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ABBREVIATIONSANDACRONYMSAfDB AfricanDevelopmentBank

AF

AfGF

AdaptationFund

AfricaGreenFund

AMCEN

AWF

CAHOSCC

AfricanMinisterialConferenceonEnvironment

AfricanWaterFacility

ConferenceofAfricanHeadsofStatesonClimateChange

CBFF

CongoBasin

Forest

Fund

CCAP ClimateChangeActionPlan

CDSF ClimDevAfricaSpecialFund

CDM CleanDevelopmentMechanism

CER CertifiedEmissionReductions

CIFs ClimateInvestmentFunds

COP ConferenceofParties

CRMA

CSIRO

ClimateRiskManagementandAdaptationstrategy(AfDB)

CommonwealthScientificandIndustrialResearchOrganization

CTF CleanTechnologyFund

FFCO

FIP

FinancialControlDepartment(AfDB)

Forest

Investment

Program

FTRY

GECL

GEF

TreasuryDepartment(AfDB)

GeneralCounselandLegalServicesDepartment(AfDB)

GlobalEnvironmentFacility

GHG GreenhouseGas

MDB MultilateralDevelopmentBank

MDGs MillenniumDevelopmentGoals

MRV Measurement,ReportingandVerification

NAMA NationallyAppropriateMitigationActions

NAPA NationalAdaptationProgramofActions

NCAR NationalCentreforAtmosphericResearch(USA)

NEPAD

NGO

NewPartnershipforAfricasDevelopment

NonGovernmental

Organizations

NIE NationalImplementationEntity

ONEC

ORQR

OSAN

PBOs

PPCR

Energy,EnvironmentandClimateChangeDepartment(AfDB)

QualityAssuranceandResultsDepartment(AfDB)

AgricultureandAgroIndustryDepartment(AfDB)

PolicyBasedOperations

PilotProgramonClimateResilience

RDBs RegionalDevelopmentBanks

REDD+ ReducedEmissionsfromDeforestationandForestDegradationandotherLand

uses

RMCs RegionalMemberCountries

SEFA SustainableEnergyFundforAfrica

SCF StrategicClimateFund

SMEs

SREP

SmallandMediumEnterprises

ScalingupRenewableEnergyProgram

UN UnitedNations

UNCBD UnitedNationsConventiononBiodiversity

UNCCD UnitedNationsConventiontoCombatDesertification

UNFCCC UnitedNationsFrameworkConventiononClimateChange


3/21

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TABLEOFCONTENTSEXECUTIVESUMMARY.............................................................................................................444

1. BACKGROUND.............................................................................................................666

2. RATIONALEFORESTABLISHINGTHEAFGF......................................................................777

2.1 AfricasLimitedAccesstoExistingClimateFinancing................................................................... 777

2.2

Needfor

aFinancing

Mechanism

Hosted

in

Africa

and

Alignment

with

Africas

Priorities

.........

888

2.3 RequestbyAfricasLeadership.................................................................................................... 999

3. THEAFRICAGREENFUNDPLATFORM............................................................................999

4. THEAFRICAGREENFUND(AFGF).............................................................................101010

4.1 GoalandObjectivesoftheAfGF............................................................................................ 101010

4.2 ScopeoftheFund................................................................................................................... 101010

4.2.1 AfGFsFinancingWindows............................................................................................................101010

4.3 GovernanceStructure............................................................................................................ 121212

4.3.1 TheGoverningCouncil...................................................................................................................121212

4.3.2 TheAfGFSecretariat......................................................................................................................131313

4.4 Trustee................................................................................................................................... 131313

4.4.1 AfDBasTrustee...............................................................................................................................131313

4.4.2 ManagementofFunds...................................................................................................................141414

4.4.3 FinancialReporting.........................................................................................................................141414

4.5 ExecutionofLegalAgreements.............................................................................................. 141414

5. IMPLEMENTINGANDFINANCINGARRANGEMENTS...................................................151515

5.1 EligibilityandAccessibility...................................................................................................... 151515

5.2 FinancingProceduresandConditions.................................................................................... 161616

6. COMPLIANCEANDREPORTING...............................................................................171717

6.1 FiduciaryStandardsandResponsibility.................................................................................. 171717

6.2 Audit....................................................................................................................................... 181818

6.3 EnvironmentalandSocialSafeguards.................................................................................... 181818

6.4 Gender................................................................................................................................... 181818

6.5 MonitoringandEvaluation.................................................................................................... 191919

6.6 Reporting................................................................................................................................ 191919

6.7 DisclosureofInformation....................................................................................................... 191919

7.

EXPECTEDROLE

OF

THE

BANK

.................................................................................

191919

7.1 TheBankasaTrustee............................................................................................................. 202020

7.2 TheBankastheAfGFsSecretariat......................................................................................... 202020

7.3 TheBankasanImplementingEntity...................................................................................... 202020

7.4 AfGFsAlignmentwiththeBanksMandate.......................................................................... 202020

8. AFDBSINSTITUTIONALCAPACITYTOMANAGEAFGF................................................202020

9. NEXTSTEPS...........................................................................................................212121


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EXECUTIVESUMMARY

1. There is strong evidence from the scientific community that climate change would have adisproportionately largeeffectonsocioeconomicdevelopment inAfrica.Theaveragecostofclimate

changetoAfricaneconomiescouldbebetween1.5and 3percentofGrossDomesticProduct(GDP)by

2030andrising.Climatechangeisathreattotheachievementofsustainabledevelopmentandpoverty

alleviation on the continent. It has shown the potential to undo the modest gains made by the

continenttowards

attaining

the

Millennium

Development

Goals.

2. Africas high vulnerability to the adverse impacts of climate change makes incorporatingadaptation in all sectors the immediate and medium term imperative. Although the continent is

currentlya lowcarbonemitter,abusinessasusualscenarioshowsthat ithastheriskofbecominga

majoremitterinthefutureifnothingisdonenowtohelpit followalowcarbonintensivegrowthpath.

3. However, adaptation and mitigation come at additional costs to the ongoing developmentinterventionsonthecontinent.RecentestimatesofthecostofputtingAfricaona lowcarbongrowth

pathwayareaboutUS$912billionperyearby2015whiletheincrementalcostofadaptationinAfrica

is estimated between US$13 US$19 billion, ifproper actionsare not taken now. Current organized

interventions will substantially reduce these costs. Yet, the long term economic benefits from the

implementationof

the

required

adaptation

and

mitigation

measures

on

the

continent

would

outweigh

thesecosts.

4. Current resources available to address climate change concerns on the continent are grosslyinadequate, asare the related financing. Africa has had historically low access rate to global climate

changefunds.Furthermore,previouslyavailableresourceshaveprovedinadequatetourgentlyredress

the African climate change effects. A reportjointly produced by Multilateral Development Banks in

2010 shows that Africa has received the lowest proportion of climate change financing among the

developingregions.Manyofthecontinentspeculiaritieshavenotbeentakenintoconsiderationinthe

design of existing global funds, including the need to provide greater financing for adaptation. It is

therefore important that the resourcespledgedunder theCancunAgreements bemanagedundera

mechanism that will adequately respond to the continents needs and increase its access to such

funds.

