ADB Group Partnership Forum Mr. Abou Sabaa, Chairman AfDB Climate Change Coordination Committee

1. Towards the creation of the Africa Green Fund (AfGF) ADB Group Partnership Forum Mr. Abou Sabaa, Chairman AfDB Climate Change Coordination Committee Tunis 23 March 2012

2. Structure • Background • Rationale • The AfGF Platform • The Fund • Objectives • Linkages with Green Climate Fund • Scope • Implementing and Financing Arrangements • Eligibility and Accessibility • Financing Procedures and Conditions

3. Structure (cont’d) • Compliance and Reporting • AfDB Institutional capacity • Expected role of AfDB • Consultation Process

4. Background • New and additional fast-track resources - $30 billion by 2012 • Mobilizing additional $100 billion annually by 2020 to address needs of developing countries • Africa’s leadership requested climate change resources flows for Africa region to be managed by the African Development Bank. • The Africa Green Fund is a response to this request.

5. Rationale for the Fund • Sub-Sahara Africa received only 12% of Bilateral Funds and just 4% of Multilateral Financing in 2009-2011 • Global funds hosted, governed and administered outside Africa • Funds have cumbersome access procedures and lack balance between mitigation and adaptation • Lack of African voice in decision making and funding priorities • Africa’s priorities now relate to implementing the Rio+20 Sustainable Development Goals including transition towards Green Growth

6. AfGF Platform • The African Green Fund is part of a Platform that seeks to enhance Africa’s access to existing and new climate finance. Block 3 (Scaled up AfGF Instrument) AfGF Instrument Block 2 Enhance Access to Existing CC Instruments Block 1 (internal governance) • The Platform is flexible enough to grow overtime and adjust to the future climate finance architecture. • The focus on short and medium term is on Block 1 of the Platform

7. AfGF Platform (Block 1) Enhance Access to Existing CC Instruments Block 1 (internal governance) • AfDB will establish a framework to: • Streamline and harmonize existing thematic funds managed by the Bank (AWF, CBFF, SEFA, ClimDev-Africa). • Simplify operational procedures and improve access. • Create a new facility to support RMCs to transition towards Green Growth

8. AfGF Platform (Block 2) AfGF Instrument Block 2(externalgovernance) • Block 2 involves creation of a new instrument which is part of long-term strategy for climate finance • AfGF could be either independent of AfDB decision-making structure or ADF type of governance structure both of which involve equitable donors and African countries. • The instrument seeks to receive, manage and deliver resources from Fast Start funds and long-term pledges under Cancun Agreements and other sources.

9. AfGF Platform (Block 3) Scaled up AfGF Instrument (Block 3) • Block 3 is a scaled up Africa Green Fund. • It will seek to receive, manage and deliver funds to Africa at scale, to be designed and operationalized after establishment of the Green Climate Fund (GCF). • AfGF will seek to become one of conduits for climate finance and preferred channel over medium term.

10. AfGF Goal and Objectives • The goal of the AfGF is to support country-owned and country-led climate compatible development in Africa • Facilitate access for African Countries to existing and Bank internal resources • Promote direct and immediate access to fast-start funds • Support the development of a Low-carbon and Climate Resilient Economy with transition towards green growth • Strengthen national institutions and support the use of country systems for direct access to the Fund • Complement other multilateral/bilateral financial mechanisms

11. Linkages between AfGf and Green Climate Fund • GCF is a global mechanism while AfGF will focus on Africa specific concerns and priorities and give greater priority to adaptation. • COP 17 in Durban adopted the establishment of the GCF. • AfGF will seek to become one of the conduits for resources from GCF without compromising access of eligible African countries to GCF. • AfGF will provide resources to build capacity and readiness to access future resources. • AfGf will also assist Bank’s RMCs to develop their Green Growth Framework

