33 / 2 0 1 3N o r d i c D e v e l o p m e n t F u n d

NEWSLETTER

The Nordic DevelopmentFund (NDF) together withthe Inter-American Deve-lopment Bank (IDB) andthe Multilateral Invest-ment Fund (MIF) hosted a seminar on InnovativeClimate Financing Mecha-nisms in Helsinki, on 4-5November 2013.

This seminar gave parti-cipants an excellent oppor-tunity to share experiencesand lessons learned frominitiatives undertaken byNDF in partnership withthe Inter-American Deve-lopment Bank Group(IDB). These initiativeshave involved new app-roaches and financingmechanisms targeted atmicro, small and medium-sized enterprises in climatechange mitigation andadaptation.

The seminar attractedmore than 60 decision-makers and professionalsin the area of development

finance and climate changefrom a variety of institu-tions, including multilat-eral and bilateral develop-ment financing institu-tions, governments, theprivate sector and re-search institutions.

Financing models pre-sented included, for ex-ample, publicly-backedprivate sector financingmodels to catalyse privateinvestment, funding op-portunities for energy efficiency, private sectoradaptation financing as well as green micro-finance.

There were discussionof scaling up and regionalreplication of successfulfinancing mechanisms in Africa and Asia. More-over, the seminar includedworkshops aimed to en-courage participants fromdifferent regions to framenew ideas, explore poten-tial collaborations and spur

the birth of new financingschemes globally.

Participants emphasisedthe importance of sharinglessons learned and expe-riences between differentregions and institutions in the climate financing focused on developingcountries. Disseminationof experiences is needednot least to enable a swiftreplication and scaling upof viable concepts. As in-novative climate financingmodels and concepts oftenimply a greater risk thanmore traditional financingmodels, sharing lessonslearned quickly becomeseven more important sothat these can feed intoplanning processes of future activities.

NDF’s co-financingpartners highlighted thatNDF is well-placed to actas global knowledge bro-kers thanks to its broadgeographical reach and

Experts gather in Helsinki to discuss mechanisms for innovative climate financing

its close affiliation withmultilateral and bilateraldevelopment finance insti-tutions. Moreover, theavailability of Nordicknowhow on its homeground was seen as a significant advantage.NDF’s clear and focusedmandate was also asses-sed as a clear benefit toallow agile and innovativeresponses to climate anddevelopment issues.

NDF’s collaborationwith the IDB Group in innovative financingmechanisms was describedby Mr Ignacio CorlazzoliHughes, Alternate Direc-tor of the IDB Office inEurope, to “constantlychallenge standard app-roaches, and push us towards the next frontier.”NDF hopes to facilitatethe transfer of theseexperiences by supportingsimilar activities in Sub-Saharan Africa and Asia.

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The value of NDF - a World Bank perspective

The Nordic DevelopmentFund (NDF) has a historyof working with theWorld Bank going backto 1990. Since NDF received a new mandatein 2009 and began pro-viding grant financing to climate change and development, NDF hascommitted to co-financ-ing with the World Bankfor 22 projects in Sub-Saharan Africa for atotal value of EUR 57.2million.

When visiting the WorldBank in Washington,NDF’s management metwith Mr Jamal Saghir,Director of the Sustain-able Development Depart-ment for Africa Region,to discuss the nature and potential of the col-laboration between NDFand the World Bank. MrSaghir characterised thecollaboration betweenNDF and the World Bankin the light of the follow-ing questions.

NDF is a relatively smallplayer among the manydonors working togetherwith the World Bank.What can NDF contributethat is not already coveredby other donors andTrust-Funds, Mr Saghir?

“NDF is small and flexi-ble, and it fully embracesentrepreneurship. Bypartnering with the NDF,the World Bank has theopportunity to add newcreative, cutting edge cli-mate change componentsto traditional lending andknowledge-generatingprojects. Furthermore,NDF’s efficient rulesallow fast-tracking somepilot projects, therebyhelping to cut lengthypreparation and imple-mentation times, ulti-mately benefiting ourdeveloping countryclients. These attributesof NDF will be increas-ingly important as the

Mr Jamal Saghir, Director of the Sustainable Development Department

Bank strives to meet itsnew goals of endingpoverty and boostingshared prosperity. TheBank is privileged tohave a strong partner-ship with NDF and looksforward to furtherstrengthening it in thefuture.”

All financing from NDFis focused on climatechange, for both adap-tation and mitigation.NDF works only with theWorld Bank at the momenton projects in Sub-SaharanAfrica. Does our narrowmandate make it difficultfor the World Bank to finda role for NDF in its work?