5. A binding global deal on climate change did not materialize at the 2009 UNFCCC COP 15 inCopenhagen. However, the Copenhagen Accord endorsed by the worlds Heads of State and

Government,Ministers,andotherheadsofdelegationnotedthatdevelopingcountries,especiallythose

withlowemittingeconomies,shouldbeprovidedincentivestocontinuetodevelopona lowemission

pathway.TheAccordprovidedforacollectivecommitmentbydevelopedcountriestoprovidenewand

additional fasttrack financing, approaching US$ 30 billion for the 2010 2012 period. The Accord

further established the goal of mobilizing US$ 100 billion a year by 2020 by developed countries to

addresstheneedsofdevelopingcountries.

6. TheCancun COP16held inDecember2010 formalizedthecommitmentmadebydevelopedcountries

in

Copenhagen

to

mobilize

US$100

billion

a

year

by

2020

to

address

the

mitigation

and

adaptation needs of developing countries. The Cancun Agreements include the establishment of a

GreenClimateFund,whichwillmanageaportionofthisfundinginordertoscaleuptheprovisionof

longtermfinancingfordevelopingcountries.ThedesignoftheGCFbytheTransitionalCommittee(TC)

isunderwayandisexpectedtobedeliveredinCOP17inDurban,SouthAfrica,inDecember2011.

7. Despite the progress mentioned above, Africas low access to global funds to address itsclimatechangeneedshasprompteditsleadershiptorequestsomeoftheresourcespledgedunderthe

CopenhagenAccordandtheCancunAgreementstobeallocatedtoAfrica,andtobemanagedbythe

African Development Bank (AfDB). Recent decisions by Africas leadership in the last AU Summit in

Malabo,EquatorialGuinea, from 23 June to1 July2011, requested theBank tocomplete theAfGFs


5/21

AMCEN/SS/IV/REF./2

Page | 5

designaheadofCOP17.

8. Whenestablished,theAfGFwillcomplementexisting instruments,andenhancetheabilityofAfricancountriestorespondtoClimateFinancechallenges.ThedesignandestablishmentoftheAfGFis

anongoingprocess thatbenefits fromextensiveconsultationwiththe institutionsRegionalMember

Countries, Donors, the Civil Society and a variety of other stakeholders. It also benefits from the

experience that the Bank has acquired in hosting and administering special funds that address the

needs

and

specificities

of

African

countries.

The

Fund

is

part

of

the

AfGF

platform

that

aims

at

addressing the gaps in climate financing in Africa. The platform comprises three building blocks. The

first block constitutes a set of existing thematic climate finance instruments within the AfDB (AWF,

CBFF, SEFA, ClimDevAfrica Special Fund) within a framework that will improve their efficiency by

simplifying processes and improving access. Although the governance of these instruments will be

harmonized, to the extent possible, it will remain internal to the Bank. Access is open to Regional

Member Countries directly or through the Bank. The second block involves the creation of a new

instrument; the Africa Green Fund (AfGF), with a governance structure that involves both African

countries and donors and held in trust by the AfDB that is able to receive, manage, and deliver

resourcesfromFastStartFundsandlongtermpledgesmadeundertheCopenhagenAccordandCancun

Agreements as well as other sources. The AfGF is independent of the Banks own decisionmaking

structure. The third block is a scaled up Africa Green Fund instrument that echoes the key design

features

of

the

Green

Climate

Fund

that

will

seek

to

receive,

manage

and

deliver

funds

to

Africa

with

a

governancestructure that involvesbothAfricancountriesanddonors. Itwillseek tobecomeAfricas

preferredchannelforpartoftheclimatefinanceresourcesoverthemediumterm.

9. TheAfGFwillprovidebalancedallocationtobothmitigationandadaptation.Itwillsupportthetransfer and deployment of low carbon technologies with a significant potential for long term

greenhousegasemissionssavings,andclimateproofingofthecontinents investments.TheFundwill

allow direct access1 to eligible countries and institutions to respond to countryspecific needs and

concerns,basedonnationallydefinedobjectives.Thefundsoperationwillbededicatedtoaddressthe

special nature of climate change challenges and Africas specific circumstance, and it will focus on

operationsthatsupportclimatecompatibledevelopmentonthecontinent.TheoperationoftheAfGF

buildsontheexperiencesofotherinternalandinternationallyadministeredclimatechangeFunds.

10. Dependingonthenatureofthepledgesandresourcesmadeavailable,theAfGFshallprovidegrants,concessional loansandguaranteestosupportpublicaswellasprivatesector investmentsand

capacitybuilding inAfrica. Itwillcomplementtheactivitiesofotherglobal fundssuchas theClimate

InvestmentFunds(CIFs),theGlobalEnvironmentFacility(GEF),andtheAdaptationFund(AF),anditfill

thegaps identifiedtoaddressAfricaschallenges.TheFundsadministrationwillensureownershipby

AfricancountriesoftheprojectsandprogrammestobefinancedbytheFund.

11. Recognized entities operating on the continent including eligible African countries, andinstitutions such as the AfDB, other MDBs and national governments, shall serve as the Funds

ImplementingEntitiesandshallbeeligiblefordirectaccesstotheFundinordertoimplementclimate

compatible projects on the continent. The AfGF will ensure transparency, equity and accountability

through itsorganizationandgovernancestructures. Inordertoprovidestrategicguidance,oversight

andto

ensure

broad

donor

and

stakeholder

participation,

the

AfGF

will

have

alean

Governing

Council,

comprisingequalrepresentation fromdonorandAfricancountries,withtheCivilSocietyandprivate

sectoractingasobservers.TheFundsoperations,includingprojectapprovals, will besupportedbya

FundSecretariatthatwill behousedattheAfricanDevelopmentBank.TheAfricanDevelopmentBank

willserveasaTrusteeoftheAfGF.

1DirectaccessmeansthataccreditedagenciesintheRMCswillbeabletodirectlyapproachtheFund.Theaccreditation

approachisdetailedinSection8.


6/21

Page | 6

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7/21

AMCEN/SS/IV/REF./2

Page | 7

yearby2020.

1.6 Whilethe internationalcommunityhasrecognizedtheneed forenhancedadditional financial

support to Africa, it is equally important to have a proper financing mechanism to deliver these

commitments to ensure that the continent benefits optimally from the pledges of the Cancun

Agreements. CurrentfinancingmechanismshavenotdeliveredtheresourcesthatAfricaneeds,hence

theneedforanewfinancingmechanismthatisappropriateforthecontinent.

1.7 The High Level Advisory Group on Climate Finance set up by the United Nations Secretary

GeneralinFebruary2010stressedinitsfinalreportlaunchedinNovember2010theexceptionalnature

ofclimatechangeinAfrica,andrecognizedthatanAfGFcanbeanappropriatewaytofacetheclimate

changechallengesinthecontinent.ThereportespeciallynotedthatraisingUS$100billioninadditional

climate finance by 2020 is challenging but feasible, considering four sources of revenue: public

revenues;developmentbankinstruments;carbonmarkets;andprivatelowcarboninvestment.

1.8 Therecent17thOrdinarySessionofAUHeadsofStateandGovernmentheldinMalabofrom23

Juneto1July2011calledontheAfDBtocompletethedesignoftheAfGFaheadofCOP17inDurban.

2. RATIONALEFORESTABLISHINGTHEAfGF2.1

Africas

Limited

Access

to

Existing

Climate

Financing

2.1.1 The resource requirements to address the threats of climate change and grow a low carbon

economy inAfricafarexceedcurrentlyavailablefunds.The incrementalcostofadaptation inAfrica is

estimatedbetweenUS$13US$19billionandUS$9US$12billionperyear formitigationby20152.

