Programme D’appui Décentralisé A La Finance Climat (Decentralized Climate Finance Programme – Padfc)
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Benin Fonds National Environnement et Climat [National Fund for the Environment and Climate – FNEC]
30 January 2017 PROGRAMME D’APPUI DÉCENTRALISÉ A LA FINANCE Project/Programme Title: CLIMAT [DECENTRALIZED CLIMATE FINANCE PROGRAMME – PADFC]
Country/Region: BENIN
Fonds National Environnement et Climat [National Fund for the Accredited Entity: Environment and Climate – FNEC] – accreditation pending
Ministère du Cadre de Vie et du Développement Durable National Designated Authority: [Ministry of the Environment and Sustainable Development – MCVDD]
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Please submit the completed form to [email protected]
A. Project/Programme Information PROGRAMME D’APPUI DÉCENTRALISÉ A LA FINANCE CLIMAT A.1. Project/programme title [DECENTRALIZED CLIMATE FINANCE PROGRAMME – PADFC] A.2. Project or programme Programme A.3. Country(ies) / region BENIN A.4. National designated Ministère du Cadre de Vie et du Développement Durable [Ministry of the authority(ies) Environment and Sustainable Development – MCVDD] Fonds National Environnement et Climat [National Fund for the Environment and A.5. Accredited entity Climate – FNEC] – accreditation pending (implementing entity) Executing Entities: Direction Générale Environnement Climat [Directorate General for Environment and Climate – DGEC], Secrétariat Permanent de la Commision A.6. Executing entity / Nationale des Finances Locales [Permanent Secretariat of the National Commission beneficiary for Local Finance – SP/CONAFIL], devolved government departments, local governments, contracted service providers Beneficiaries: Local communities A.7. Access modality Direct☒ International☐ A.8. Project size category (total investment, million Micro (≤10) ☐ Small (10
Reduced emissions from: ☐ Energy access and power generation (E.g. on-grid, micro-grid or off-grid solar, wind, geothermal, etc.) ☐ Low emission transport (E.g. high-speed rail, rapid bus system, etc.) ☐ Buildings, cities, industries and appliances (E.g. new and retrofitted energy-efficient buildings, energy-efficient equipment for companies and supply chain management, etc.) ☐ Forestry and land use A.11. Results areas (E.g. forest conservation and management, agroforestry, agricultural irrigation, water treatment and (mark all that apply) management, etc.)
Increased resilience of: ☒ Most vulnerable people and communities (E.g. mitigation of operational risk associated with climate change – diversification of supply sources and supply chain management, relocation of manufacturing facilities and warehouses, etc.) ☒ Health and well-being, and food and water security (E.g. climate-resilient crops, efficient irrigation systems, etc.) ☒ Infrastructure and built environment (E.g. sea walls, resilient road networks, etc.) ☒ Ecosystems and ecosystem services (E.g. ecosystem conservation and management, ecotourism, etc.)
1Please use the following naming convention for the file name: “[CN]-[Agency short name]-[Date]-[Serial number]” (e.g. CN-ABC-20150101-1).
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A.12. Project / programmelife ………5 years…….. span
A.13. Estimated Start: 2018………………………... implementation start and end date End: 2022………………………….
B. Project/Programme Details The Fund requires the following preliminary information in order to promptly assess the eligibility of project/programme investment. These requirements may vary depending on the nature of the project/programme.
Overview of decentralized climate finance in Benin The decentralization process began in the 1990s. A new legal and administrative framework was subsequently established in 1999-2001 (Art. 93 to 96 of Act no. 97-029 of 15 January 1999 on the organization of communes in the Republic of Benin). The communes are the only fully decentralized entities and are invested with three different forms of power – devolved, shared and delegated. Communes are required to produce their own local development plans according to central government guidelines. The new councils – voted in following the local elections in 2015 – are currently working on plans for 2016-2020. The communes receive the majority of their funding from two sources: direct payments from central government and aid from technical and financial partners (TFPs). Most communes still have limited mobilization of their own resources. Direct payments from central government come from the Fonds d’Appui au Développement Local [Local Development Support Fund – FADeC] – a national mechanism, set up in 2008, to fund local development in Benin. The priorities for the coming years include building administrative, technical and financial capacities and strengthening local authority management. These priorities are confirmed in the Programme d’Action du Gouvernement [Government Action Programme – PAG] for 2016-2021, as defined by the new Government (which came to power in April 2016). The PAG includes a specific action entitled “Building decentralization process capacities”, which forms part of a broader strategic objective entitled “Balanced and sustainable development of the national space” (Pillar: “Improving living conditions for Benin’s population”). There is therefore a need for greater recognition of climate change at the local level. The Government has made clear its intention to devolve greater responsibility on this issue to the B.1. communes, in line with the establishment of the new strategic and operational framework on Project/programme adaptation, known as the Plan National d’Adaptation [National Adaptation Plan – PNA] (currently description under development). While responsibility for environmental conservation rests with the communes, (including no explicit mention is made of climate issues. In 2016, however, a new methodological framework objectives) was produced for Plans de Développement Communaux [Communal Development Plans]. This guide is currently being disseminated and includes climate perspectives throughout the commune planning/programming cycle. This naturally raises the question of funding, with substantial funds needed to support local adaptation efforts and to strengthen both competencies and infrastructure. Building on past pilot schemes (in particular the LoCAL project initiated in 2013), the Government is aiming for large- scale deployment of mechanisms to help address local adaptation challenges. This area of intervention is one of the stated adaptation priorities of the country’s intended nationally determined contribution (INDC), as prepared in 2015 (measure 5: Strengthen local governance of climate change adaptation finance).
Defined programme
Objectives and expected outcomes The overall objective of the programme is to support climate finance decentralization and, in doing so, to promote greater responsibility for adaptation issues at the communal level. The ultimate aim is to enhance local resilience to climate change. The specific objectives are as follows: (i) to devolve greater responsibility for climate issues to the communes by helping them to plan, budget for, implement and monitor adaptation measures; (ii) to finance investment measures identified as priorities by the communes, in consultation with the communities; and (iii) to consolidate and share lessons learned.
