Transcript GEF Country Dialogue Workshops Programme Project

GEF Engagement with
the Private Sector
Overview of the Session
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Why engage with the private sector?
GEF strategy for engagement
Definition of the private sector in GEF projects
Profile of private sector participation
Types of stakeholders (multi-national groups, national
companies, trade associations)
Typical Focal Area interventions
Sectoral approach - links to global environmental benefits
Financial instruments used
Project examples
Final Thoughts
What are the benefits of
engaging with private sector?
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For GEF:
Private investment flows > ODA
 Transfer state of the art technology
 Sustainability and Replication often depend on
functioning markets
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For the private sector:
GEF funds can reduce risk
 GEF funds enable access to new markets
 Raise business’ environmental image
 GEF leverages partner cofinancing
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GEF Strategy for Engagement:
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Indirectly through removal of barriers to promote
market transactions:
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Creating market conditions for certain activities (eg. firms
now able to sell SHS or ELP)
Helping firms enter an untested market (eg. Providing
guarantees to FI who make credit available)
Directly as eligible project proponents or direct
beneficiaries (eg. Incremental cost financing to
firms investing in ecotourism businesses)
Through procurement allowing private firms to bid
on supply of GEF equipment and services
Definition of GEF Private Sector
Projects
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Private sector enterprises with commercial viability as
goal mainly involved in project component, sometimes
overall project proponents
Public sector led project that creates more effective
market conditions for attainment of global environment
benefits
Projects to assist private landowners establish private
reserves or protected areas on their land for
conservation/sustainable use of forests (presently only
in Latin America and the Caribbean)
Profile of GEF Private Sector
Projects (Findings from M&E Study)
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10% of GEF projects, 17 % of GEF grants allocated
Co-financing ratio of 3.7 but private sector
contribution only 0.67
IFC claims 5 – 11 times leverage of GEF funds and
average World Bank co-financing ratio is 6:1
In only half of projects does private sector
contribute significant resources or assume
substantial risk
Projects are almost entirely climate change and
biodiversity, in 2:1 ratio
Typical Focal Area Interventions
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Climate Change
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Biodiversity
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EE: ESCOs; Efficient Lighting Products
RE: Solar PV;
Transport: Fuel cell buses (new)
Ecotourism and mass tourism
Agro-forestry commodities, agriculture, fisheries, non-timber
forest products, banking
 Certification for coffee and cocoa
Private lands conservation
Payment for environmental services
IW: Ship waste; Water conservation;
POPs: Alternative Pesticides; PCB substitutes
Financial Instruments in GEF Projects
Grants: To stimulate markets
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Promote certification, standard setting and labeling (eg.
Logos for ELP, labels for biodiversity friendly
products.
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Consumer or producer awareness campaigns
(workshops, surveys, media, etc.)
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TA to promote new market mechanism such as ESCOs
and cover other development costs.
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To provide a degree of subsidy to some investments.
Financial Instruments in GEF Projects
Non-Grants
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Partial credit guarantees: eg. to an FI to provide credit
for ESCOs or PV end users
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Contingent financing: where repayment depends on
certain financial and performance targets, eg.
Ecotourism.
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Loans: at concessional or market rates
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Equity funds: similar to traditional equity/venture
capital fund where GEF cofinancing used to leverage
private investment in potential profitable project.
Project Examples (will vary according to national
circumstances): Climate Change
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Kenya, India, Morocco: PVMTI (IFC)
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accelerate sustainable commercialization of PV
technology.
 TA provided
to develop sustainable and replicable
business models with proponents, grants (up to
10%), soft loans, partial guarantee and equity
financing provided to finance projects.
Project Examples (will vary according to national
circumstances): : Climate Change
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Kenya: Removal of Barriers to Energy Conservation and EE in
SMEs (UNDP)
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Financed capacity building and awareness of EE among
business owners, develop business plans for EE investments,
implement demonstration projects. EE investments expected
to follow.
Efficient Lighting Initiative (IFC)
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In 7 countries including South Africa to accelerate development
of the market for EE lighting technologies.
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Financed consumer awareness of CFL, educational programs in
schools, capacity building in energy industry, pilot projects,
M&E, and project development
Similar previous projects successfully implemented in Poland,
Mexico, Thailand and Jamaica.
Project Examples (will vary according to national
circumstances): : Climate Change
Uganda Energy for Rural Transformation
(World Bank)
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Part of a larger program of private sector led rural
electrification and and ICT sector development
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GEF to strengthen private sector capacity to develop and
undertake RE projects and FI to evaluate financing proposals.
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Financing to project sponsors through investment subsidies and
debt/equity from FI.
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Grid related power from small RE sources eg. Sugar mills for sale to
third parties;
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Installation of PV systems in homes public health, educational, water
insitutions and rural enterprises
Project Examples (will vary according to national
circumstances): : Biodiversity
Payments for Environmental Services
 Costa Rica Ecomarkets (World Bank)
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Incentives to private landowners to conserve biodiversity through
payments for environmental services
Payments for forest conservation that achieve: GHG mitigation through
carbon storage; hydrological services; biodiversity conservation; scenic
beauty.
GEF contributed to national Fund from which payments made and for
strengthening supporting organizations. Govt contributes dedicated tax
revenues to Fund.
SME FUNDECOR (IFC): GEF provides loans to Fund for
advanced payments to landowners for wood harvested in forests and
plantations certified under the Greenseal program.
Project Examples (will vary according to national
circumstances): : Biodiversity
SME Program (IFC)
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Supports ecotourism operations in Honduras, Guatemala,
Tanzania and Zimbabwe
Provides concessionary loan financing through financial
intermediaries who on lend to SMEs.
Project Examples (will vary according to national
circumstances): : Biodiversity
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Coffee and Cacao certification schemes mainly in
Latin America but also in Uganda (Kibale Coffee).
Creation of a label such as “organic” “fair trade”
“biodiversity friendly” through which producers
would obtain a premium price on world markets.
Achieve biodiversity goals, eg. maintenance of
biodiversity shade, adopt or maintain biodiversity
conservation friendly practices.
GEF grants financed technical assistance to farmers
and creation of the labeling scheme.
Final Thoughts
 critical
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Role of government?
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Enabling environment for private sector
development must be in place:
 Legal
and regulatory framework, pricing and
incentives, financial and banking systems
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Careful, clear and transparent selection of
financial partners as well as provision of
incentives to achieve GEF objectives.
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Importance of the private sector itself
providing co-financing .
Thank You