International Climate Fund 'relatively good' but 'must be improved'

The UK's International Climate Fund is making an impact but needs to involve the private sector, according to a recent report by the Independent Commission for Aid Impact (ICAI).

ICAI has given the Fund a green-amber rating which means the programme performs relatively well overall

ICAI has given the Fund a green-amber rating which means the programme performs relatively well overall

The International Climate Fund (ICF) is a £3.87bn pot set up to help developing countries adapt to climate change.

In its report, ICAI has given the Fund a green-amber rating which means the programme 'performs relatively well overall against ICAI's criteria for effectiveness and value for money, but improvements need to be made.'

Private capital

Review team leader of the report Catherine Cameron said: "The ICF has made good progress in a relatively short time frame. It has supported progress at the international level both at policy and technical levels.

"It would benefit from a more flexible mix of resource and capital expenditure since it needs to deepen its engagement with developing country governments and this is likely to require greater access to grant resources."

ICAI commissioner Mark Foster said: "The ICF needs to develop a more detailed private sector strategy, identifying the conditions and strategies needed for attracting different forms of private capital for low-carbon, resilient growth. These might include foreign direct investment, foreign bank lending and institutional investment.

"This would enable more effective use of private finance in the ICF's priority countries and thematic areas by amplifying and accelerating capital flows."

The report states that, after a challenging start, the ICF is now well-placed to deliver on its ambitious objectives. It is a significant contribution to climate finance and a tool for influencing action at national and international levels.

Recommendations for improvement

1) The ICF should work through a wider range of delivery partners at the international and national levels, with a stronger understanding of their comparative advantages.

2) More flexibility in the allocation of resource and capital expenditure is needed. DECC and Defra would benefit from access to more flexible and direct resource and capital expenditure.

3) The ICF should develop a more differentiated strategy for working with the private sector, focused on the particular conditions and approaches required to attract different forms of private capital.

4) The ICF should deepen its engagement with developing country governments and national stakeholders, including through greater emphasis on capacity development. This is likely to require greater access to grant and technical assistance resources, including for middle-income countries.

5) The ICF should strengthen coherence across multilateral and bilateral delivery channels and programmes and implement a common, country-level planning process and tracking system.

6) The ICF should be more transparent and inclusive, publishing its strategies, activities and progress on an ICF website, in a co-ordinated reporting format in partnership with other climate finance data providers.

In November, the UK committed to fund 12% of the Green Climate Fund (GCF) from the International Climate Fund, which has a £3.87bn budget for 2011-2016.

Lois Vallely


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