12. Adaptation Sustainable Land & Water Management Climate Resilient development Natural Disaster management Mitigation Renewable Energy and Energy Efficiency Sustainable Transport Sustainable land and Forestry Cross-Cutting Assist with state of readiness and preparatory phase and Capacity building Transition towards Green Growth Technology development and transfer; capacity building Collaboration with UNFCCC, UNCBD and UNCSD Scope of the Fund

13. Access: African Countries through Direct Access African Regional Organizations Recognized public and private enterprises in RMCs AfDB, other MDBs and International Organizations operating in Africa Eligibility criteria: Development Impact, Potential scale up for adaptation and low carbon, cost effectiveness and demonstration potential, national priorities Implementing and financing arrangements

14. Implementing and financing arrangements • Financing procedures • An accredited Implementing Entity (IE) shall submit a Request for Funding to the Secretariat, following some requirements : • Each operation will be approved and administered in accordance with the applicable guidelines of the concerned accredited Implementing Entity; • The accredited Implementing Entity will conclude an agreement with the beneficiary, expressing the terms of financing and acknowledging the source of finance; • Eligible expenditures under individual financing will be determined in accordance with the policies and procedures of the respective accredited Implementing Entity. • Each IE will apply its own appropriate procedures in developing operations.

15. Instruments include concessional and non-concessional lending, grants, guarantees and equity Grants for Adaptation activities and Capacity development Concessional for investments to support low-carbon economic development that have internal rates of return just above the normal market threshold Gurantees for credit, regulatory or technology risk Details will be provided in the Operations Manual of the Fund. Financing Instruments

16. AfDB institutional capacity The Bank will put its experience to provide technical and advisory support to the AfGF • Bank’s total lending volume for 2008-2010 was US$ 24.8 billion from its own resources; cumulative approvals from 1967-2010 amounted to US$ 89.6 Billion; cumulative disbursement of US$34.1 Billion. • The Bank is also managing US$ 5.46 billion on behalf of over 50 funds

17. Expected Role of the AfDB • Bank as a Trustee • Bank has experience being a trustee of climate change funds (NEPAD, CBFF, ClimDev, etc.) and hosting several bilateral trust funds • Bank’s responsibilities as trustee shall include fund management, financial reporting and the execution of legal agreements. • Additional staff will be recruited to help with resource mobilization • Bank as a Secretariat • Bank has the requisite experience • Additional staff will be recruited to work in the Secretariat • Bank as one of the Implementing Entities (IE) • The Bank will apply to the Fund, as with other accredited entities

18. Compliance and Reporting • Fudiciary Standards including Audit • AfGF fiduciary standards will be developed, including criteria for accreditation as implementing entities • Country systems will apply for direct access when national entities meet basic standards • Countries’ institutional capacities will be strengthened, where needed • National entities borrowing from the AfGF are responsible for carrying out an audit of their operations • Environmental Safeguards including Gender • A set of E&S safeguards shall be established • The AfGF shall enhance the capacities of countries to meet minimum safeguards standards • Gender equality shall be part of selection criteria and M&E system

19. Compliance and Reporting (cont’d) • Reporting and Disclosure of Information • The Bank shall present to the Governing Council an Annual Report on AfGF activities • Information on AfGF’s operations shall be regularly posted on the AfGF website • Monitoring and Evaluation • A M&E system shall be developed for the AfGF. • Establishment of national M&E systems to support Direct Access operations. • An Independent Evaluation Mechanism will be established to carry out periodic independent evaluation of the Fund • A detailed results framework will be developed, with key indicators and targets

20. Consultation Process • Planned and completed consultations: • Consult with AGN in Durban (August 2011) • Consult with African representatives in Transitional Committee in Geneva (Sept 2011) • African Ministerial Conference of Environment (Sept 2011) • AfDB Board seminar (Jan 2012). • Donors and potential contributors to the Fund (ongoing); • Civil Society and Private Sector; • AfGF Framework Document will continue to be revised based on further consultation in response to post COP 17 response to emerging issues.

21. For tails: Further information: www.afdb.org climatechange@afdb.org Thank you