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Intervention components The proposed programme includes four intervention components: Component 1. Establish, at the national level, a sustainable mechanism for self-managed and transparent implementation of adaptation efforts at the local level. - Outcome 1.1. Synergy and coordination between adaptation actions are improved at the local level (intervention frameworks). - Outcome 1.2. A sustainable, FNEC-coordinated financing mechanism is established at the national level and is integrated or aligned with the FADeC procedures. Component 2. Build the capacities of local development stakeholders to implement climate change adaptation measures effectively. - Outcome 2.1. Tools and methodologies are developed in accordance with commune needs, including access to climate data. - Outcome 2.2. Communal development stakeholders (elected officials, staff, communities, decentralized government departments, private service providers, etc.) receive training and support to integrate climate change adaptation measures. - Outcome 2.3. Climate change adaptation is included in strategic and sector-specific planning documents at the local level. Component 3. Have the communes implement priority adaptation measures via a system of performance-based climate resilience grants. - Outcome 3.1. Communal development stakeholders (elected officials, staff, communities, decentralized government departments, private service providers, etc.) receive training and support to implement climate change adaptation measures. - Outcome 3.2. Natural resource preservation measures are implemented. - Outcome 3.3. Smallholder farm resilience and food security measures are implemented. - Outcome 3.4. Climate-resilient infrastructure is established to improve natural risk prevention and management. Component 4. Monitor, build on and consolidate outcomes and knowledge. - Outcome 4.1. A programme monitoring and evaluation (M&E) system is in place. - Outcome 4.2. Knowledge-sharing activities are organized at the national level, in conjunction with international networks (communication).
Geographical scope The programme will build on the existing pilot projects (six communes under the UNCDF LoCAL project, see description in the pre-feasibility study report), with a view to gradual deployment across 38 communes in Benin over five years. This will allow the programme to reach 3.4 million people, i.e. around half of the country’s total population. The programme will cover the following zones: the Far North of Benin, Western Benin (Atacora and northern Donga), the Central cotton- producing zone, and the Fisheries zone (see description in section D.4 and the map in the appendices). (Describe project/programme sponsor’s operating experience in the host country or other developing countries) This proposal has been prepared under the leadership of MCVDD (formerly MECGCCRPRNF), acting as the Green Climate Fund (GCF) National Designated Authority (NDA). FNEC is the entity responsible for implementing the proposed programme. FNEC is already the accredited National Implementing Entity for the Adaptation Fund (AF) and is currently awaiting B.2. Background clearance as the Accredited Entity for the GCF. It was put forward by the Ministry and selected by information on the Government to submit an Enhancing Direct Access (EDA) proposal. project/programme FNEC spearheads climate finance implementation at the national level in Benin. Created in 2003 sponsor by Decree no. 2003-559 of 29 December 2003 (amended by Decree no. 2008-273 of 19 May 2008), its purpose is to mobilize domestic and international resources to finance environmental projects in Benin. Initially known as the Fonds National pour l'Environnement [National Environmental Fund – FNE], its remit was widened in 2013 to include climate-specific issues (by decision of the Council of Ministers on 29 May 2013) and its name was changed to Fonds National pour l'Environnement et le Climat [National Fund for the Environment and Climate – FNEC]. While some countries set up National Climate Finance Institutions (NCFIs) from scratch to address climate-specific issues, Benin converted an existing entity (FNE) into an NCFI.2
2 Frankfurt School - UNEP Collaborating Centre for Climate & Sustainable Energy Finance, Case Study: The National Environmental Fund Benin, 2014 – http://www.fs-unep-centre.org/
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FNEC is one of several institutions that work with MCVDD to help implement its policies on environmental conservation and improving the living conditions of the Beninese population. In particular, it helps transfer resources to the communes so that they can implement environmental conservation initiatives in conjunction with CONAFIL and FADeC. FNEC comes under the authority of MCVDD. Its main duties are as follows: - To mobilize resources to finance environmental conservation efforts in Benin. This includes both domestic resources (including eco-taxes and “polluter pays” fines collected through various anti-pollution measures) and international resources. - To finance, support and monitor environmental conservation projects that are likely to improve living conditions for the country’s population. FNEC has used eco-taxes to directly finance 31 environmental projects since 2006 (via competitive bidding processes). Seventeen of these projects (i.e. around 55 per cent) were submitted by a commune, with the remainder led by civil society organizations (CSOs) or universities.3 FNEC objective is to emerge as a leading actor on resource mobilization for environment and climate at regional scale, in interaction with the other countries. Projects’ development as well as knowledge sharing at this scale are strategic development lines for the Funds. Changes will be made to the way in which FNEC operates as part of the ongoing GCF accreditation process, building on lessons learned from its experience as the AF-accredited Implementing Entity.The targets for 2017 are to move forward with the accreditation process and to prepare the detailed EDA proposal.
(Describe the market for the product(s) or services including the historical data and forecasts). The aim of the programme is to improve access to finance for adaptation measures led by local governments, in consultation with the communities. In theory, the market is the financial market linked to local adaptation in Benin. At present, however, this “market” does not really exist because: (i) local governments in Benin have little access to financial markets, and (ii) most of the priority needs are not “bankable” (non-income-generating activities). “Bankable” projects are, however, likely to emerge under this programme (e.g. development of market gardens with produce that can be sold on local markets). As such the programme may, in the longer term, lead to a new range of financial services for certain types of project, tailored to the needs of local governments and communities. The programme will help bolster local technical and financial B.3. Market management capacities and, in doing so, will create more secure market conditions. overview In the long term, the programme could support the development of a local financial market that builds on the current trend for new resilience-related financial products (such as municipal and climate resilience bonds and public-private partnership (PPP) arrangements). It could also facilitate new projects to give all stakeholders in Benin access to finance (e.g. the UNCDF Local Finance Initiative (LFI), as described in the pre-feasibility study). There may also be opportunities for synergies with the microfinance sector. These avenues will be explored at a later date, in the feasibility study.
(Provide the key competitors with market shares and customer base (if applicable). Provide pricing structures, price controls, subsidies available and government involvement (if any).)
