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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
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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
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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.
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Page | 6
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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
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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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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.
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Page | 1
Thefoc
FundPl
theglob
4.
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Thegoa
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indow.Add
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onalfinanci
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REF./2
fricaGreen
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lopmentin
viationand
ingspecific
nd internal
as well as
rojectsthat
ralfinancial
adaptation
ngto
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hatsupport
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F
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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.
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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
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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.
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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.
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Page | 1
5.
5.1
5.1.1 T
organiz
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COMES
assistan
national
Thesee
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5.1.2 A
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9Toattai
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5
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andECOW
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ResultsFra
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dability to
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onstratethat
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ntalandsocia
REF./2
vernmental
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ns,suchas
ingorother
iat through
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urces.9
This
untries and
s to design
ssist in the
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mpatible
enhance
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theymeetthe
Manual.These
lsafeguardsas
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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.
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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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(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.