Climate Finance Mobilization in Uganda
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CLIMATE FINANCE MOBILIZATION IN UGANDA THE MOST VIABLE OPTION Robert Bakiika Christine Mbatuusa Anthony Mugeere, PhD Anna Amumpiire ACODE Policy Research Paper Series No. 102, 2020 CLIMATE FINANCE MOBILIZATION IN UGANDA THE MOST VIABLE OPTION Robert Bakiika Christine Mbatuusa Anthony Mugeere, PhD Anna Amumpiire ACODE Policy Research Paper Series No. 102, 2020 Published by ACODE P. O. Box 29836, Kampala Email: [email protected]; [email protected] Website: https://www.acode-u.org Citation: Bakiika, R., Mbatuusa, C., Mugeere, A., Amumpiire, A. (2020). Climate Finance Mobilization in Uganda: The most viable financing option, Kampala: ACODE. Policy Research Paper Series No. 102. © ACODE 2020 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. ACODE policy work is supported by generous donations and grants from bilateral donors and charitable foundations. Reproduction or use of this publication for academic or charitable purposes or for purposes of informing public policy is excluded from this restriction. ISBN: 978-9970-56-725-6 Cover Illustration: CONTENTS LIST OF ACRONYMS AND ABBREVIATIONS .......................... III EXECUTIVE SUMMARY ...............................................................VI 1. BACKGROUND TO THE STUDY ............................................. 1 1.1 Introduction ............................................................................................................................1 1.2 Problem statement ..............................................................................................................1 1.3 Rationale ...................................................................................................................................1 1.4 Objectives and tasks .........................................................................................................2 1.5 Methodology and approach .........................................................................................2 1.6 Limitations...............................................................................................................................3 2. CLIMATE CHANGE AND CLIMATE FINANCING NEEDS IN UGANDA ................................................................................... 4 2.1 Climate change and its dimensions ...........................................................................4 2.2 Financing needs to address climate change impacts .......................................5 3. LESSONS FROM GLOBAL CLIMATE FINANCE ARCHITECTURE AND NATIONAL CLIMATE FUNDS .......... 5 3.1 Understanding climate finance .....................................................................................5 3.2 Global financing windows for climate action .......................................................6 3.3 LDCs responses to mobilizing climate finance and their drivers ................6 3.4 Impacts, value addition and lessons of NCFs in south ......................................9 4. LESSONS OF OTHER FINANCIAL ARRANGEMENTS IN UGANDA .................................................................................. 9 4.1 Case studies of selected financing arrangements in Uganda .......................9 4.1.1 National Environment Fund, Wildlife Fund and National Tree Fund .................................10 4.1.2 Road Fund ..............................................................................................................................................................................................10 4.1.3 Uganda Energy Credit Capitalization Company ......................................................................................... 11 4.1.4 aBi Trust, Agricultural Credit Facility, Yield Uganda Fund and Agricultural Insurance Scheme ........................................................................................................................................................................... 11 4.1.5 Bwindi Mgahinga Conservation Trust (BMCT) .............................................................................................12 4.1.6 Environmental Conservation Trust (ECOTRUST) and Uganda Biodiversity Fund ................................................................................................................................................................................................................13 4.2 Emerging lessons form case studies ........................................................................ 13 5. ASSESSMENT OF VIABLE CLIMATE FINANCE MECHANISM FOR UGANDA ..................................................13 i | Scoping Study on Climate Finance Mobilisation 5.1 Voices from some stakeholders ................................................................................ 13 5.2 Basic enabling factors for a national climate financing mechanism ........14 5.3 Scope, functions and structure of a national climate financing mechanism ............................................................................................................................ 15 5.4 Evaluating options for suitability national climate financing mechanism .......................................................................................................................... 17 5.5 Relationship between preferred climate financing mechanism and the Tree Fund ............................................................................................................................... 19 5.6 Ways to support capitalization of the national climate financing mechanism .......................................................................................................................... 19 6. CLIMATE FINANCE CAPITALIZATION AND MRV FOR CLIMATE FINANCE ................................................................20 6.1 Capacity and capitalization ...................................................................................... 21 6.2 MRV for climate finance ................................................................................................. 21 7. RISKS AND THEIR MITIGATION MEASURES ..................... 23 8. CONCLUSION ......................................................................... 26 REFERENCES ............................................................................. 27 ANNEX: List of Respondents Interviewed ...................................................................30 List of Figures Figure 1: Ideal National Climate Finance Mechanism .................................................................................................16 Figure 2 Comparative assessment of alternative climate finance delivery mechanisms 18 Box 1 Proposed Content for a potential climate financial mechanism ...............................................25 List of Tables Table 1. Criteria groups and aspects used to assess alternative climate financing options ..........................................................................................................................................................................................................3 Table 2: Examples of NCFs by specific financing function ...................................................................................7 Table 3: Prioritisation of investments eligible from selected NCFs ............................................................. 8 Table 4 Elements of MRV of climate finance ‘received’ .........................................................................................22 Table 5 Potential high risks and mitigation measures of the alternative NCGF ........................23 Scoping Study on Climate Finance Mobilisation | ii LIST OF ACRONYMS AND ABBREVIATIONS aBi Agriculture Business Initiative ACF Agricultural Credit Facility ACODE Advocates Coalition for Development and Environment AF Adaptation Fund BMCT Bwindi Mgahinga Conservation Trust BOU Bank of Uganda CBO Community Based Organisation CDKN Climate and Development knowledge Network CSO Civil Society Organisation EAC East African Community EMLI Environmental Management and Livelihood Improved Bwaise Facility ENR Environment and Natural Resources EU European Union FAO Food and Agriculture Organisation of the United Nations FONAFIFO National Forestry Financing Fund (in Spanish) FONERWA National Fund for Environment (in French) GCF Green Climate Fund GDP Gross Domestic Product GEF Global Environment Facility GHG Greenhouse gas GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GNI Gross National Income iii | Scoping Study on Climate Finance Mobilisation IFMS Integrated Financial Management System LDCs Least Developed Countries Fund LG Local Government LULUCF Land Use and Land Use Change and Forestry MDA Ministry, Department and Agency MoFPED Ministry of Finance, Planning and Economic Development MRV Measurement, Reporting and Verification MTEF Medium Term Expenditure Framework MWE/CCD Ministry of Water and Environment/Climate Change Department NAMA Nationally Appropriate Mitigation Actions NAPA National Adaptation Plans of Actions NARO National Agriculture Research Organisation NCCP National Climate Change Policy NCFs National Climate Funds NCGF National Climate Green Fund NDCs Nationally Determined Contributions NDP National Development Plan NEF National Environment Fund NEMA National Environment Management Authority NFA National Forestry Authority NCFs National Climate Funds