(Provide details of government licenses, or permits required for implementing and operating the project/programme, the issuing authority, and the date of issue or expected date of issue). The programme interventions are incorporated directly into national planning, budgeting and programming systems, which are coordinated by the Government and aligned with the existing legislative and strategic frameworks. The Government may need to publish circulars detailing precisely how adaptation issues will be B.4. Regulation, incorporated into general documents (such as annual commune audit specifications, which taxation and determine the transfer of FADeC resources to the communes). insurance (Describe applicable taxes and foreign exchange regulations). FNEC is not subject to tax. The programme interventions are not subject to tax. The only taxes will be salary expenses for programme staff. The relevant fiscal and legislative provisions will apply to work performed at the local level.
3DGEC/FNEC internal memo, 2016
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(Provide details on insurance policies related to project/programme).
(Describe construction and supervision methodology with key contractual agreements.) (Describe operational arrangements with key contractual agreements following the completion of the project.) This proposal has been prepared under the leadership of MCVDD (formerly MECGCCRPRNF), acting as the GCF NDA. FNEC is the entity responsible for implementing the proposed programme. FNEC is already the accredited National Implementing Entity for the AF and is currently awaiting clearance as the Accredited Entity for the GCF. The three-function governance structure is designed to guarantee effective programme implementation and viability (i.e. beyond the end of the programme): 1) implementation control and monitoring; 2) steering and coordination; and 3) local support.
1) Implementation control and monitoring (coordinated by FNEC) This function is managed by FNEC using its internal structures for M&E. The Direction de la Programmation et de la Prospective du Ministère en charge des changements climatiques [Direction in charge of planning and prospective of DGEC] as well as the SP/CONAFIL will support FNEC in this function. Monitoring and control at departmental and local level will be done by departmental and communal committees chaired respectively by the Prefect and by the Mayor. FNEC is responsible to the GCF for activity implementation and proper use of funds. It controls all procedures and activities associated with project implementation and is responsible for the quality of outcomes (including implementation risk management). FNEC releases the funds required for project implementation and coordination. A procedural manual will be produced, outlining the responsibilities of each entity and institution, along with the corresponding administrative management arrangements, technical and financial standards and implementation lead times. It will also describe how to draft the midterm report and the financial reports.
2) Multi-stakeholder steering and coordination B.5. An interdepartmental body at national scale will be set up to give the needed orientations and Implementation process the validation of diverse documents related to the programme management. It will be arrangements chaired by the DGEC Director and will be supported by a technical committee composed of DGEC executives and thematic experts. Below is a provisional list of organizations that will be represented on the interdepartmental body: - SP/CONAFIL - Commission Nationale du Développement Durable [National Sustainable Development Commission – CNDD]; - Agence Béninoise sur l’Environnement [Benin Environment Agency – ABE]; - Direction Générale du Budget [General Directorate for the Budget – DGB]; - Direction Générale de l’Environnement et du Climat [Directorate General for Environment and Climate – DGEC] - Direction Générale des Eaux, Forêts et Chasses [Directorate General for Water, Forest and Game]; - Fonds National pour l’Environnement et le Climat [National Fund for the Environment and Climate – FNEC]; - Délégation à l’Aménagement du Territoire [Delegation for spatial planning] - Direction Générale du Trésor et de la Comptabilité Publique [Directorate for Treasury and public accounting - DGTCP] ; - Direction Générale du Développement Urbain [Directorate for Urban development]; - Association Nationale des Communes du Bénin [National Association of Communes of Benin – ANCB]; - Private sector (CCIB, Chambre Nationale d’Agriculture, Chambre des Métiers) - Civil society organisations - FTPs (UNCDF and UNDP) - key technical ministries involved in the implementation of the programme (climate change, decentralisation, finance)
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This body will be responsible for issuing technical and methodological guidelines for the various programme components and for ensuring that these guidelines are properly applied. Its duties will include: - coordinating the production of methodological tools: determining tool content and format (definition of terms of reference (ToR)), producing and disseminating tools, and helping produce a list of eligible investments; - defining the fund allocation criteria; - defining the performance criteria; - defining the commune M&E measures.
Financial cycle The main thrust of the component 3 (Have the communes implement priority adaptation measures via a system of performance-based climate resilience grants) is to define a suitable funding circuit so that funds are transferred to local governments effectively and efficiently (and that fund movements can be tracked). The system is under consideration by the DGTCP on provisional designs (see description in the enclosed pre-feasibility study) building on FADeC and existing processes.
3. Local support Local support will be brought by bodies yet operating at departmental and communal scale. Technical support will be arranged locally in conjunction with the Conférence Administrative Départementale [Departmental Administrative Conference – CAD], which is chaired by the Prefect and comprises the departmental directors of various sector-specific ministries, and with the Conseil Départemental de Coordination et de Concertation [Departmental Coordination and Consultation Council – CDCC], which comprises representatives of the communes (all mayors and deputy mayors) and civil society.
(Provide a timetable showing major scheduled achievements and completion for each of the major components of the project/programme.) The implementation period is scheduled to commence in 2018 and last for five years. The majority of the “new-generation” communal development plans, which include climate issues, are expected to be finalized in 2017 (covering the period up to 2020). As such, it will be possible to use the available plans to support implementation of the planned activities and to use the outcomes of the 2016-2020 period to assist with the next planning phase (2021-2025).
The table below gives a general overview of implementation, per component, for the five-year period (the percentages reflect percentage implementation in each year as a proportion of the corresponding budget, excluding management and coordination costs).
Progress (percentage) 2018 2019 2020 2021 2022 Nber of communes 38 communes 38 communes 38 communes 38 communes 38 communes Component 1. Establish, at the national level, a sustainable mechanism for self-managed and transparent implementation of adaptation efforts at the local level.. 82% 18% Component 2. Build the capacities of local development stakeholders to implement climate change adaptation measures effectively. 100% 0% Component 3. Have the communes implement priority adaptation measures via a system of performance-based climate resilience grants. 20% 20% 20% 20% 20% Component 4. Monitor, build on and consolidate outcomes and knowledge. 31% 8% 27% 8% 27% Note: Capacity-building activities are spread across Component 2 (support for initial assessment) and Component 3 (support all along the programming and implementation cycle).