Thisclimate financinggapwillseriouslyhampereffortsbyAfricancountries to respondeffectivelyto

the growing challengesof energy security and adaptation, especiallywith regard to countries facing

highpovertylevels.

2.1.2 Africancountrieshavehadlimitedbenefitfromcurrentfinancingmechanismswhencompared

tootherdevelopingcountries.Comparedtootherworldregions,Africahasreceivedonlylimitedglobal

Climate funds3actuallydisbursedbetween2005and2009.ArecentjointMDBsAssessment4hasalso

revealedthat

only

12%

of

all

MDB

disbursed

mitigation

financing

within

2006

2009

has

gone

to

Africa.

2.1.3 While global attention focuses on efforts at mitigating greenhouse gas emissions, adaptation

remainsAfricasprioritybecauseoftheregionshighcurrentandprojectedvulnerabilitytotheadverse

impactsofclimatechange.Anassessmentofcurrentclimatechange financingshowsthat82%ofthe

resources go to support mitigation, 5% for Reducing Emissions from Deforestation and forest

Degradation(REDD+),only8%foradaptationandabout5%formultifociprojects.Adaptation inSub

SaharanAfricawilltakealargershareofnationalincomecomparedtootherregions(Table1).

2 Grantham Research Institute on Climate Change and Environment, Possibilities for Africa in Global Action on Climate

Change,ImperialCollege,UK(2009)3ThemajorclimatefundscomefromsourcessuchastheClimateInvestmentFund(CIFs),GlobalEnvironmentFacility(GEF),

CleanDevelopmentMechanism(CDM),andtheAdaptationFund.4PreliminaryjointMDBReportonClimateFinancing,June2010


8/21

AMCEN/SS/IV/REF./2

Page | 8

Table1:ProjectedAdaptationCostsbyWorldRegions(%GDP)5

Region NCARestimates CSIROestimates

SubSaharanAfrica 2.44% 2.26%

EastAsiaandPacific 0.71% 0.58%

EuropeandCentralAsia 0.67% 0.39%

LatinAmericaandCaribbean 0.72% 0.56%

MiddleEastandNorthAfrica 0.33% 0.34%

SouthAsia 1.17% 1.39%

2.1.4 Currently,allglobalfundsarehosted,governedandadministeredoutsidetheAfricancontinent,

creatingasenseofalienationamongtheintendedbeneficiariesbecausetheirgovernancestructuresdo

notpromoteAfricasequitableparticipation indecisionmaking.There isalsothe lackofownershipof

climate changerelated projects financed on the continent by African governments and intended

beneficiaries. Some of these funds have exceedingly cumbersome accessibility procedures, with

unnecessarycomplexityandbureaucraticbottlenecksdelayingnationalplans.

2.2 Need for a Financing Mechanism Hosted in Africa and Alignment with Africas

Priorities

2.2.1 TheAfGF,dedicatedtotheneedsoftheAfricancontinent, isimperative.TheAfGFservesasa

financingmechanism foraddressing thespecificneedsessential fortacklingclimatechange inAfrica.

ThedesignoftheFundrespondstothepeculiarneedsandcircumstancesofthecontinent.Hostingand

administeringclimatechangefunds inAfricabyanAfrican institutionhasscoresofadvantagesforthe

continent.

Firstly, itenhancestheownershipofclimatechangeresourcesand investments,andprojectideas and processes necessary to deal with climate change as well as reinforce countryled

processes.

Secondly,itempowersAfricancountriestoparticipatefullyindecisionmakingregardingtheuse of the funds. The active presence of African countries in the decisionmaking processes

pertaining to allocating funds, through an appropriate governing structure, will enhance the

principleofequityand fairness in theallocationof fundsaswellasprovide the incentives to

ensurethattheresourcesaredisbursedtransparentlyandusedforthepurposesforwhichthey

havebeenprovided.

Thirdly, it facilitates easier and direct access for recipient African countries and otherbenefitingentitiestothefunds,therebyrespondingefficientlyandurgentlytoAfricasclimate

changeneeds.

Fourthly, it provides a balanced allocation to both adaptation and mitigation throughappropriate instruments while directly responding to national concerns through nationally

definedobjectives.

2.2.2 Thehostingandmanagementofaconsolidatedclimate fund inAfricawillreducethecurrent

fragmentation of climate funds and will increase the continents access to the pledges under the

Copenhagen Accord and commitment under the Cancun Agreements. This increased access will

enhancethecontinentsconfidencetocontributetoclimatechangeeffortsaspartofthesolutiontoan

intelligentglobalclimatechangedeal.

5ExtractedfromAdapcostbriefingpaperpreparedbytheStockholmEnvironmentInstitute(2009)


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AMCEN/SS/IV/REF./2

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2.2.3 The administration of the Fund by the African Development Bank is consistent with its

institutionalmandateandcapacitytomanage investments incoredevelopmentsectors inAfrica.For

example, the total lending volume by the Bank to African countries for the 20082010 period was

US$24.8 billion, comprising US$14.4 billion of ADB (nonconcessional) and US$10.4 billion for ADF

(concessional)loansandgrants.Ofthis,infrastructurereceivedthelargestsharewith60%(inclusiveof

private sector). The public sector benefited 51% with 9% allocated for private sector operations.

Governance

accounted

for

22%,

14%

for

regional

integration,

the

remaining

was

allocated

to

agriculture,health,environment&climatechangeandeducation.

2.3 RequestbyAfricasLeadership

2.3.1 BasedonAfricascharacteristicallylowaccesstoexistingglobalfunds,andtheneedtourgently

increase Africas access to resources to address the continents increasing vulnerability, the African

leadershipatCOP15 requestedthatsomeofthefasttrackresourcesforclimatechangeprovidedfor

intheCopenhagenAccordbeallocatedtoAfrica.TheGroupfurtherrequestedthatAfricasallocationof

the fasttrack financing as well as its share of longterm financing be administered by the African

DevelopmentBank.Thisdecisionwasendorsedbythe14thOrdinarySessionoftheHeadsofStateand

GovernmentoftheAfricanUnionon2February2010.TherecentMalaboDecisionstakenduringthe

17thOrdinarySessionoftheAUHeadsofStateandGovernmentmeetingheldfrom23Juneto1July

2011

also

called

on

the

AfDB

to

complete

the

design

of

the

AfGF

ahead

of

COP

17

in

Durban.

2.3.2 The AfGFs establishment comes as a response to this request by Africas leadership.

Preliminary consultations were held in 2010. At the 7th

African Development Forum in Addis Ababa,

Ethiopia, from 10 15 October 2010, African Ministers, the Civil Society and other stakeholders

supported the African Development Banks proposal to establish this Fund, and requested speedy

processing to enable Africa to benefit from the pledges and commitments under the Copenhagen

AccordandCancunAgreements.

3. THEAFRICAGREENFUNDPLATFORMThe African Green Fund is part of a platform that addresses climate financing gaps in Africa. The

platform will bring together a number of existing and new climate finance instruments to enhance

Africas

access

to

climate

finance.

