`Direct access' to climate finance: lessons learned by National Institutions

Developing countries need significant amounts of finance to help them adapt to the changing climate and follow a path of low-carbon development. The international community has set up multilateral funds to help support climate change mitigation and adaptation in these nations. Two of the largest climate funds, the Adaptation Fund and the Green Climate Fund (GCF), have committed to allowing institutions from developing countries so-called direct access to finance. Direct access in this context means that national or subnational entities become accredited to receive finance directly from the fund without going through an international intermediary (like the World Bank or a regional development bank). The goal of such direct access is, among other things, to reduce transaction costs and enhance national ownership over available financing. Implementation of the Adaptation Fund and GCF direct access modalities is still in a relatively early stage. (The Adaptation Fund accredited its first implementing entities in 2010; the GCF did so in 2015.) This paper explores the experiences to date of national institutions that have been accredited by either of these two funds. It focuses on approaches that these institutions have taken to plan for, access, and use finance received through direct access, as well as early lessons learned in the process.

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