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C. Financing / Cost Information (Please provide: • a breakdown of cost estimates analysed according to major cost categories. • a financial model that includes projection covering the period from financial closing through final maturity of the proposed GCF financing with detailed assumptions and rationale; • a description of how the choice of financial instrument(s) will overcome barriers and achieve project objectives, and leverage public and/or private finance.) Breakdown of costs Over five years, gradual deployment of the mechanisms across 38 communes (see deployment schedule below) is expected to cost an estimated US$ 14 million. This is a provisional estimate that will be fine-tuned following future studies. The breakdown of costs (in millions of FCFA) is given in the table below, per component and per year.
FCFA (millions) 2018 2019 2020 2021 2022 TOTAL Nbre de communes 38 38 38 38 38 Component 1. Establish, at the national level, a sustainable mechanism for self-managed and transparent implementation of adaptation efforts at the local level.. 160 34 194 Component 2. Build the capacities of local development stakeholders to implement climate change adaptation measures effectively - cross- cutting actions (development of tools) 50 0 50 Component 2. Build the capacities of local development stakeholders to implement climate change adaptation measures effectively. - actions C.1. Description of by commune 510 510 Component 3. Have the communes implement financial elements of the priority adaptation measures via a system of project / programme performance-based climate resilience grants - grants allocated by commune 1,140 1,140 1,140 1,140 1,140 5,700 Component 3. Have the communes implement priority adaptation measures via a system of performance-based climate resilience grants - technical support per commune per year 190 190 190 190 190 950 Component 4. Monitor, build on and consolidate outcomes and knowledge. 80 20 70 20 70 260 Programme coordination costs 536 SUB TOTAL 2,130 1,384 1,400 1,350 1,400 7,664 Programme management costs 536 TOTAL 8,736 The breakdown of costs per component is as follows: Component 1: 2 per cent Component 2: 7 per cent Component 3: 76 per cent Component 4: 3 per cent Coordination costs: 6 per cent Management costs: 6 per cent
Financial model The GCF contribution (US$ 10 million) will be used mainly to fund Component 3 (Have the communes implement priority adaptation measures via a system of performance- linked resilience grants). Complementary funding are expected as follows: FNEC : 1 M US$ UNCDF, other FTPs and State General Budget : 3 M US$
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Use of grant finance Because the programme concerns adaptation projects at the local level (i.e. projects that do not generate income in the short term), the decision to use only GCF grant finance is entirely justified. Moreover, the current finance situation in Benin means that local governments can only receive funds in the form of grants, since they are not presently authorized to take out loans.
C.2. Project financing Financial Amount Currency Tenor Pricing information Instrument
Total project FCFA 7,421 financing million Options (a) = (b) + (c) (US$ 14 million)
(i) Senior Loans ………………… Options ( ) years ( ) % (ii) Subordinated Loans ………………… Options ( ) years ( ) % (iii) Equity ………………… Options ( ) % IRR (iv) Guarantees ………………… Options (b) (v) Reimbursable ………………… Options Requested grants * US$ 10 million... Options GCF amount (vi) Grants *
* Please provide detailed economic and financial
justification in the case of grants.
Total Requested US$ 10 million Options (i+ii+iii+iv+v+vi)
Financial Name of Amount Currency Seniority Instrument Institution
US$ 4 million Options Options ………………… Options ………………… Options Options ………………… Options ………………… Options Options ………………… Options ………………… Options Options ………………… Options ………………… (c) Co- financing Co-financing
There are also plans to seek an additional contribution from interested TFPs in terms of their involvement in and support for the climate finance decentralization process. This support could come in two forms: local technical support for capacity-building activities, building on existing initiatives and outcomes (see initiatives described in the pre-feasibility study) financial support to strengthen the existing programme of activities (either by topping up available grant funds for the existing programme, or by accelerating deployment through its extension to a new set of communes). In the short term, the programme could help raise additional funds in different ways:
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local governments could use some funds from their own budgets to supplement projects and could possibly generate their own resources from certain measures (local taxes) partners could top up the initial funding (as explained in more detail below), following the example set in Cambodia, where the LoCAL mechanism has been widely deployed and where other donors have topped up the initial funding with further resources (IFAD’s ASPIRE programme, Resilient Livelihoods Project funded by the Global Environment Facility (GEF)). Effects of financial mobilization The programme’s long-term aim is to help local governments mobilize additional resources by building their financial management capacities and helping establish effective, transparent investment processes, thereby “de-risking” interventions at the local level.
D. Expected Performance against Investment Criteria Please explain the potential of the Project/Programme to achieve the Fund’s six investment criteria as listed below. (Specify the climate mitigation and/or adaptation impact. Provide specific values for the below indicators and any other relevant indicators and values, including those from the Fund’s Performance Measurement Frameworks.)
• Total tonnes of CO2 eq to be avoided or reduced per annum • Expected total number of direct and indirect beneficiaries and number of beneficiaries relative to total population (e.g. total lives to be saved from disruption due to climate- related disasters)
The aim is to deploy the programme gradually across 38 communes in Benin over the course of five years (see description in section D.4 below and the map in the D.1. Climate impact potential appendices). This will allow the programme to reach 3.4 million people, i.e. around [Potential to achieve the half of the country’s total population. GCF's objectives and results] This will have a positive impact on the resilience of these communities in two ways. Firstly, they will benefit from improved infrastructure and services to help them handle the local impacts of climate change. Secondly, these communities will be more involved in local governance adaptation processes (and in local planning processes more generally).
A specific methodology, currently under development as part of the LoCAL programme, will be tailored to the needs of the programme in Benin. This methodology will then be used to determine how to improve the resilience of the communities in question.
(Provide the estimates and details of the below and specify other relevant factors.) • Potential for scaling-up and replication (e.g. multiples of initial impact size) • Potential for knowledge and learning • Contribution to the creation of an enabling environment • Contribution to the regulatory framework and policies
D.2. Paradigm shift potential Potential for scaling-up and replication [Potential to catalyze The proposed programme is itself a scale-up programme because it builds on two impact beyond a one-off existing projects in Mali (using approaches and methods that are currently being project or programme implemented in another 13 countries across Africa, Asia and the Pacific). The EDA investment] funding will be used to support this gradual scale-up process, building on the existing pilot phases to extend coverage on a wider scale throughout the country, thereby paving the way, in the longer term, for systematic inclusion in institutional processes. Learning from the Mali experience, the programme offers potential for replication in other developing countries, in particular in LDCs, SIDS and in Africa.