The

platform

is

designed

as

a

flexible

and

efficient

mechanism

that

seekstogrowovertimeand isabletoadjusttofutureclimatefinancearchitecture inawaythatbest

servesAfricasneeds. ThebuildingblocksofthePlatformcanbedescribedasfollows:

The first block constitutes a set of existing thematic climate finance instruments within theAfDB(AWF,CBFF,SEFA,ClimDevAfricaSpecialFund)withinaframeworkthataimstoimprove

theirefficiencybysimplifyingprocessesandimprovingaccess.Accesswillcontinuetobeopen

toRegionalMemberCountriesdirectlyorthroughtheBank.

The second block involves the creation of a new instrument; the Africa Green Fund (AfGF)whichwillbepartoflongtermfinance,withagovernancestructurethatinvolvesbothAfrican

countries and donors, and managed in trust by the AfDB. The structure should be able to

receive,

manage,

and

deliver

resources

from

fast

start

funds

and

long

term

pledges

made

under

the Copenhagen Accord and Cancun Agreements as well as other sources. The AfGF is

independentoftheBanksdecisionmakingstructure.

ThethirdblockisascaledupAfricaGreenFundinstrumentthatechoesthekeydesignfeaturesoftheGreenClimateFund(GCF)thatwillseektoreceive,manageanddeliverfundstoAfricaat

scale,withagovernancestructurethatinvolvesbothAfricancountriesanddonors.Itwillseek

tobecomeAfricaspreferredchannelforpartoftheclimatefinanceresourcesoverthemedium

term.


10/21

Page | 1

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F


11/21

AMCEN/SS/IV/REF./2

Page | 11

climateresilientdevelopmentonthecontinent.Itwillsupportthemainstreamingofclimateresilience

and adaptation into development planning, poverty reduction strategies and socioeconomic policies

thatwill include: investments inwaterresourcesmanagement, landmanagement,agriculture,health,

transport and other infrastructure development, fragile ecosystems, integrated coastal zone

management, enhanced capacity to monitor diseases and vectors affected by climate change and

related forecasting and earlywarning systems, and in this context, improve disease control and

prevention.Consideringthe limitedunderstandingofhowadaptationcanbe implementedwithinthe

context

of

development,

the

Fund

shall

serve

as

a

catalyst

for

faster

and

better

understanding

of

Africa

specificadaptationissues.Someoftheprogramsthatwillbefundedinclude: SustainableLandandWaterResourceManagement: increasingfinancingrequiredtosupport

multipurposewater infrastructure,optimizationofexistingdams,waterstorageandirrigation

systems and projects in support of the implementation of the African Agenda on the water

sector, particularly the Africa Water Vision 2025, adopted by the African Ministers of Water

ResourcesandendorsedbytheAfricanUnion. BuildingClimateResilienceinKeyEconomicSectors:supportingthegenerationofknowledge

and competencies required to make adaptation a core component of development in key

economic sectors and promoting innovative initiatives with the potential of positive

transformation. These interventionswillalso targetactivities toenhance theprivatesectors

capacity

to

support

adaptation.

The

private

sector

has

an

important

role

to

play

in

supporting

adaptation,whichiscurrentlybeingsupportedentirelyfrompublicsources.

SupportingDisasterManagementActivities:Supportingthedevelopmentandimplementationof disaster management strategies for vulnerable populations. These strategies could include

earlywarningprocedures fornaturaldisasterssuchas floodsordroughtsthatare forecastto

increase in frequencyandmagnitude,anddiseaseoutbreaksaswellasmeasuresdesignedto

alleviate the impact of natural disasters in order to minimize loss of human life, economic

assets,andnegativeeffectsonbothurbanandruralsocieties.4.2.1.2 Mitigation Window. This financing window will support low carbon actions addressing the

power sector (renewable energy, as well as increased efficiency in generation, transmission and

distribution, transboundary interconnection lines); transportation (modal shifts to public

transportation,improvedfueleconomy,andfuelswitching);andlargescaleadoptionofenergyefficient

technologies,water

sector

and

other

demand

management

techniques

in

the

relevant

sectors.

It

will

alsosupportreductionofemissionsfromdeforestationandforestdegradation,includingthepromotion

of conservation, sustainable management of forests and the enhancement of forest carbon stocks

(REDD+).ThescopeofprogramsbenefitingfromtheMitigationWindowwillincludethefollowing:

RenewableEnergyandEnergyEfficiency:supportingan increasingshareofrenewableenergyinAfricasenergymixandadditionalelectricitygeneration,usingrenewableenergysourcesas

wellaspromotingsupplyanddemandsideenergyefficiency. SustainableTransport:supportingprojectsthatfocusontechnologicalsolutions,suchasmore

efficientpublictransport that ispoweredbynewfuelcellsandclean liquidgas;projectsthat

improve the transportsystemon anurban scale,eitherbystandalone investments (public

transportinfrastructures,nonmotorizedtransport),andcomprehensiveurbanstrategies,such

as

urban

and

transport

planning,

the

introduction

of

multimodal/mass

rapid

transit

systems/trafficandfleetmanagementsystemsleadingto increasingaccesstoandshareinthe

useofpublictransportbyurbancommuters. Sustainable Land and Forestry Management: Scalingup support to sustainable forest

management, including the development of policy frameworks to slow the drivers of

undesirable landuse changes, supporting projects to reduce greenhouse gases from

deforestationandforestdegradation,andsupportingafforestationandreforestationleadingto

7 An adaptation program is understood as a process, a plan, or an approach for addressing climate change impacts that is

broaderthanthescopeofanindividualproject.


12/21

AMCEN/SS/IV/REF./2

Page | 12

a reduction in thecurrentrateofdeforestationand landdegradation.Severalcountrieshave

collectively pledged about US$ 6 billion dollars to support REDD+ initiatives in developing

countries.REDD+initiativesinAfricawillbenefitfromtheseglobalresourcesthroughthefunds

channeledthroughthisAfGFwindow.4.1.2.3 Tosupportmitigationandadaptationefforts,thefollowingcrosscuttingprogramsshallalsobe

fundedfromthetwoAfGFwindows:

Enhanced

Technology

Development

and

Transfer

Program.

While

there

are

significant

gains

to

bemadefromtheadoptionofexistingtechnology,additionaleffortsareneededtodeveloped

new technologies to better support mitigation and adaptation efforts on the continent. This

callsforcooperationonresearchanddevelopmentofcurrent,newandinnovativetechnology,

including winwin solutions, and collaboration by institutions in developed and developing

countries,onmitigationandadaptationtechnologies.It isproposedthattheAfGFwillsupport

northsouth and southsouth technological collaborations, including the promotion of

indigenoustechnologies.

CapacityBuildingActivities.TheAfGFwillfund initiativestoenhancecapacityandknowledgewithin Regional Member Countries to address the climate change challenges and ensure

sustainability and gender equality through policy and regulatory reforms and strengthen

existingand,whereneeded,establishregionalandnationalcentresand informationnetworks

for

addressing

climate

change

impacts,

including

those

related

to

extreme

weather

events.

Capacity building investments from the AfGF will be complementary to those undertaken by

otherinitiativesandFunds.

Fostering Collaboration and Coordination between the three UN Conventions UNFCCC,UNCCD and UNCBD as climate change, desertification, and the loss of biodiversity are

inextricablylinked.

TheAfGFwillalsofundothercrosscuttingspecialinitiativesthatmayadvanceitspurpose.Thismightincludetheestablishmentofspecializedproductssuchasaclimateindexinsurance.

