the international architecture. The Paris Declaration Monitoring Survey found that there is general lack of transparency in the way `non-traditional‘ or `emerging‘ donors like the BRICKs operate, with a recommendation that they `be brought on board in order to ensure that transactions costs are reduced significantly.‘38 At present they do not form a part of the DP grouping or reporting, ad hoc as it may be, nor do they participate more informally. e.g. at receptions and other events. This situation is not unique to Ghana.39 Given that, for example, China is operating across almost all sectors this will become an

increasingly important gap. Traditional donor partners may find themselves in a dialogue with each

other whilst the centre of activity shifts elsewhere. However, at the global level there is little evidence that joint assistance strategies have automatically resulted in a fully harmonised donor approach. Individual donors often place different emphasis on the aid effectiveness commitments as set out in the Paris Declaration and Accra Agenda for Action that results in mixed commitments towards implementation. Challenges to increased harmonisation:

No finalized national climate framework with action plans

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Paris Declaration Monitoring Survey 2011 39 From aid effectiveness to development effectiveness: 2nd regional meeting on aid effectiveness -South-South

cooperation and capacity development, Tunic November 2010, African Development Bank Group, Roundtable No. 6.

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No national forum where core donors jointly negotiate with government

Opportunities for increased harmonisation:

Possibility to encourage ENRAC to promote improved harmonisation

Core group of donors has already demonstrated ability to harmonise for climate change via NREG. Build and extend on this practise.

Common standards for reporting on additionality

6. Managing for Development Results

The 2011 Paris Declaration Monitoring Survey notes that Ghana has made `modest improvement‘ in the last two years particularly the way aid conditionalities have been developed transparently and in consultation with government and other donors. The framework for reporting results on climate change should ideally fall out of the GSGDS. However in the absence of a finalised framework for climate change, with supporting action plans, this is weak mechanism. Climate change is therefore largely missing from the national results architecture. To date results on climate change have been captured either by bi-lateral donors reporting on their individual or joint programmes or through reporting on global funding triggered by international requirements. Outside of NREG there is no joint reporting done by government and donors. NREG results are promising at this relatively early stage. The international system requires participating governments to produce specific reports on climate change, such as the National Communication on Climate Change, that demonstrates how the government is responding to climate related challenges. The production of such documentation has been a burden, particularly on the EPA. Challenges to strengthened management for development results:

No national reporting framework for climate change

Lack of joint monitoring of climate change results by both government and DPs

Current reporting more driven by international climate change architecture than Ghana‘s needs and priorities

Opportunities for strengthened management of development results:

Capacity for monitoring and reporting exists within civil society, this could be tapped, particularly those organizations with international networks

Ongoing strengthening of government reporting systems to support MRV

Prioritising and then strengthening this aspect amongst all donor partners.

7. Mutual Accountability The 2011 Paris Declaration monitoring survey found that:

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`Mutual accountability in terms of resource flow and achievement of results has recorded little improvement over the past two years and goes to confirm Ghana’s recent position on the Corruption Perception Index40. Evidence of improvements can be seen in terms of mutual trust and respect, open dialogue and flexibility between DPs and government.’

There is little evidence to suggest that mutual accountability has been considered around climate change as a specific issue. In reality this is largely due to a lack of awareness around climate change within wider government departments and amongst Ghana‘s citizens. It is also notable that, for external funders, given the lack of common targets with government it appears that the dominant accountability relationship is to the providers of funding for disbursement, rather than to the citizens of Ghana for mutually agreed outcomes. As the PD 2001 report notes:

`Accountability it is noted has been more skewed towards GoG and less towards donors. There is incomplete information on donor contributions to CSOs and some donors are unwilling to provide such information when requested for.’

Climate change is not yet an organising concept for civil society in Ghana. To date there are only a limited number of Civil Society Organisations and Non-Governmental Organisations that claim to advocate and work on behalf of the population on climate change issues at the local and national levels and many of these have been inspired by donor partner interest and funding, sometimes to prepare for specific events to support the wider architecture. Social mobilisation or advocacy by national organisations has tended to focus on particular interests, for example forestry and agriculture. Likewise there has been little sectoral engagement with climate change issues by the private sector, for example around renewable energy. If some specific elements of the private sector were to mobilise around climate change it could provide a powerful body for holding the government to account on its actions and delivery and encourage donor partners to think more strategically and systemically in their response to climate challenges rather than in simpler financing mechanisms terms. Donors have a role to play in becoming more accountable to the government, particularly through strengthening the predictability of their climate change financing. Reporting on funding commitments is recognised globally as a challenge to aid effectiveness, not least because individual donors are restricted by their own internal requirements, procedures and timeframes for approving country programmes. At the global level international commitments for climate change financing are expected to remain high for the foreseeable future. Expectations and frustration are both running high in Ghana at present. Little incentive currently exists to actively develop collective accountability approaches. Rather the perverse incentive is to use the power or resources that accompany climate change knowledge and financing in order to control the activities and flow of resources that currently exist or may soon follow. To date non-state actors have predominantly played the role of technical service providers in the

40 Ghana ranks 62/178 in the 2010 CPI, with only South Africa on 54 higher than this of the 5 countries in this study. Morocco ranks 85, Tanzania 116 and Kenya 154. The highest ranked African country on the CPI is Botswana on 33. So it is possible that the PD survey assessment is somewhat harsh relatively speaking, especially when Ghana is compared with its near neighbours in West Africa.