Potential for knowledge and learning
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The programme offers significant potential for knowledge production and dissemination in two areas in particular: decentralization/local finance processes in general, and local adaptation financing solutions. The central thrust of Component 4 is to build on and consolidate the outcomes of the programme, making use of government and partner knowledge-dissemination channels.
Contribution to the creation of an enabling environment As explained previously, the programme will go a long way to building the communes’ financial management and local adaptation planning capacities. More generally, it will also build the country’s adaptation planning and budgeting capacities at the institutional level, in line with the PAG 2016-2021 and the PNA (which is currently under development). The grant system linked to adaptation performance will promote a greater understanding of the issues among local governments and will encourage them to act. The system’s performance-based aspect will also force local governments to take greater responsibility in this area – a key priority for Benin’s central government, which wants to move towards a contract-based relationship with local governments (including plans for government-commune contract pilot projects). Moreover, the programme will make local projects a more attractive prospect for both public and private donors by seeking synergies with other, existing initiatives in the country (see initiatives described in the pre-feasibility study, such as the World Bank Projet de Services Décentralisés Conduits par les Communautés [Decentralized Community Driven Services Project – PSDCC], the GIZ Programme d’appui à la Décentralisation et au Développement Communal [Supporting Decentralization and Municipal Development Programme – PDDC], and UNDP support activities).
Contribution to the regulatory framework and policies The programme is aligned with the existing regulatory and institutional frameworks. It takes the existing processes and institutions and seeks to improve them so that they better reflect local adaptation planning and finance needs. There is a direct connection with the PNA (currently under development) and with the new decentralization support mechanisms (included in the new PAG 2016-2021). This will ensure that climate finance decentralization mechanisms are firmly rooted within institutional processes. One of the programme’s key supporting priorities is to define and implement appropriate fund transfer procedures to support local government adaptation efforts, building on existing work and studies in this area.4 The programme will also draw on the new-generation communal development plans (currently under development), and its initial outcomes will be used to ensure that climate change issues are more closely reflected in the next planning phase (2021- 2025). (Provide the estimates of economic, social and environmental co-benefits. Examples include the following): • Economic co-benefits - Total number of jobs created - Amount of foreign currency savings - Amount of government’s budget deficits reduced • Social co-benefits - Improved access to education D.3. Sustainable development - Improved regulation or cultural preservation potential - Improved health and safety [Potential to provide wider • Environmental co-benefits development co-benefits] - Improved air quality - Improved soil quality - Improved biodiversity • Gender-sensitive development impact - Proportion of men and women in jobs created
In general, these criteria cannot readily be applied to the proposed EDA programme because it covers a range of disparate measures, each with specific co-benefits. As such, it is difficult to determine the exact co-benefits that the interventions will deliver.
4Including, in particular, the KfW-funded pre-feasibility study conducted in 2013, entitled “Financer l’adaptation aux changements climatiques au Bénin par le FADeC” [Financing climate change adaptation in Benin via FADeC].
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A general, summary overview is given below. Economic co-benefits Because the overall aim of the programme is to make communities more resilient, it will help improve local conditions for activity development, in particular by protecting infrastructure against climate impacts or even by creating new activity and employment opportunities linked to the funded measures. By building the technical and financial capacities of local governments and their partners, the programme could also – in the longer term – facilitate the emergence of a local market (financial and other services, labour supply, etc.). Social co-benefits Improving local governance of climate issues is one of the programme’s key outcomes. By incorporating adaptation-related financial flows directly into local budgets (in consultation with local communities), it will be possible to develop/strengthen responsible, inclusive and accountable local practices in this area. Moreover, these practices will better reflect stated community needs, and the most vulnerable communities will enjoy better representation. Gender-sensitive development impact Gender is a cross-cutting aspect of the planned programme. Special emphasis will be placed on the active involvement of women in the activities, and on female representation in decision-making processes and bodies (e.g. in the implementation of local consultation bodies). This targeted support should help empower women, both in the community and in the home. Environmental co-benefits Since the programme will support local measures that focus on preserving natural resources and improving farming and forestry practices, it is expected to deliver significant environmental benefits. It will also bring co-benefits in terms of land use and greenhouse gas emissions (improved carbon storage capacity). It is widely recognized that environmental issues have the greatest impact – and are most effectively addressed – at the local level (especially in terms of water resource and soil quality problems). The programme focuses on locally stated needs, and will lead to greater recognition of environmental concerns more generally.
(Describe the scale and intensity of vulnerability of the country and beneficiary groups and elaborate how the project/programme addresses the issues. Examples of the issues include the following:) Level of exposure to climate risks for beneficiary country and groups Does the country have a fiscal or balance of payment gap that prevents from addressing the needs? Does the local capital market lack depth or history? Needs for strengthening institutions and implementation capacity
D.4. Needs of recipient Level of exposure and vulnerability [Vulnerability to climate An assessment carried out during preparations for the 2008 Programme d’Action change and financing National d’Adaptation aux changements climatiques [National Adaptation Programme needs of the recipients] of Action for Climate Change – NAPA] found that the main climate change risks affecting Benin were drought, flooding and late, heavy rains (across the entire country). It also found that violent winds and excessive heat were locally significant risks, and revealed more localized climate risks such as rising sea levels (affecting only a small area but having potentially significant economic and social impacts). These risks, and their major impacts, are already becoming a reality in Benin. Over the last three decades, climate change has driven down agricultural yields, shifted farming seasons, reduced the amount of drinking water held in reservoirs, and extended the high- and low-water periods. A series of scenarios were produced for 2015, 2025, 2050 and 2100, using appropriate models, in an effort to anticipate the socioeconomic and environmental
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impacts of climate change (Second National Communication (SNC), 2011). The projections include the following findings:5 a continued rise in sea levels, potentially up to 0.81 metres by 2100, resulting in coastal flooding and saltwater intrusion into inland waterways and aquifers, potentially affecting human settlements, health and fisheries a likely reduction in surface water run-off by 2050 throughout the Ouémé river basin (caused by reduced rainfall in the north of the country) a temporal shift in the high-water periods of the Benin section of the Niger river basin, resulting from a marked reduction in seasonal rainfall levels falling corn yields in some agroecological zones depleted fish stocks, potentially leading to smaller catches and a shortage of fish products throughout the country. The expected changes affect all key sectors of the country’s economy – agriculture (including livestock farming and fisheries), forestry, water resources, coastal zones, human health, energy, etc. – on different scales and to varying degrees.