4.3 GovernanceStructure

TheAfGFsgovernancestructure isdesignedtoprovidetherequiredtechnicalsoundnessandproper

oversight,while

ensuring

efficiency

and

effectiveness.

The

initial

governance

framework

has

been

set

outbelowandinotherpartsofthisdocument.Theconstitutivedocumentsprovidingfurtherdetailsof

the Fund and its governance will be developed following AfGFs establishment. The governance

structure consists of the Governing Council, the Trustee and the Fund Secretariat. The Governing

Council will decide on any constitutive documents and further developments of the governance

structure.

4.3.1 TheGoverningCouncil

4.3.1.1 Inordertoprovideastrategicorientationaswellaspolicy,financialandlegalguidanceinorder

to provide oversight and ensure broad donor and stakeholder participation, the AfGF will have a

Governing Council which will also serve as the AfGFs ultimate governance authority. The Governing

Council will have 9 voting members, comprising an equal number of representatives of donors and

Africancountries

(4

each),

and

arepresentative

of

the

Trustee.

Observers

will

include

civil

society

and

privatesectorrepresentatives.

4.3.1.2 ThenominationofmembersrepresentingAfricancountrieswillbeonthebasisofarotational

andregionalrepresentation,basedontheselectioncarriedoutbyAU inconsultationwiththeRECs.

The donors shall consult among themselves in order to select their representatives. A senior AfDB

representative willrepresenttheTrustee.

4.3.1.3 Decisions by the AfGF Governing Council will be made by consensus (which does not imply

unanimity but a possibility for a member to block a decision), and the quorum necessary for the

conduct of any meeting of the Governing Council shall be five members, including at least one


13/21

AMCEN/SS/IV/REF./2

Page | 13

representativeofeachofthedonors,AfricanGovernmentsandtheBank.TheAfGFGoverningCouncil

will meet at such frequency as it may decide, but at least once a year. The Governing Council may

choosetodelegateitsauthoritywhenappropriate.Dependingontheimportanceofthedecisionstobe

taken,theGoverningCouncilmaydecidetohavephysicalorvirtualmeetings.

4.3.1.4 In addition to being the Funds ultimate governance authority, the Governing Council is

responsible fordeterminingAfGFsgeneralpolicydirection,ensuringanalignmentwith international

standards;

and

reviewing

and

approving

the

annual

report

of

activities

financed

with

AfGF

resources.

4.3.1.5 The Governing Council is also responsible for approving AfGFs resource envelope and

disbursementdecisionsforprogramsandprojectstobefinancedusingAfGFresources, thetechnical

integrity and consistency of a transparent proposal review process. It is also in charge of approving

AfGFsadministrativebudgetofthe.

4.3.1.6 The AfDB Board of Directors shall have an oversight role only over the performance of the

BanksroleasTrusteeandonlyoverAfGFfinancedprojectsimplementedbytheBank.

4.3.2 TheAfGFSecretariat

4.3.2.1 A Secretariat will be established to support the AfGF Governing Council, and to facilitate

communications betweentheGoverningCouncilandallotherAfGFstakeholders.TheSecretariatwill

beresponsibleforthedaytodaymanagementoftheAfGFportfolio,executingtheGoverningCouncilsdecisions,providingadministrativesupport,andoverseeingmonitoringandevaluationoftheFunds

portfolio. It is also responsible for screening proposals submitted, making recommendations to the

GoverningCouncilandcommunicating programsandprojectproposals.TheSecretariatisalsoincharge

ofpreparingtheGoverningCouncilwork.Itisalsoresponsibleforreviewingprogramsandprojectsto

ensureconsistencywiththeobjectivesoftheFund,eligibilitycriteriaandensuringthemonitoringand

periodicindependentevaluationofperformanceandfinancialaccountability ofimplementingentities.

TheSecretariatalsoensurescomplementaritybetweenactivitiesoverseenbytheAfGFandthose of

other development partners active in the field of climate change such as the CIFs, GEF, AF and the

UNFCCC,andensureseffectivecooperationtomaximizesynergiesandavoidoverlap.

4.3.2.2 The AfGF Secretariat shall be hosted at the AfDB headquarters and shall be headed by a

Coordinator

who

will

be

appointed

by

the

Governing

Council

at

a

level

commensurate

with

the

responsibilitiesoftheoffice.

4.3.2.3 TheAfGFSecretariatwillberesponsiblefortheaccreditationprocessofImplementingEntities

inordertoensurethattheymeetbasicfiduciarystandardsasapprovedbytheGoverningCouncil.

4.3.2.4 Staffing8requirementsoftheSecretariatareexpectedtoincluderelevantspecialistsinclimate

changerelatedoperations,legal,fiduciary,safeguardsandadministration.Thesestaffwillberecruited

directlyfortheFundbutsomecouldalsobesecondedfromtheBankandotherImplementingEntities,

where appropriate. The TOR of the Secretariat will be elaborated in the Operational Manual to be

preparedbytheTrusteeinconsultationwiththeGoverningCouncil.

4.4

Trustee

4.4.1 AfDBasTrusteeTheAfricanDevelopmentBankservesasAfGFsTrustee.Inthiscapacity,itwillestablishatrustfundfor

theAfGF toreceivecontributions,andwillhold in trust,assetsand receipts thatconstitute theTrust

Fund,pursuanttothetermsoftheagreementsenteredintowithdonors.TheTrusteeisresponsiblefor

8 Based on initial provisional staffing assumptions of a Coordinator, 8 professional staff, 1 Secretary and 1 Team Assistant,

meetings of Governing Council and equipping of Secretariat, the estimated operating costs for the first year should be

approximatelyUS$1.6million.ItisimportanttonotethattheoperatingcostsshallalwaysbebornebytheFund.


14/21

AMCEN/SS/IV/REF./2

Page | 14

threemajorfunctions:managementoffunds,financialreportingandexecutionoflegalagreements.

4.4.2 ManagementofFundsa. Inthiscapacity,theBankshallberesponsiblefor:(i)Establishingandmaintainingappropriaterecords and accounts to identify contributions and other receipts, including reflows; (ii) Disbursing

approved funds in accordance with instructions received by it from the AfGF Secretariat; and (iii)

PreparingfinancialreportsandauditcoordinationfortheFund.

b. Pendingthedisbursementof proceeds,theAfDBwillinvesttheFundsresourcesinaccordancewith AfDBs policies and procedures for the investment of other similar funds that it administers.

IncomeearnedoneachinvestmentwillbecreditedtotheFund,thusincreasingresourcesavailablefor

operations.

4.4.3 FinancialReporting

TheBankasaTrustee isaccountabletotheGoverningCouncilwithregardto theperformanceof its

fundmanagementresponsibilities.TheBankwillsubmitannualreportstotheGoverningCouncilonthe

AfGFs financial status. The Bank will provide for an external annual audit of the funds accounts in

accordancewith

its

usual

external

audit

regime.

The

Bank

will

also

forward

to

the

Governing

Council

a

copyoftheannual,AfGFauditedfinancialstatementstogetherwiththeauditorswrittenreportofthe

auditfindings.

