Financing for Development

Financing for Development

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  Nigeria Erosion and WatershedManagement Project (NEWMAP) Development Finance Impact Project - A Digital Artifact
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  Introduction Financing for Developmentrequires an integrated sustainable development financing strategy. The best projects involve at least a number of key stakeholders in development financing including Governments, Multilateral Development Banks and Private investors. The projects also utilise an number of different instruments such as Loans, Grants, Domestic public spending and other private finance. This presentation explores an exemplar project in NEWMAP to better understand how these key characteristics can be applied together in development project financing.
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  Erosion at Ameke-Ngwo Soilerosion is rampant in the South East of Nigeria with an estimated 3000 gullies which can be up to 10 kilometres long. The effects of these gullies include damage to natural assets like productive farmland and forests. Erosion at Ajali Nsude-Enugu The Problem – Gully Erosion in Nigeria
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  The solution A multifocalproject jointly funded by the Global Environment Facility (GEF) and the Special Climate Change Fund (SCCF), under auspices of the World Bank but executed by the Nigerian Federal Ministry of Environment along with State Ministries of Environment and other partner government agencies. The Project Development Objective is to support Nigeria in achieving greater environmental and economic security, as well as reduce vulnerability to the persistent problem of gully erosion.
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  Financing partners
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  Global Environment Facility •Contribution to NEWMAP US$3.96 Million • The GEF participation in the project is because of its role as the largest public funder of projects to improve the global environment. • It provides grants for projects on biodiversity, climate change, land degradation etc. • The NEWMAP Project is an ideal candidate for the grants and concessional funding provided by the GEF. These grants to cover additional costs associated with transforming a project with national benefits into one with global environmental benefits.
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  Special Climate ChangeFund Contribution of US$4.63 MILLION from the Special Climate Change Fund (SCCF). The Special Climate Change Fund rationale for engagement in the project stems from its purpose to intervene to support the development of replicable local and community innovations on climate adaptation and soil, water, and biodiversity conservation that can be scaled up within the broader project. Involvement in the NEWMAP Project enables the delivery of global environmental public goods. Adaptation to climate change is the top priority of the SCCF, although it can also support technology transfer and its associated capacity building activities. The SCCF is able to catalyse and leverage additional finance from bilateral and multilateral sources.
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  World Bank The WordBank contribution is a U$500 Million International Development Association (IDA) concessional loan. The rationale for the World Bank’s engagement stems from the Project’s alignment with its strategy in Nigeria supporting sustainable and inclusive non-oil growth. Secondly, to improve environmental and climate risk management, and encourage the wider adoption of sustainable land use practices. The Project helps in meeting the World Bank’s goal of strengthening governance and public sector capacity. The project also enables the government and Bank to both participate and helped fund project preparation.
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  Government The Government’s contributionis U$150 Million The Government participates in the project as it contributes to strengthening it’s strategic framework for climate action. It enhances Nigeria’s capacity to promote low carbon, climate resilient development. The project also supports Nigeria’s strategic framework for climate action and is important because climate variability and change threaten to exacerbate Nigeria’s erosion challenges, and undermines Nigeria’s efforts to achieve its development objectives.
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  Obstacles to solvingthe problem of gully erosion Understanding the casual factors. In a lot of cases of the land degradation that had developed into gully erosion sites were caused by human activities for instance through the wrong dumping of waste products and felling of trees.
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  Obstacles to solvingthe problem of gully erosion 2 Capacity – In the past the Nigerian government’s Ecological Fund has carried out gully erosion activities but these have had mixed results partly due to issues with the government’s capacity to managed the projects. Corruption – the risk of corruption and fraud is high and have to be mitigated by strengthening of the procurement, financial management and oversight processes.
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  Transparency and Open governanceis key to addressing these obstacles The project’s utilisation of an integrated watershed management approach with community participation is innovative and designed to bring all the key stakeholders to work collaboratively. The conduct of impact evaluations to help to quantify success factors for interventions is also a welcome addition to the governance process and will help to ensure problems are quickly identified and rectified. Compensation to persons affected by the project is also important aspect and will engender buy in from the community.
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  Closing remarks The fundingof the project could be enhanced by the addition of private financing e.g. private philanthropy. Preserving the environment benefits not only society but companies too. Reducing or eliminating gully erosion will lead to a more productive use of resources. There is also plenty of evidence which suggests that the most effective method of addressing many of the world’s development issues is often to mobilise the corporate sector in ways that benefit both society and companies. To conclude the project is still ongoing but lessons learned from its implementation should help inform how the financing of new projects is structured.