“Climate change is a development issue and we find the specificity of NDF’s mandate to behelpful in supplementingour work. The key NDFcontribution to the WorldBank’s cooperation withSub-Saharan Africacomes from the lessonsand experiences learnedfrom projects that haveNDF-financed components.

Where do you see the roleof NDF and the best valueadded - apart from themoney - that NDF con-tributes to the WorldBank cooperation withSub-Saharan Africa?

The small-scale pilot projectshave been feeding good information regardingwhether certain methodson adaptation or mitiga-tion are working, how toscale up successful experi-ences, what are the key ele-ments and determinantsfor success, and so on.This evidence and thedata emerging from theseprojects is invaluable forthe World Bank as itworks to strengthen exist-ing projects and developnew projects for greaterdevelopment impact.”

And in the short-term future, what do you envision for an enhancedcollaboration for our insti-tutions? Are there areaswhere NDF could improveour cooperation with theWorld Bank?

“I am very pleased to seeNDF’s flexibility in revisingworking arrangementsaccording to a changingenvironment. Being able to amend cooperationarrangements in accor-dance with the changingenvironment will scale up

our future work. On theBank’s side, we are com-mitted to broadening thecategories of climate-relatedprojects that could be con-sidered for funding byNDF.”

Where do you see the major bottlenecks formainstreaming climate in World Bank operationsand how could an institu-tion like NDF facilitatethis process?

“It becomes increasinglydifficult to allocate fundsto programs that lie be-yond the traditional in-vestments in agriculture,infrastructure, educationand health to name just afew. NDF’s strength isthat it allows us to betterintegrate a climate dimen-sion into our sectoral in-vestments, and remainengaged in areas that donot benefit from IDAfunding.”

What kind of an approachwould you suggest to co-financiers like NDF toincrease the effectiveness of their collaboration withthe World Bank?

“A laser-like focus on the quality of outputs, the economic results and

development impacts, andwhether the program canbe scaled up to other areasor countries are all impor-tant determinants of effec-tiveness. Paying attention to data collection for bothbaseline and results is im-portant. So is the need toallocate budget to ensurerelevant data will be col-lected and capacity will be built. Finally, buildingcapacity to evaluate thedevelopment impacts ofprojects remains vital.”

We find the specificity ofNDF’s mandate to be helpful insupplementing our work

Focus on Partnerships

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innovation, leverage andpartnership, and thereforeadding value. Moreover, the facility is seen as a cost-effective scheme that hassuccessfully delivered re-sults, even though it is tooearly to say much about im-pact and sustainability sincemost projects are still underimplementation. In addition,the partners involved haveperceived NCF as a usefulmechanism.

NCF is financed by theNordic Development Fund(NDF) and administered bythe Nordic Environment Finance Corporation (NEFCO).Since the first call for pro-posals was launched in2009, NCF has allocatedEUR 18 million to 40 pro-jects in low-income coun-tries in Africa, Asia andLatin America.

Nordic Development Fund • Nordic Environment Finance Corporation

NCF will launch its fourthcall for proposals in December2013. The theme for the callwill be “Inclusive greengrowth project contributingto private sector develop-ment.” The pre-qualificationproposals will this year besubmitted through an on-line application platform.Preference will be given toprojects in Sub-SaharanAfrica. More informationon the requirements andguidelines for applying forfunds will be available onNDF’s and NEFCO’s web-sites in the beginning ofDecember 2013.

The findings of the eval-uation conducted earlierin 2013, confirm that NCFfits well into NDF’s currentstrategy and targets. Whencompared to other call-basedschemes, it is seen as a ratherrare mechanism combining

The Nordic ClimateFacility (NCF) to

launch fourth call for proposals

Nordic -Clim ate Facilit y-

Together with the Govern-ment of Nepal and theAsian Development Bank(ADB), NDF will providefinancing for the projectBuilding Climate Resi-lience of Watersheds inMountain Eco-Regionsin Nepal. The project isone of five componentsin Nepal’s Strategic Pro-gram for Climate Resi-lience. The project aimsto improve access to andenhance the reliability ofwater supply for domes-tic purposes and irriga-tion for communitiesliving in the watershedswhich are significantlyvulnerable to climatechange. The selected watersheds are in the farwestern region of Nepal.More than 85% of house-holds in these watershedslive in scattered dwellingsclose to natural springsand patches of slopingland. They have subsis-tence life-styles based onmixed agriculture, graz-ing activity and collectionof non-timber forestproducts. These areasare significantly vulner-able to climate changesince even a small rise in the temperature isprojected to affect thehydrological cycle, whichin turn is estimated tohave an impact on wateravailability, runoff andthe discharge regime.