4.5 ExecutionofLegalAgreements

(a) AsaTrustee,theAfDBwillacceptastandardizedLegal InstrumentofParticipationfromeachfinancialcontributor.TheTrusteewillalsoenterintoagreementswitheachofthestakeholdersofother

climatechangerelatedfunds,andImplementingEntities,whichwillsetoutthetermsandconditionsof

commitment,transferofAfGFresourcestotheimplementingEntities,aswellasreportingrequirements

andremediesincaseofabreachoftheagreement.

(b) TheTrusteewill,subjecttotheavailabilityofapplicableresourcesintheFundandthetermsofthe

Contribution

Agreements,

make

commitments

and

transfers

of

AfGF

resources,

in

accordance

with

the approvals of the AfGF Governing Council and to the relevant approval organs of respective

Implementing Entities (as will be described in the AfGF Operational Manual and stipulated in

agreementstobeenteredintobetweentheTrusteeandtheseImplementingEntities).

(c) UpontransferoffundstotheImplementingentities,theTrusteewilltakenoresponsibilityfortheuseoftheAfGFresourcestransferredandactivitiescarriedouttherewith.TheTrusteewillrequire,

andreceivefromtheImplementingEntitiescertainperiodicfinancialandotheragreedreports,aswill

be required under the agreements to be entered into between the Trustee and the Implementing

Entities.


15/21

Page | 1

5.

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16/21

AMCEN/SS/IV/REF./2

Page | 16

c) Potential for costeffective Greenhouse Gas (GHG) Emissions Savings: demonstrate thepotential for high CO2equivalent emissions reductions over the lifetime of the proposed

program/project.

d) Potential to scale up climateresilient and lowcarbon technologies: provide technological

solutions and should demonstrate the scalability of these technologies and their potential for

greateradoptionanddeploymentonthecontinent.

e) Implementation Potential: demonstrate alignment with country and sector strategies,

responsibility,capability

and

capacity

of

implementing

institutions

or

absorptive

capacity

to

support

technologyadoptionandsustainabilityofprojectsthroughevidenceofcommitmentandownership

ofprojectandrelevantpoliciesand,whennecessary,arrangements for longtermoperationsand

maintenancebyprojectbeneficiaries.

Other appropriate criteria will be added and approved by the Governing Council, once the need

arises.

5.2 FinancingProceduresandConditions

5.2.1 Anaccredited ImplementingEntityshall submitaConcept Note (Request for Funding)with a

resource envelope which shall be processed for approval and earmarking of resources by the

Secretariat for successful requests. This will authorize the Implementing Entity to proceed with the

development,

preparation

and

approval

of

individual

programs/projects

using

its

internal

processes.

Thefinalapprovedprogram/projectdocumentwiththeexactfundingrequestedwillberesubmittedto

theGoverningCouncilthroughtheSecretariat for finalclearance fordisbursement.Detailsofproject

approval process, threshold for project size as well as the accreditation process of Implementing

EntitieswillbeprovidedintheFundsOperationalManual.

5.2.2 Thefollowingrequirementswillapplytoallprograms/projectsfinancedbytheAfGF:

(a) Eachoperationwillbeapprovedandadministeredinaccordancewiththeapplicableguidelines

oftheconcernedaccreditedImplementingEntity,whichwilldischargeitsresponsibilitieswiththesame

degreeofcareasitexerciseswithrespecttoitsownresources;

(b) TheaccreditedImplementingEntitywill,forpurposesofeachfinancing,concludeanagreement

withthe

beneficiary,

expressing

the

terms

of

financing

and

acknowledging

the

source

of

finance;

(c) Eligible expenditures under individual financing will be determined in accordance with the

policies and procedures of the respective accredited Implementing Entity or other approved

organizations,includingenvironmentalandsocialsafeguardsarrangementsandfiduciarystandards.

5.2.3 Each operation will follow the investment lending policies and procedures of the accredited

Implementing Entity, including its fiduciary standards and environmental and socialsafeguards. Each

Implementing Entity will apply its own appropriate procedures in designing, appraising, approving,

supervising,monitoringandevaluatingoperationstobefinancedfromtheAfGF.Detailsofthiswillbe

providedintheOperationsManualoftheFund.

5.2.4

Inline

with

standard

practice

in

relation

to

the

administration

of

similar

funds,

the

Bank

will

charge an Administrative Fee of at least 5% of the contributions to support the AfGF in terms of

services,officespaceandoperatingcosts.TheBankwillhoweverbeentitledtofullcostrecoveryinthe

eventthattheexpenses incurredby it intheexecutionof itsrole inrelationtotheAfGFexceedthe

minimumadministrativefeeof5%10.

5.2.5 TheAfGFmayfacesomerisksthatmayhampereffectiveimplementationofitsobjectives.The

designoftheFundhasprovidedmeasurestomitigatethepotentialnegative impactoftheseriskson

thefunctionalityandoperationalcapacityoftheAfGF.

10ThisfigureisunderconsiderationbytheBank.


17/21

AMCEN/SS/IV/REF./2

Page | 17

5.3 AfGFFinancingInstruments

5.3.1 The AfGF will utilize a range of appropriate financing instruments, including grants and

concessional loans,riskmitigation instruments,suchasguarantees,andequitytosupportpublicand

privateprogramsandprojectsthatcontributetotheobjectivesofthefund.

5.3.2

Grant

funding

will

mainly

be

used

for

activities

that

provide

economic

and

social

benefit

with

theinternalratesofreturnbeingnegativeorbelowthenormalmarketthresholdanddoesprovideany

direct financial return to the participants. As an example, activities in adaptation such as coastal

community preparedness in anticipating increased sea level rise and the education of farmers in

tacklingclimatechange issuescouldbefinancedthroughgrantfunding.Grantelementsareofspecial

importanceforadaptationinterventions,particularlyincountriesthatarehighlyvulnerabletoclimate

changeimpacts.Grantresourcescanalsobeprovidedtogovernmentstocreateenablingenvironments

tosupportprivatesectorparticipationinlowcarbondevelopment

5.3.3 Concessional loans will mainly be provided for investments to support lowcarbon economic

developmentthathave internalratesofreturnjustabovethenormalmarketthreshold. Concessional

loanscouldbeusedtofilltheinvestmentgapintransformingsectorsand,possiblyincombinationwith

revenues

from

emissions

reductions,

to

make

low

carbon

investments

attractive

by

improving

the

internalratesofreturnonsuchinvestments.

5.3.4 The AfGF could provide guarantees to cover political and commercial risks that undermine

project viability which the market is not willing or able to bear. Such risks could include credit risk,

technologyrisks,orchangestotheprojectsregulatoryenvironment.

5.3.5 AfGF instruments will be adequately structured to provide the appropriate level of

concessionality that will increase the commercial viability of projects without displacing investments

that may otherwise transpire through commercial or standard MDB borrowing or guarantees. The

resources of the AfGF may be used complementarily in combination with other instruments and

mechanisms available on the market, such as GEF resources, other donor funds, insurance and/or

carboncredits.

5.3.6 Detailsofthesefinancinginstrumentsandspecificmechanismsdesignedtosupportprivateand

publicsectorparticipationintheAfGFwillbeelaboratedindetailintheAfGFOperationsManual.

6. COMPLIANCEANDREPORTING

6.1 FiduciaryStandardsandResponsibility

AsAfGFwillhavedifferenttypesofbeneficiariesasimplementingentities.AfGFfiduciarystandardswill

bedeveloped,includingcriteriaforaccreditationthatimplementingentitieshavetomeet.