The issue of vulnerability also affects different parts of the country in different ways – and to varying degrees. A detailed vulnerability assessment was carried out during preparations for the 2008 NAPA, in consultation with the relevant stakeholders. This assessment divided the country into eight agroecological zones, each containing communes with similar physical, biological and social characteristics and similar converging adaptation strategies. Four of these eight zones were identified as particularly vulnerable to climate change (NAPA, 2008): the Far North of Benin, Western Benin (Atacora and northern Donga), the Central cotton-producing zone, and the Fisheries zone (see the map in the appendices). Targeted analyses were carried out in these zones, involving the representative communes and with the assistance of the NCCC, which helped shed light on their vulnerability, as well as the needs of the local populations and the potential adaptation options. These four zones were therefore selected for the deployment phase of this programme (37 communes), with a view to building on the work begun under the NAPA and to helping these communes become more self-sufficient in their adaptation efforts. At communal scale, an in-depth vulnerability study will be done within the diagnosis phase for each commune involved ; it will take into consideration the following aspects: > Vulnerability aspects : extent of risks, current and potential impacts, resilience capacity of communes, gender integration > Feasibility aspects : capacity of communes regarding the integration of climate change adaptation into planning and budgeting, administrative governance processes based on performance in FADeC management, operationality of departmental and communal coordination, implementation and M&E bodies.
Financial gap The estimated total cost of implementing the plans, programmes and projects set out in the Adaptation section of Benin’s INDC is under revision. It is expected to mobilize external financial support (bilateral or multilateral, conditional or unconditional), and to supplement this with resources from the state budget, given that Benin currently has relatively limited access to climate finance (see pre-feasibility study).
Needs for strengthening institutions and implementation capacity Under the decentralization process, local governments (communes) are responsible for local development, with an increasingly significant role in infrastructure and service implementation. Even though these governments have only been up and running for a limited period of time and continue to depend on central government transfers for the majority of their resources, they will have to bear substantial adaptation-related responsibilities and costs. The communes are in particular need of additional support to strengthen decentralization processes and to ensure that climate and local community resilience challenges are fully addressed. In particular, they need help to better anticipate, plan, budget and implement climate change actions and to mobilize the corresponding resources. The LoCAL pilot scheme and other local capacity-building initiatives have had a major positive impact on the capacities of local institutions, in terms of both
5 INDC, 2015
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general planning capabilities and their ability to address climate issues in particular (see pre-feasibility study and LoCAL evaluation reports). Capacity-building is also required at all levels (and not just at the local level) to support the implementation of these new mechanisms. Support will also be needed at the national level (for stakeholders involved in these mechanisms and who will be expected to continue them once the programme has ended) and at the departmental level (mainly for devolved government departments that will be expected to advise and support the communes). A specific needs analysis was recently carried out, followed by a strategy document which is now awaiting approval (Stratégie nationale de renforcement des ressources humaines, de l'apprentissage et du développement des compétences pour favoriser un développement vert, faible en émissions et résilient aux changements climatiques [National strategy for strengthening human resources, learning and skills development to foster green, low-emissions and climate-resilient development] – see below). The findings of this analysis will inform the assessment of programme stakeholder needs. (Provide details of the below and specify other relevant factors. • Coherence and alignment with the country’s national climate strategy and priorities in mitigation or adaptation • Brief description of executing entities (e.g. local developers, partners and service providers) along with the roles they will play • Stakeholder engagement process and feedback received from civil society organizations and other relevant stakeholders)
Coherence and alignment The Government has identified the deployment of a climate finance decentralization mechanism as one of its objectives, as stated in Benin’s INDC (measure 5: Strengthen local governance of climate change adaptation finance). The proposed programme is also intended to support the Government’s decentralization and devolution policy, under which it aims to give the communal level a greater role in tackling climate change. As indicated previously, the latest generation of communal development plans (2016-2020) is currently under development. It is expected that climate concerns will be reflected in these plans, and then in annual investment plans and communal budgets. The Government’s interest in wide-scale deployment of this type of mechanism shows how the programme is aligned with the Government’s priorities. This interest is based in particular on the positive outcomes of the LoCAL D.5. Country ownership project pilot phase. [Beneficiary country ownership of project or This programme is also intended to support several other, ongoing initiatives, as programme and capacity detailed below: to implement the proposed The PNA, which is currently being prepared with support from GIZ. This plan activities] has two main objectives: (i) to reduce vulnerability to the impacts of climate change by strengthening adaptation capacity and resilience; and (ii) to incorporate adaptation consistently into all relevant policies, programmes and actions (both current and future), and in particular into development planning processes and strategies, across all relevant sectors and at different levels. The national strategy for strengthening human resources, learning and skills development to foster green, low-emissions and climate-resilient development. This document, which is currently pending approval by the Council of Ministers, focuses on formal, informal and non-formal education and institutional strengthening and sets out a range of different targets, including local institutions. The Stratégie de Développement Sobre en Carbone et Résilient aux Changements Climatiques [Low-Carbon Climate-Resilient Development Strategy] – a sustainable development strategy that is currently being produced with technical and financial support from the French Global Environment Facility (FGEF) and the French Development Agency (AFD). The programme is also linked to a series of other ongoing initiatives (see pre- feasibility study). We will seek to identify potential synergies with these initiatives, particularly in terms of sharing technical support tasks for local stakeholders.
Executing entities
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FNEC will act as the implementing agency (see section B.2). The main executing agencies will be as follows: SP/CONAFIL: this entity is heavily involved in determining and implementing appropriate fund transfer processes. It is well placed to fulfil this duty, given its past and current experience in providing finance to the local level and its active involvement in the LoCAL project pilot phases. Communes: generally speaking, local governments lack the initial capacities to implement the proposed mechanisms immediately; they have different starting points depending on local political leadership and previous support work. However, the outcomes of the LoCAL pilot scheme and other local capacity-building initiatives show that significant progress can be made on this front, as long as the support provided is aligned with the local situation and needs. Contracted service providers: some stakeholders (such as engineering consultancy, service providers and contractors) are at least partially familiar with the relevant aspects due to their experience with the above-mentioned past and ongoing initiatives. These service providers could be called upon to perform technical tasks, such as providing local technical support. TFPs: as mentioned previously, these stakeholders could be called on to assist with specific activities, in order to capitalize on their intervention capacities and experience. The distribution of tasks and responsibilities is detailed in section B.5. The execution capacity of these entities will be monitored and controlled closely. This will be done through the set of procedures implemented in the programme, which will draw on FNEC’s procedures and on its GCF accreditation process.
