“Paris itself was just an agreement around transparency,” says Clare Shakya, Climate Change Director at the IIED, when we sit down to discuss the recent report she co-authored on Delivering real change: Getting international climate finance to the local level. “Now that we are trying to develop the rulebook for delivering it, we have seen how different the underlying country agendas are.”
This is one of the reasons IIED have focussed on transparency in the climate finance recommendations made in their just-published report. “The least developed countries (LDCs) need close to $100 billion a year for their climate actions, and a large part of that will be needed at local levels. So we need to increase the transparency of reporting on where climate finance is flowing. Right now, we don’t have ways of really understanding what the money is being spent on.”
One way to create that visibility would be to introduce an asset- or project-level coding system of some kind that would allow different classes of climate finance to be identified, which could then create linkages to national budgets as well. Work that IIED is doing with UNCDF in Tanzania and Mali is piloting this approach.
We need to see targets being set for local spending. USAID is doing this and having some success
Another aid to transparency would be to introduce targets for local spending. USAID, Shakya points out, has set a target of 30% of its aid going to local projects, and is achieving around 20%. In Nepal, the target is 80% getting to local level, and this is being promoted by the creation of local action plans, especially on adaptation.
But there are still many things that stand in the way of finance getting to communities where it is needed, Shakya says, pointing to the main conclusions of her report (see box).
“A big problem for donors is their perception of fiduciary risk,” Shakya says. “That is, that money will leak or get siphoned off through corruption or simply poor accounting. We are looking at whether there are technology fixes for that – for example there is a lot of talk about blockchain, which would create complete transparency in the chain from donor to end user.”
IIED’s recommendations on how to drive more finance to local levels
- Change the metrics of success: for example, counting numbers of people with access to energy rather than MW installed would prioritise local distributed energy schemes
- Widen the net and avoid using ‘business as usual’ intermediaries such as MDBs, which are not set up to deliver smaller projects
- Use the innovative financial instruments that are available to increase the level of risk taken by MDBs and DFIs
- Provide more support (and allow more time) to build local capacity to generate climate finance flows
- Avoid co-financing conditions (for example cash contributions) that discriminate against local level finance: count collective community action as co-financing
- Create agreed international goals for levels of local funding and monitor these for achievement
Another barrier to community access to funding is that “local governments and local communities don’t always speak the same language in terms of articulating needs and solutions. So we need to create intermediaries between them.”
The need for intermediation
One example of how such intermediation can work is the surveys conducted by Slum Dwellers International (SDI) in Kenya and Tanzania, where SDI has set up informal groups that survey their local populations and provide data on, for example, land use or water management to local government officials. “This allows the government people to make decisions based on the kind of data and paperwork they are used to and need to have, while achieving better visibility on real local needs than if the officials were to try and guess at these needs, which is what they would probably otherwise be doing.” Digital technologies are also among the potential ways this kind of data-gathering can be scaled up.
The biggest problem is institutional capacity, especially in low-income countries. Donors need to put more money into this
“Another example of government / community intermediation are the climate funds devolved to County governments that the Kenyan government are developing.” Here ward-level Adaptation Planning Committees have been established under the National Drought Management Authority. These committees are composed of elected community members supported by ward-level county government staff, and are legally empowered by county government legislation to engage communities in identifying their priorities for investments in resilience, which is then funded by the County Climate Change Fund.
“The decision‐making process that’s been established here enables local people, through these ward committees, to remain in control of their development and adaptation priorities, but also to be sure they are in keeping with the relevant Kenyan laws. And through using local government, communities’ priorities are aggregated and can be supported at scale.”
Behind all the barriers to local deployment IIED’s report identified, Shakya says, is one fundamental problem, which is institutional capacity, especially in low-income countries. “Donors have to put more resources into capacity building,” Shakya says, “and they also need to be much more patient about timeframes for getting results.”
Before joining IIED in 2016, Clare was a senior climate change adviser at DFID, where she led climate change work for Africa Division and, earlier, for Asia Division. This included leading a review of climate work across the division and agreeing priorities, setting up facilities such as the Africa Risk Capacity and the South Asia Water Initiative and high level processes such as the Energy Africa campaign. Wider experience includes the Commission for Africa, tackling the social impacts of AIDS, developing a toolkit for poverty and social impact analysis, community monitoring and setting up learning processes for sustainable livelihoods approaches.
Clare Shakya is a voluntary adviser to NDCi.global