CIFs and the private sector

23 October 2013

Information on the private sector and the CIFs taken from each section of CIF Monitor 8 (October 2013)


Private sector engagement  

The efforts to increase private sector engagement in the CIFs have made further progress. Calls for proposals for the new private sector set-asides for the PPCR, FIP and SREP, to facilitate an increased share of funding to the private sector through a competitive process, were launched after the May meetings. The first set of applicants has been assessed by appointed expert teams, and the nominees will be discussed for final approval in the October/November sub-committee meetings. Most have requested loans rather than grants.

For PPCR, one regional and six country proposals have been shortlisted for approval, a further four were recommended with conditions (see page 16). For FIP, four proposals have been shortlisted, with a further four recommended, subject to further information (see page 20). For SREP, six proposals have been shortlisted, with a further three requiring further work, and subject to further funding becoming available (see page 25). However, CTF’s proposal for a “global private sector programme” raised concerns in the May meeting and has been revised into a Dedicated Private Sector Programs proposal with suggested sub-programmes for discussion and decision on which ones to move forward with in the October meeting (see page 9).

Clean Technology Fund (CTF)

Private sector proposal to be discussed

The proposal for the establishment of a “global private sector programme” (see CIFs Monitor 7) was discussed in the May meeting where several concerns were raised, in particular regarding the suggestion to open up the programme to countries outside the CTF, leading one participant to ask whether a new CIF was being proposed. It was agreed that the proposal would be revised, to be discussed at the October meeting. This includes developing suggested sub-programmes for current CTF countries using $150 million of CTF funds. Issues to be considered include country ownership, governance and project selection criteria.

The subsequent October paper, renaming the proposal Dedicated Private Sector Programs (DPSP), outlines four sub-programmes and requests the committee to choose which ones to develop further:

  • “Utility-scale renewable energy” to “catalyse a global funding effort to scale up renewable energy, starting with a focus on utility-scale geothermal energy”;
  • “Risk capital to address regulatory risks for renewable energy” that will use “a targeted approach to address risks posed by uncertainties arising from a regulatory regime”;
  • “Renewable energy mini-grids and distributed power generation … to leverage private investment to fill financing gaps and to promote the wide-spread development of renewable energy mini-grids to serve rural and under-served off-grid communities”;
  • “Climate finance equity investments … to engage institutional and private equity investors to fill financing gaps encountered in climate change mitigation and low-carbon development.”

Pilot Program for Climate Resilience (PPCR)

Private sector projects get green light

Concept notes from Dominica, Haiti, Jamaica, Mozambique, Saint Lucia, Tajikistan and one multi-country proposal for Zambia, Niger and Mozambique were submitted for the new private sector set-aside, to be discussed in the October meeting (see CIFs Monitor 7). The majority of proposals target private sector clients through the MDB’s private sector arms. Only one proposal requested grant resources. An independent expert group appointed in August has assessed the proposals and fully recommended two EBRD projects from Tajikistan, one on the energy sector and one on a small business financing facility. Furthermore, an AfDB project on forestry from Mozambique and IDB projects from Jamaica (on urban household water), Saint Lucia (on the agriculture sector) and Haiti (on an agricultural supply chain) were “recommended with conditions”. Two of the remaining proposals (an AfDB regional private sector project and an IBRD project on community adaptation from Dominica) were asked to resubmit after further development, and the remainder, all from Dominica, were not recommended.

Furthermore, in the May meeting the CIF administrative unit and the MDBs were asked to “prepare further analysis of lessons and good practices to engage the private sector in strengthening climate resilience”, including “an exchange of experiences on this issue among the MDBs, bilateral and other stakeholders”. However, this is not on the agenda of the October meeting.

Forest Investment Program (FIP)

Private sector proposals recommended

Decisions are due to be made on funding for proposals under the FIP private sector set-asides at the sub-committee meeting in October. This follows discussions earlier this year on the procedures for how the $56 million fund to engage the private sector on reducing emissions from deforestation and forest degradation (REDD) and sustainable forest management will work (see CIFs Monitor 7). The proposals will be assessed on their coherence with country investment plans, level of innovation and feasibility.

A total of 11 proposals were received from Brazil, Burkina Faso, Democratic Republic of Congo (DRC), Ghana and Mexico and one region (Africa), which have been assessed by an August appointed independent expert group. The group has recommended four proposals from Brazil, Burkina Faso, Ghana and Mexico, totalling $20.3 million in loans, to be discussed further in the October meeting. Furthermore, proposals from Burkina Faso, Brazil and two from DRC, totalling $31 million in loans, were also recommended, subject to further information.

A March CIF report Incentivising the involvement of the private sector in REDD+ identified key lessons learnt to date including that: the FIP’s added value is to focus on advisory services; the private sector is a key source of REDD+ finance and private sector engagement is dependent on demonstrated profitability of sustainable forest management.

Scaling up Renewable Energy Program in Low Income Countries (SREP)

Private sector funding approved

Decisions are due to be made on funding for proposals under the SREP private sector set-asides at the October sub-committee meeting. The procedures for how the private sector should be funded were presented in April, including how to assess coherence with country investment plans, level of innovation, feasibility and demonstration of private sector support. A July-appointed expert panel has ranked the 12 proposals received and proposed a priority list of six concepts (from Maldives, Mali, Kenya, Nepal and two from Honduras) for a total of $84.6 million to be allocated from the $90 million available. In addition, the panel has listed three concepts requiring further work, should further funding become available. Eleven of the proposals requested concessional loans, with three of them also requesting additional grant funding. Only one requested grant funding.