Stakeholder engagement The programme includes plans to establish specific stakeholder engagement tools and processes (see section G).
(Provide details of the below and specify other relevant factors (i.e. debt service coverage ratio), if available.) • Estimated cost per t CO2 eq (total investment cost/expected lifetime emission reductions) • Co-financing ratio (total amount of the Fund’s investment as percentage of project) • Economic and financial rate of return - With the Fund’s support - Without the Fund’s support
Co-financing ratio The EDA grant request covers 72% of the pre-defined programme budget (the D.6. Effectiveness and detailed costings are outlined in section C.1). efficiency [Economic and financial Cost-efficiency and effectiveness soundness and The development finance community is increasingly recognizing how addressing effectiveness of the climate issues locally can deliver potential cost-efficiency and effectiveness gains. proposed activities] This is because: the local level is often the best scale at which to design and implement adaptation activities, and “localization” offers the opportunity to experiment with measures and strategies that can potentially be replicated elsewhere planning and executing activities locally (by local partners and service providers) helps limit implementation and maintenance costs. With specific reference to the proposed mechanisms, feedback from ongoing initiatives shows that: a performance-based incentive system works (LoCAL programme, under which annual grant amounts are linked to performance assessment) and helps improve resilience (i.e. greater cost-effectiveness) the inclusion of fund transfer mechanisms in national budget procedures helps limit management costs and avoids the need for parallel finance management systems.
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Feedback from the LoCAL pilot phase in Benin provides more country-specific detail, particularly with regard to the cost-effectiveness of local fund transfer procedures (evaluation reports enclosed).
E. Brief Rationale for GCF Involvement and Exit Strategy (Please specify why the GCF contribution is critical for the project/programme.) Existing climate finance decentralization projects in Benin have demonstrated that such mechanisms are both relevant and feasible and have led the Government to believe that these mechanisms should be deployed more widely across the country, as part of efforts to transition from a project-based approach to a programmatic approach. This wide-scale deployment demands more funds than initially committed by Benin’s partners, and the Government wishes to fill this gap by applying for an EDA grant. The programme’s purpose is fully aligned with the EDA objectives because it: (i) involves deploying a finance decentralization system that is supported by the Government and incorporated into national systems; and (ii) makes a specific contribution to local community adaptation by institutionalizing new planning, budgeting and implementation practices for local adaptation measures. (Please explain how the project/programme sustainability will be ensured in the long run, after the project/programme is implemented with support from the GCF and other sources.) The GCF funding will be used to accelerate deployment of the proposed mechanisms while supporting gradual scale-up of the programme. Deployment will continue, and be even stronger, after the funding period ends because: (i) the necessary institutional processes will be in place, including planning, budgeting and monitoring of local adaptation measures; (ii) the communes will have the incentive and capacity to act in accordance with their needs; (iii) feedback from previous projects and initiatives will be used to adjust practical implementation procedures where needed; and (iv) in the long term, more secure local finance conditions will help make local projects more attractive to the traditional and innovative financial sector (including PPP arrangements). Throughout implementation, special attention will be drawn on communes’ and communities’ ownership of processes in order to ensure their sustainability in the long run.
F. Risk Analysis (Please describe the financial and operational risks and discuss mitigating measures.) The proposed programme will be a continuation of an existing project in Benin, which has achieved positive outcomes during the initial implementation phases. This means that the financial and operational risks will be limited. The proposed programme draws on both positive and negative lessons learned from these projects. This programme faces two types of risk: Implementation risks (I): implementation of certain tasks fails due to errors or unforeseen circumstances, or resources are not used as intended in the initial workplan. Outcome risks (O): the tasks are carried out in accordance with the workplan, but the expected outcomes are not achieved, either because of errors in the initial assumptions, or as a result of unforeseen external circumstances. Here, the main risk is that the implemented measures fail to improve local community adaptation and resilience. There is also a possibility that implementation of these measures could have a negative impact on the environment or on the populations. The main identified risks have been pre-identified as well as corresponding mitigation measures (see table below). A detailed risk assessment will be carried out as part of future analyses. This will involve a qualitative assessment of the potential impacts and the likelihood of their occurrence. Specific risk-management procedures will be produced in accordance with the FNEC procedural manuals.