Access and reliability towater resources will beimproved through aparticipatory programof integrated watershedmanagement with inter-ventions in upland areasto increase surface waterstorage and ground-water recharge, and todeliver water to locationswhere the communitycan use it. The Governmentwill adopt knowledge-based approaches for integrated water andland management, andimproved water reliabilityand accessibility. Thiswill improve water security, water storageinfrastructure and catchment management,and enhance watershed resilience.

As a result of theproject, the communi-ties in the region willhave more reliable watersupplies during the dryseason and agriculturalproduction will increase,thus enabling small-scale market gardeningand thereby improvingfood security and in-come. Major beneficiar-ies will be women anddisadvantaged groupswho are often requiredto subordinate theirwater needs when thereis a water shortage.

Better access to water supply in Nepal

NDF was invited by theDanish Prime MinisterHelle Thorning-Schmidtto participate in the high-level Global Green GrowthForum (3GF), held 21-22October in Copenhagen.The theme of the third3GF was “Improving Resource Efficiency in the Value Chain”, and itbrought together 250

top-level government representatives, businessleaders, investors and international organisa-tions to discuss how to effectively realise the potential for long-termglobal, inclusive greengrowth.

NDF’s Managing Director Pasi Hellmanparticipated as panellist

in two 3GF sessions: ‘‘Public-Private Partnerships to ReduceUrban Water Leakage” and“Public and Private Financefor Renewable Energy: Pos-sible Pathways for China,’’where he highlighted recentNDF experiences withusing public financing tostimulate private invest-ments in renewable energythrough concessions,

NDF at the Global Green Growth Forumpartial guarantee schemes, and insurance.

The Global Green GrowthForum (3GF) was initiatedby the Danish Govern-ment in collaboration withthe governments of China,Kenya, Mexico, Qatar andthe Republic of Korea anda number of leading busi-nesses and internationalorganisations.

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FINANCING FOR CLIMATE CHANGEPROJECTS IN LOW-INCOME COUNTRIES

The Nordic Development Fund (NDF) provides financing for climate change interventions in low-income developing countries. NDF is the joint deve-lopment finance institution of the Nordic countries—Denmark, Finland, Iceland, Norway and Sweden—and finances projects in cooperation with otherdevelopment institutions.

NORDIC DEVELOPMENT FUND, P.O. Box 185, FIN-00171 Helsinki, Finland (Visiting address: Fabianinkatu 34), Tel: +358 10 618 002, Fax: +358 9 622 1491, E-mail: info.ndf@ndf.fi, www.ndf.fi

Nordic Development Fund

NDF Newsletter presents NDF's operations. The newsletter is published as needed. Layout Kubik, print Erweko Oy.

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GMS countries to warn of synthetic nitrogen fertiliser risk

Several of the GreaterMekong Sub-region (GMS)countries rely heavily onsynthetic nitrogen fertiliserto improve crop yields. At a GMS Working Groupon Agriculture (WGA)knowledge forum in 2011,the GMS countries high-lighted the importance of increasing awarenessof the negative effects of synthetic nitrogen fertilisers. When nitrogenis broken down, in soil or water, nitrous oxide isproduced. Nitrous oxideis among the most power-ful greenhouse gases,with heat-trapping effects289 times greater thancarbon dioxide.

In the GMS, regionalcooperation in agricultureis guided by the CoreAgriculture Support Pro-gram (CASP). The secondphase of CASP is underimplementation, sup-ported by an ADB techni-cal assistance (TA) project.The scope of the ADB TAdid not originally include

activities that were tar-geted at reducing the useof synthetic fertilisers.Therefore, based on a re-quest from the GMS coun-tries, ADB approachedNDF to support an add-oncomponent of the TA thataims to mitigate climatechange by reducing theuse of synthetic nitrogenfertilisers.

Together, ADB and NDFhave designed the nitrogen-cycle management compo-nent to have a strong en-vironment, climate changeand social developmentfocus. The project is ex-pected to increase food se-curity, income and healthamong farmers. The keyobjective is to increase un-derstanding of the effectsof synthetic nitrogen fer-tilisers. The lessons learnedfrom the project will beused in regional and na-tional policy discussionsand when planning newagricultural investments in the region.

NDF launches new website

In September 2013, NDF launched its new website.“The ambition was to make the site more living, and also to help users find information more easily,”says Maria Talari, Administration and InformationOfficer at NDF. “For example, tender opportunitiesare posted on the front page and the most recent notice is always visible,” she continues. Also, themost recent projects and publications are visible on the front page.

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