Donor-driven, project-based climate financing limiting interventions - Report

Donor-led climate programmes and projects are limiting the implementation of climate change interventions in the country as they come with many constraints, says Feed The Future Ghana Policy Link.

In its latest policy brief on climate financing which is part of a broader climate change assessment with a focus on six key areas — agriculture, water, energy, forest, coastal systems and climate finance, it said donor-driven and project-based financing comes with many constraints regarding the use and the amount of funding, thereby limiting their impact.

“The time-bound nature of donor projects is also a constraint,” it added.

Financial inflows for climate actions in Ghana between 2011 and 2019 amounted to US$15.5 billion. Of this amount, grants make up the largest share, 72.1 percent, followed by loans, 19.1 percent, the national budget, 8.5 percent and result-based payments, 0.4 percent — a clear indication that most of Ghana’s climate finance is currently donor-driven and project-based.

Donor-led climate programmes and projects are limiting the implementation of climate change interventions in the country as they come with many constraints, says Feed The Future Ghana Policy Link.

Climate finance refers to “local, national or transnational financing—drawn from public, private and alternative sources of financing—that seeks to support mitigation and adaptation actions that will address climate change,” according to the United Nations Framework Convention on Climate Change ( UNFCCC).

Financing flows through different channels

Of the different channels, financial flows through bilateral channels were the largest (45.1 percent), followed by multilateral channels (29 percent), global projects (11.6 percent), national funds (7.1 percent), and the global environment facility (4.4 percent), the think tank disclosed during a capacity enhancement training on climate change for media professionals in Ghana held in the capital of Eastern Region, Koforidua.

The remaining 2.8 percent comes from: private foundations outside, 1.3 percent; private sector 0.13 percent; and technical cooperation 0.02 percent with the country benefiting from other international funding sources as well, including bilateral and multilateral institutions like the World Bank, continental development banks such as the African Development Bank and private sources.

The country further benefited from other United Nations Framework Convention on Climate Change (UNFCCC) institutions, including the Adaptation Fund and the Green Climate Fund (GCF), with the latter expected to become one of the main multilateral financing mechanisms supporting climate action in Ghana.

The country already has six GCF projects worth approximately US$89.7 million, four of which are multi-country and two are Ghana-specific.

Greater domestic financing critical

The country in the last two decades has experienced severe flooding, some of which have had severe economic and social impacts.

The projected impacts of climate change are likely to intensify pressure on the country’s existing dam infrastructure, yielding severe consequences for river runoff, which could affect over 1.3 million people, mostly women and children, according to research by the Ministry of Science, Environment, Technology and Innovation, in partnership with the Global Centre on Adaptation.

To avert a climate crisis, there’s the need to increase domestic financing of climate change interventions in the country instead of relying on donor-driven funding.

The policy think tank therefore recommended that the government strengthen private sector engagements in climate finance in the country both by highlighting win-win solutions and by identifying enabling environment and policy process improvements that could unlock climate finance for priority actions.

“Donors can help build bridges between public and private sector stakeholders so that they can work together to overcome the barriers described above (e.g., by raising awareness of climate opportunities, improving policies, and developing effective incentives). Together, the public and private sectors can move beyond analysis and proposals and start implementing climate change investment policies, plans and roadmaps,” it proposed.

The brief also called for support for accreditation and efficient management of climate trust funds, explaining that it would increase access to and the use of climate finance in Ghana. Currently, Ecobank Ghana is the only institution in the country accredited with the Green Climate Fund.

“To increase access to climate finance, donors should help other institutions in Ghana gain accreditation and develop capacity in project preparation and implementation for the GCF and other climate-related trust funds,” the brief stated.

The two-day capacity enhancement training on climate change for media professionals in Ghana was organized by the Feed the Future (FTF) Ghana Policy LINK Activity in collaboration with the Ghana News Agency (GNA), Ghana Broadcasting Corporation (GBC) and the Environmental Protection Agency (EPA).