Risk Project Assumptions Type Mitigation Measures (I/O)
Funds allocation processes are Policy leadership on CCA and I Close engagement with MCVDD/DGEC to build policy not integrated in national local resilience building issues consensus and institutional arrangements systems Proactive support from Alignment with strategic and policy frameworks institutional actors in charge of Collaborative work to design most relevant the decentralization process integration processes
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Funds are not disbursed to National transfer systems to LGs I Collaborative work to design most relevant LGs (on-time) are fully operational and integration processes efficient
Investments identifed by LGs Planning process results in funds O Capacity development for CCA Planning (local are not adaptation-relevant allocated to highest-value CCA governments, state services, and communities) investments Menu of eligible investments Capacity constraints of LG are Performance Incentives reward good adaptation such as can be addressed planning through capacity building efforts
Communities are not/badly Planning process involve active I Capacity development for Adaptation Planning (local integrated in the investments´ consultation with local governments, state services, and communities) selection process communities Eligibility and performance criteria take into account the use of participatory processes
Vulnerable goups are Planning process involve active I Capacity development for Adaptation Planning (local not/badly integrated in the consultation with local governments, state services, and communities) - investments’ selection process communities with specific inclusive aspects attention to the inclusion of Eligibility and performance criteria on participatory vulnerable groups processes – inclusive aspects
Women are not/badly Planning process involve active I Capacity development for Adaptation Planning (local integrated in the investments’ consultation with local governments, state services, and communities) - selection process communities with specific gender aspects attention to the inclusion of Eligibility and performance criteria on participatory women processes – gender aspects
Investments funded are not Local Governments are I Capacity development for project’s development and implemented sufficiently equipped to lead management (local governments, service providers); and manage the financial and technical skills implementation of investment projects
Issues in procurement Existing local governments’ I Fiduciary monitoring processes / corruption and budget execution systems Capacity development for project’s development and leakage of funds provide acceptable fiduciary management (local governments, service providers); assurance financial and technical skills Performance incentives reward good process
Investments’ implementation Appropriate, small-scale, O Technical support to local governments within the does not lead to adaptation / community-based local projects’ selection resilience benefits investments have positive Menu of eligible investments impact on resilience building Appraisal procedures including resilience building criteria Performance Incentives reward good adaptation planning M&E processes including performance criteria on resilience building (compatible with GCF investments’ criteria6)
Use and performance of funds Funds’ transfer cycle is fully I Capacity development for project’s development and is not tracked/documented / documented and reported management (LGs, providers); administrative and reported / assessed financial skills Performance incentives reward good process
6 GCF, GCF/B.09/23, Annex III: Initial investment framework: activity-specific sub-criteria and indicative assessment factors
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Auditing processes and fiduciary monitoring
Implemented investments Appropriate, small-scale, O Capacity development for adaptation Planning entail negative environmental community-based local (environmental and social aspects) and/or social impacts investments are designed in a Environmental and social safeguards way they do not entail significant environmental and/or social impacts
Please briefly specify the substantial environmental and social risks that the project/programme may face and the proposed risk mitigating measures Environmental and social safeguarding clauses will be drafted, based on the FNEC procedures (environmental and social procedural manual, currently being prepared as part of the accreditation process) and in line with the GCF environmental and social safeguarding clauses.
G. Multi-Stakeholder Engagement (Please specify the plan for multi-stakeholder engagement, and what has been done so far in this regard.)
Stakeholder engagement The programme includes plans to establish specific stakeholder engagement tools and processes, with a particular emphasis on consolidating feedback from other ongoing initiatives (LoCAL projects and local planning initiatives – see pre-feasibility study). The local authority methodological guide (to be produced) will emphasize the importance of stakeholder engagement tools and procedures and will focus in particular on engaging with vulnerable groups and women. The main stakeholder groups are as follows: > central government entities > local governments > local community representatives > civil society representatives > institutional TFPs > private sector (including financial sector) > national and international knowledge-sharing and consolidation networks (including academia and research).
The EDA proposal drafting phase includes specific consultation activities. Initial discussions were held during the concept note preparation process. This involved a reconnaissance mission and workshops in November and December 2016, with a view to determining the programme content and implementation procedures. Key government stakeholders were also included in this consultation process. A further multi-stakeholder consultation process will take place at a later date, as part of FNEC’s GCF accreditation process.
Knowledge-sharing and consolidation The Government and its partners will take steps to disseminate and consolidate feedback from this programme, with a particular emphasis on South-South cooperation. For example, the Government will use the UNCDF-led LoCAL network, which is currently being deployed in around a dozen countries.
H. Status of Project/Programme
1) A pre-feasibility study is expected to be completed at this stage. Please provide the report in section J.
2) Please indicate whether a feasibility study and/or environmental and social impact assessment has been conducted for the proposed project/programme: Yes ☐ No ☒ (If ‘Yes’, please provide them in section J.)
3) Will the proposed project/programme be developed as an extension of a previous project (e.g. subsequent phase), or based on a previous project/programme (e.g. scale up or replication)? Yes ☒ No ☐
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(If yes, please provide an evaluation report of the previous project in section J, if available.) The country report for LoCAL Benin is pending. The 2015 annual report for the overall LoCAL programme is provided.
I. Remarks
J. Supporting Documents for Concept Note
X Map indicating the location of the project/programme (see next pages) ☐Financial Model X Pre-feasibility Study (document attached) ☐Feasibility Study (if applicable) ☐Environmental and Social Impact Assessment (if applicable) X Evaluation Report (if applicable): 2015 annual report for the overall LoCAL programme
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LOCATION of the programme
The programme covers those agroecological zones identified as particularly vulnerable during the NAPA (2008) preparation phase: the Far North of Benin (zone 1), Western Benin (Atacora and northern Donga) (zone 4), the Central cotton-producing zone (zone 5) and the Fisheries zone (zone 8). These are shown on the map below.
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The table below contains a list of the communes covered by the programme. Those communes already included in the LoCAL project are shown in red (five in the priority zones, one outside these zones). The programme therefore covers 38 communes in total (37 in the priority agroecological zones plus Banikoara, which is outside these zones but is already included in the LoCAL project).
Surface Major economic Population No. of rural activities carried out Zone Communes No. area (2002) households by vulnerable populations (km²) Crop farming (millet, sorghum, cotton, corn, rice, onions, Zone I: Far Karimama and potatoes); market North of 2 9,057 141,207 9,843 Malanville gardening on the Benin banks of the Niger; cattle farming and fishing. Cobly, Ouaké, Matéri, Zone IV: Crop farming (cereals Boukoumbé, Tanguiéta, Western in the north of the Natitingou, Djougou, 9 16,936 629,993 54,855 Benin zone, plus yams in the Toucountouna and (Atacora) south). Copargo Zone V: Bassila, Parakou, Central Tchaourou, Ouèssè, Crop farming (cereals, Benin Bantè, Savè, Savalou, tubers, legumes and 12 32,163 1,166,182 9,153 (cotton- Glazoué, Kétou, Djidja, cotton are produced producing Dassa-Zoumé and twice a year). zone) Aplahoué Mainly fishing, followed by crop farming (corn is the main rotation crop, Athiémé, Grand-Popo, plus cassava, black- Bopa, Comé, Lokossa, eyed peas and market Zone VIII: Ouidah, Sô-Ava, Sèmè- garden crops). Fisheries Podji, Aguégué, 14 3,280 1,435,888 65,120 Extensive agriculture zone Dangbo, Adjohoun, is limited due to the Bonou, Ouinhi and scarcity of land in this Cotonou zone. Specific issues in Cotonou, the country’s main city. Subtotal 37 3,373,270 Zone II: Northern Crop farming Benin Banikoara (sorghum, corn, yams, (cotton- cotton). producing zone)