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development of a national response to climate change. Some, such as CARE, SEND or the University of Ghana Legon are advocacy or research institutions that are independent of the state. They have acted as the clients of both donors and government in providing technical knowledge on specialist issues. Their work has included assisting with the research and design of approaches, delivering projects, building capacity and acting as co-ordinators of activities. There has been little awareness or promotion of the role such non-state actors could play in holding the government to account around climate change. However, opportunities are beginning to emerge for civil society to increase their engagement around climate change. Improvements in communications have strengthened advocacy networks and have helped to put the pieces in place for co-ordinated organisation at local and national levels around climate change once the issue begins to gain political traction. Funders, such as DFID and the Netherlands, are providing some funds for civil society to play this role. A critical mass of mobilisation around climate change is required before sufficient accountability measures will be put in place to ensure that actions take place in the public interest. To date climate change has remained too narrowly the realm of experts rather than including wider society. In particular, private sector interests have been notably neglected. Challenges to strengthening mutual accountability:

Limited engagement of non-state actors to date, climate change not yet an organising concept for CSOs

Lack of awareness amongst wider government and citizens on climate change has limited capacity to hold government and donors to account

External requirements and processes imposed by individual donors and the collective international climate architecture

Primary accountability of donors for disbursement

Opportunities for strengthening mutual accountability:

Systematic political mobilization is occurring around some specific issues, an opportunity to link these to climate change

Improved communications networks and emerging media interest around climate change could raise awareness and increase domestic demand for climate change activities

Opportunity for private sector to increase their engagement around business related opportunities.

8. Conclusion/ Recommendations

Climate change is still a more internationally driven agenda in Ghana. Across government there is only narrow understanding amongst a few of the impacts climate change will have on Ghana‘s development. Engagement to date has focused too narrowly within a select group of technical experts. There is an urgent need to build climate change leadership across a broad range of senior political leaders and to increase climate change awareness across government, civil society and the private sector. Capacity deficits are significantly restricting the response.

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Access to available global funding has been limited to date in spite of the government awareness of the possibilities for future climate change financing, particularly for mainstreaming adaptation. Although Ghana has incorporated climate change into it GSGDA, the lack of a finalised climate framework, and access to global funds, is hindering progress beyond a more fragmented and piecemeal progress, with the notable exception of NREG. Donors should consider further coordinating and unifying their commitment to climate change in Ghana including supporting the finalisation a national climate framework with action plans. Gains on harmonisation will only be fully realised once donors are able to align behind a strong nationally led agenda. The current national response will need to be scaled up dramatically if Ghana is to adequately address current and future climate change risks. Ghana is at an economic/energy transition point with oil and gas lock-in decisions on energy, together with transport and other infrastructure being made now. Government needs to align these with a strong adaptation and low carbon growth response as soon as possible, before a chasm opens up between the rhetoric and reality, and north and south of the country. The climate framework needs to be finalised urgently with mechanisms for delivery, supported from the international community via scaled up financing to meet Ghana‘s priorities and needs. A systemic response to the adaptation challenge and low growth opportunity is required now. END

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Selected Bibliography CDM participation reports, Ghana and Uganda chapters, Marmanie consulting ECOSOC Development Cooperation Forum Ghana country study in Economics of Adaptation to Climate Change, World Bank, December 2010 Ghana Paris Declaration Aid Effectiveness 2011 report Ghana‘s GHG emissions inventory, EPA, March 2011 Ghana‘s second national communication to the UNFCCC, February 2011, coordinated by William K Agyemang Bonsu Ghana Shared Growth & Development Agenda 2010-2013 Initiatives related to climate change in Ghana: towards coordinating efforts, Ingo Bunzeck, Laura Wurtenberger, Xander van Tilburg, CDKN & Energy Research Centre of the Netherlands, February 2011 Mid term review of NREG, Neil Bird, ODI

ODI submission to Environmental Audit Committee `The impact of UK overseas aid on environmental protection and climate change adaptation and mitigation.‘ Written evidence submitted by Neil Bird NEEDS country report, 2009 Policy Brief: NAMAs and the Ghana Shared Growth and Development Agenda 2010-2013, February 2011-03-27 Policy Brief: Low carbon growth for Ghana, December 2010 URAdapt: managing water in the urban-rural interface for climate resilient cities http://uradapt.iwm

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