(a) When national entities meet basic standards such as governance and procurementrequirements,

their

country

systems

will

apply

for

direct

access

to

AfGF

resources.

A

set

of

minimum

fiduciary standards will be established through the Operational Manual. Where needed, countries

institutional capacities will be strengthened in order to help them meet the minimum standards

required.

(b) Where AfGF finances operations to be implemented by other Multilaterals and RDBs,procurement arrangements and financial management practices should, in principle, follow those

institutions rules and procedures, where they meet basic accreditation criteria, including fiduciary

standards.


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Page | 18

(c) In cases where the AfGF is financing private sector and civil society organizations, it will beessential to ensure that the quality of fiduciary standards, policies and procedures of these

organizations be generally acceptable. Where these standards are considered inadequate, while

workingtogetherwithsuchorganizationsinordertodevelopstricterstandards,the AfGFsstandards

willapply.

(d) Operations funded by the AfGF and implemented by the AfDB will follow the Banksprocurement

rules

and

procedures

and

financial

management

standards.

However,

consideration

will

be given to making the processes more flexible to allow for faster processing of projects without

compromising on high fiduciary standards (wider use of post review might be considered, where

feasible).

6.2 Audit

6.2.1TheAfGFshallbesubjecttotheinternalcontrolproceduresoftheBank,includinganannualaudit

to be conducted by the external auditors of the Bank. Upon a written request of the Governing

Council, the Bank shall cause the accounts and records of any specific activity financed with AfGF

resources tobeauditedbyafirmofexternalauditorstobeappointedbytheBank.Thecostsofany

suchauditsshallbechargedtotheFund.

6.2.2National

entities

borrowing

from

the

AfGF

resources

shall

be

responsible

for

carrying

out

an

audit

oftheiroperations.

6.3 EnvironmentalandSocialSafeguards

6.3.1 DuediligenceshallbeappliedtoallprojectsandprogramsfinancedusingAfGFresources.The

AfGFshallestablishaminimumsetofenvironmentalandsocialsafeguardstoensurethatallprograms

andprojects financedby theFundareenvironmentallyandsociallyappropriate.Projects financedby

theAfGF,butimplementedbyotherfinancialintermediaries,shallapplytheirenvironmentalandsocial

safeguards policies, where these are found acceptable to the AfGF Governing Council during

accreditation. Wherethesafeguardspoliciesofthe implementingEntitiesdonotmeettheminimum

standards set by the Governing Council, (and where the Implementing Entity has been granted

conditionalaccreditation),

the

safeguards

standards

of

the

AfGF

shall

apply.

6.3.2 Thesesafeguardsstandardsshallbedevelopedinaparticipatoryprocessandshallnotserveas

deterrentstopoorerAfricancountriesinparticipatingintheAfGF.TheAfGFshallprovideresourcesto

enhancethecapacitiesofcountriesthat donotmeettheseminimumsafeguardsstandardstobeable

todoso.

6.4 Gender

Climatechangeandgender inequalityare inextricably linked.Ontheonehand,climatechangeslows

progress towards gender equality and poses a challenge to poverty reduction efforts. On the other

hand,genderinequalitycanfurtherworsentheeffectsofclimatechangeoncommunities.Womenand

men contribute differently to the causes of climate change. They are affected differently by climate

changeand

react

differently

to

its

impacts

and,

given

the

choice,

favor

different

solutions

to

mitigate,

andoptionstodealingwiththeconsequencesofclimatechange.InAfrica,existingdisparitiesresulting

fromwomens socialpositionwithin the familyand thecommunityare aggravatedby theeffectsof

climate change on the factors that protect womens means of subsistence (food, water and energy

supply).Itis,therefore,criticaltounderstandthelinkagesbetweengenderandclimatechangeinterms

of vulnerability and adaptation to existing stressors that have the potential to worsen already

precarious sets of economic and social circumstances, as well as in mitigation actions necessary to

reduceglobalemissions.

Gender inequalities in access to resources, including credit, extension services, information and


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technology, must be taken into account in developing climate change intervention activities.

Intervention efforts to be financed by the Fund will seek to systematically and effectively address

genderspecific impactsofclimatechange intheareasofenergy,water,foodsecurity,agricultureand

fisheries, biodiversity and ecosystem services, health, industry, human settlements, disaster

management, and conflict and security. Gender equality shall be built into the criteria for project

selection. The Log Frame Matrix in project documents will specifically address gender targets and

indicators.TheM&Esystemwillalsobuildintogendermainstreaming.

6.5

Monitoringand

Evaluation

6.5.1 The availability of timely and regular monitoring and evaluation systems and results will

enhanceAfGFsefficientmanagement.Adetailedresults frameworkwillbedevelopedandapproved

bytheGoverningCouncil, inresponsetothespecificsectorandcountrydemandsand inaccordance

with existing Results Management Frameworks. The results framework will have key indicators and

targets that will be set according to the level of resources that will be available, and shall include

gendersensitiveindicators.

6.5.2 The AfGF shall establish an Independent Evaluation Mechanism to carry out periodic

independent evaluation of the overall operation of the Fund, its entities (Secretariat, Trustee,

implementing Entities), and the programs and projects financed by the Fund. This function, at the

beginning,

shall

be

contracted

to

an

external

independent

entity,

until

such

a

time

that

the

Governing

CouncilshalldecidetoestablishanIndependentEvaluationMechanismwithintheFund.Thereportsof

theevaluationshallbesubmitteddirectlytotheGoverningCouncil.

6.5.3 AMonitoringandEvaluationsystemshallbedevelopedfortheAfGFthatshallshow,indetail,

the type, frequency and responsibility for monitoring and evaluation within the Fund. To further

strengthentheuseofcountrysystems,theAfGFshallsupporttheestablishmentofnationalmonitoring

andevaluationsystemstosupportDirectAccessoperations.

6.6 Reporting

The Bank shall present to the Governing Council an Annual Report on AfGF activities. The Annual

ReportshallcontainabriefdescriptionofAfGF activitiesduringtheprecedingfinancialyear,including

alloperationsfinancedfromAfGFresources,andtheoutcomesofsuchoperations. TheAnnualReport

shallalsoincludetheauditedfinancialstatements.

6.7 DisclosureofInformation

AfGF operations of would be subject to the Bank Groups Information DisclosurePolicy. The policy is

intendedtopromoteproperaccountabilityfor resourcesentrustedtotheBanktomanage.Thiswould

bedonethroughthetimelydisclosureanddisseminationofrelevantdocumentstothegeneralpublic,

includinggovernments,civilsocietyorganizationsandtheprivatesector,unless there isacompelling

reason not to do so. Information on AfGFs operations shall be posted on the AfGF website with

updated information on the resources and uses of resources. Audited financial reports, project

completion reports, independent evaluation reports, or any other AfGF relevant documents shall be

disclosedandpostedontheAfGFwebsite.

6.8

Recourse/RedressMechanism

The AfGF shall have an Independent redress mechanism that will receive complaints, evaluate and

make recommendations on the implementation of AfGFs social and environmental safeguards by

implementingentities.TheserecommendationsshallbesubmitteddirectlytotheGoverningCouncil.To

reduce the cost of establishing such a mechanism from the beginning, the Independent Review

Mechanism of the African Development Bank shall perform this function until such a time that the

GoverningCouncilshalldecidetoestablishanIndependentmechanismfortheAfGF.

