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Creation of the Global Alliance for Subnational Development Banks for Climate Action

08 October 2019

[Submitted by FMDV]

In order to contribute to the necessity to localize climate finance for sustainable local development, the Government of Cameroun together with the African Network of SDBs (RIAFCO) and the Global Fund for Cities Development (FMDV) launched the African Chapter of the Global Alliance on September 24th during the Climate Action Summit at the United Nations Head Quarter, in New York, USA.

More than 15 countries already engaged and 9 participated to the launching meeting in New York.

The Challenge of Climate Finance for Local Governments:

Local and Regional governments (LRGs) are an integral part of the new global climate financing framework but, to access available public and private financing, need to expand and diversify their financial resources, and solve structural lack of capacities to formulating and implementing bankable low-emission, resilient projects.

Yet, due to constraints in their mandate and business models, MDBs, DFIs and investors remain too much focused on individual projects within countries instead of putting efforts in developing subnational financial markets, including in reinforcing the necessary financial intermediaries dedicated to finance local action: the Subnational Development Banks (SDBs).

SDBs are national public or public-private institutions mandated for providing funding and financing to LRGs for public services provision and investments in infrastructure projects (through technical assistance, guarantees, credit enhancement, intergovernmental transfers, fiscal equalization, and debt; at concessional or market rates; directly or through commercial banks).

SDBs are recognized as key national stakeholders to facilitate access of LRGs to finance, and are more and more used to catalyze external resources from donors or investors to channel them at local level to support local governments in financing their projects (direct investment, project preparation, reinforcing capacities, creditworthiness, etc).

Engagement of the initiative: The Global Alliance aims at creating a commitment of African countries to reinforce their Subnational Development Banks for a better access of African cities to climate finance

Considering the urgent necessity to organize the enabling environment and capacities for long term climate investment at local level, the Government of Cameroun together with the African Network of SDBs (RIAFCO)[1] and the Global Fund for Cities Development (FMDV) launched the African Chapter of the Global Alliance on September 24th during the Climate Action Summit at the United Nations Head Quarter, in New York, USA.

Chaired by Cameron, eight countries participated to the launch with Morocco, Canada, Benin, Niger, Burundi,Kenya, Namibia, along with technical and financial partners who participated as observers such as the African Development Bank, GIZ and UN-Habitat.

In terms of action, the Global Alliance for Subnational Development Banks aims to:

- Demonstrate: pilot regional network, action plan and activities,

- Leverage: show the multiplier effect of one dollar invested in supporting SDBs

- Deliver : setting/feeding pipeline of projects based on SDBs’ databanks of domestic projects and knowledge of LRGs needs and opportunities.

This initiative is a unique opportunity to create the conditions for long term investment for the climate transition of local governments, including secondary territories, leaving no one behind.

The Global Alliance has been integrated as one component of the Leadership for Urban Climate Investment (LUCI) initiative announced during the Climate Action Summit in New York.

The next steps are to present an Action Plan towards COP25 in Chile and to launch the first activities in early 2020.

 

[1]  Created in 2014, the RIAFCO currently has twelve African members from Benin (CONAFIL), Burkina Faso (FPDCT),

Burundi (FONIC), Cameroon (FEICOM), Côte d’Ivoire (FPCL), Gabon (CDC), Guinea ( ANAFIC), Mali (ANICT),

Madagascar (FDL), Niger (ANFICT), Senegal (ADL, ADM).+

 

Further information:

 

  • Visit the site of FMDV