7.EXPECTEDROLEOFTHEBANK

TheAfricanDevelopmentBankshallserveas TrusteetotheAfGF,hosttheFundSecretariatandbean


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ImplementingEntityfortheFund.ThethreerolesoftheBankwillrequiredifferentcapacities.Potential

conflictsofinterestwillbeaddressedand,ifnecessary,theobjectofspecificcommitments.

7.1 TheBankasaTrustee

7.1.1 The Bank has the requisite experience and capacity to manage and efficiently disburse large

scalefunds,includingthoserelatedtoclimatechange.AsofJune2011,theBankiscurrentlyatrustee

and managing US$ 5.46 billion on behalf of over 50 funds either hosted by the Bank or by external

institutions.

7.1.2 The Banks responsibilities shall include fund management, financial reporting and the

executionoflegalagreements.TheBanks institutionalstructureandprocessesallowtheBanktoplay

this role, as it currently does for several similar funds such as the Nigerian Trust Fund, the NEPAD

InfrastructureProjectPreparationFacility,CongoBasinForestFund,theAfricanWaterFacility,andthe

newlyestablishedClimDevFund.TheBankalsohostsseveralbilateralTrustFunds.TheBanktherefore

hastheexperience inmanagingdifferenttypesoffunds.However,additionalhumanresourceswillbe

requiredbytheBanktoexecuteitsTrusteerole.

7.2 TheBankastheAfGFsSecretariat

TheBankhasadequateexperience inhostingtheSecretariatofFunds. Itplaysthat functionwiththe

AWF,theCBFFandtheClimDevAfricaSpecialFund.Whilethemagnitudeofexistingfunds issmaller

thanthe

proposed

AfGF,

the

principle

is

the

same.

The

Bank

will

recruit

the

required

staff

to

manage

thesecretariatinlinewiththelevelofAfGFresourcesthattheSecretariatwillmanage.

7.3 TheBankasanImplementingEntity

7.3.1 TheBankisanImplementingEntityofotherglobalfundssuchastheClimateInvestmentFunds

andtheGlobalEnvironmentFacility.It iscurrentlybeingaccreditedasan ImplementingEntityforthe

UNFCCCAdaptationFund.TheBankscomparativeadvantageasanImplementingEntitystemsfromthe

factthatitis thelargestinfrastructurefinancinginstitutiononthecontinent.

7.3.2 TheBankalsohasexpertiseinimplementingprojectsinalleconomicsectorsthataresensitive

toclimatechange.AsanImplementingEntity,theBankwillleverageAfGFresourceswithinternalBank

resources as well as raise additional resources from donors who have come to trust the Banks high

fiduciary

standards,

as

exemplified

by

the

recent

Bank

200%

capital

increase.

As

an

ImplementingEntity,theBankwillapplytotheFund,aswithotherregisteredandaccreditedagencies,forresources

toimplementitsprojects.TheBankisnotexpectedtoabsorballtheFundsresources.

7.4 AfGFsAlignmentwiththeBanksMandate

7.4.1 TheproposalfortheBanktohost,governandmanagetheAfGFreflectsacarefulconsideration

ofAfGF objectives,aswellasAfDBsmandate,capacityandprocedures.TheAfDB isasignificantand

committed leader of African development. It was established for the purpose of contributing to the

sustainable economic development and social progress of its regional member states. Clearly,

addressingclimatechangeissuesinAfricaiscriticaltoachievingtheAfDBsmandate.

7.4.2 AfGFsestablishmentisconsistentwithArticle8oftheAgreementestablishingtheBank,which

authorizestheBanktoestablishSpecialFundsthataredesignedtoservethepurposes forwhichthe

Bankwas

created,

and

which

fall

within

the

scope

of

its

functions.

7.4.3 The AfGFs design and implementation will benefit from the experience that the Bank has

acquired inhostingandadministeringsimilarspecial fundsthataddresstheneedsandspecificitiesof

AfDBRegionalMemberCountries.

8.AfDBsINSTITUTIONALCAPACITYTOMANAGEAfGF

8.1TheBankhastherequisiteexperienceandcapacitytomanageandefficientlydisburse largescale

funds,includingthoserelatedtoclimatechange.AsofJune2011,theBankiscurrentlythetrusteeand


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is managing US$ 5.46 billion on behalf of over 50 funds either hosted by the Bank or by external

institutions.From itsownaccounts,theBankstotal lendingvolumefrom2008to2010wasUS$24.8

billion, comprising US$ 14.4 billion in nonconcessionary loans and US$ 10.4 billion in concessionary

loansandgrants.Sixtypercentoftheseresourceswereinvestedininfrastructureacrossthecontinent.

Twentytwopercentwasinvestedingovernanceandcapacitybuildinginvestments,fourteenpercentin

investments promoting regional integration, with the remaining investment shares split across

agriculture, health, environment and climate change and education sectors. To further enhance

development

outcomes,

the

Bank

is

setting

up

a

dedicated

fund

for

fiduciary

reform

activities

to

strengthennational institutionsof regionalmembercountries in theuseof theircountrysystems for

publicfinancialmanagementandprocurementsystems.

8.2Furthermore,theBanks institutionalstructureandprocesseswillallow ittohostandmanagethe

AfGFfund,asitcurrentlydoesforseveralsimilarfunds.

8.3TheBankwillputitsexperiencetoprovideanytechnicalandadvisorysupportneededtotheFund.

The Bank has developed institutional experience. This includes knowledge and expertise designing

climate resilient projects from its experience as an implementing entity for existing global

environmental financing facilities, as well as project design and implementation, capacity building,

policy and regulatory reforms and budget support to climate change initiatives through its own

operations.TheBanksgrowingrenewableenergyportfolioandtherequest fromotherMDBs forthe

Bankto

lead

the

MDB

report

on

financing

adaptation

is

evidence

of

the

Banks

growing

expertise

and

capacitytoaddressbothclimatechangemitigationandadaptation.

9.NEXTSTEPS

9.1TheconsultationwillcontinuethroughSeptemberbeforetheproposalisfinalizedandprocessed

internallyaheadofsubmissiontotheBoardofDirectorsforconsideration.Someofthekeyconsultation

formsinclude:

FurtherconsultationwiththeAfricanNegotiators; ConsultationwithAfricaGroupsRepresentativestotheTransitionalCommitteedesigningthe

GreenClimateFund;

ConsultationwithAfDBBoardmembersthroughaSeminartoseekviewsandcomments; ConsultationwithDonorsandpotentialcontributorstotheFund; ConsultationwiththeAfricanCouncilofMinistersofEnvironment; ConsultationwiththeCivilSocietyandPrivateSector;

Keyareaswherecommentsareinvitedarepresentedbelow:

StructuresupportingtheactivitiesoftheFund; Approvalprocesswithrespecttoprojects/programs,includingprocurementprocedures; MonitoringandevaluatingtheFund; Projectandprogramselectioncriteria; Fundinginstrumentsforbothpublicandprivatesectoroperations; Mechanismonbeneficiarycontributions; Accreditation ofImplementingEntities; PossiblethresholdsonpercentageofAfGFcontributiontoprojects/programsfinancedbythe

Bankandotherpartners;

Proceduresandguidelinesforaccessingfunds;and Monitoringindicatorsandevaluationprocedures.

Documents

Amcen Ss4 Ref 2