Financing Locally-led Adaptation: Action on the Ground

At the Gobeshona Global Conference 2022, GRP and UNDP co-hosted a session on financing Locally Led Adaptation with examples from the ground.

Written by: Ameil Harikishun
GRP Areas of work: Knowledge Policy Theme: Finance and markets

The Principles for Locally-Led Adaptation (LLA) have increasingly been recognised as an efficient and effective means to deliver contextually appropriate adaptation and resilience responses on the ground. Grassroots organisations and initiatives often have the best understanding of local vulnerabilities, with trusted links between communities and local authorities. Despite the the potential for improving local environmental and social resilience, many locally-led projects and organisations struggle to access finance.

The Global Resilience Partnership, in collaboration with UNDP, co-hosted an interactive conversation at the Gobeshona Global Conference 2022 to explore the challenges in financing LLA, and the role that organisations can play in supporting access to urgently needed resources for scaling.

Innovative and impactful LLA is already taking place around the world.  

UNDP-supported projects being implemented in Sudan, Uganda, Fiji and Kenya gave valuable insight into impactful LLA and the challenges they face in accessing finance. The message across the projects was clear: solutions are out there and local actors, often overlooked, embody so many of them. Challenges exist, but so do the opportunities for the private finance to step in and step up the support needed for locally-owned solutions.

Financiers and funders often see local entrepreneurs accessing finance for the first time as high-risk. Thislimits their willingness to channel resources and finance to these businesses, despite the significant potential they may hold.The Near East Foundation is working to support women farmers in Sudan by targeting improved access to modern processing technologies and markets. By localising investment into cooperatives, the project aims to bolster horizontal governance and address the lack of farming cooperatives. This in turn strengthens the negotiating power of the farmers.

Many investment vehicles are traditionally seen as high-return driven, but there needs to be a shift in mindset when making these types of investments into communities. An example of these types of investments is low-cost revolving funds. In Uganda, the Lutheran World Relief is working with farmers to improve their creditworthiness and address the otherwise high interest rates for borrowing capital. High interest rates prevent farmers from investing in their farms and leaves them vulnerable to shocks and stresses.

For interventions to be successful, communities need to be involved from the outset. A participatory approach adopted by World Neighbours, Kenya, shows how local innovative approaches can be unearthed. This joint experimentation with farmers highlights that with support, these communities can see their innovations come to fruition. Importantly, there is now work to institutionalise the participatory approach to the whole country, with the evidence from the project being used to influence policy and mainstream it in the agriculture and development sector in Kenya.

Radical collaboration is needed to drive finance into LLA

The key is to involve domestic players in local capital markets, instead of trying to just drive international or foreign investment.”  – Neil Walmsley, Climate-KIC

Supporting action by local actors and communities requires dialogue, understanding and purposeful steps to overcome the challenges of accessing resources. Climate-KIC, for example, has developed portfolios of programmes that work in coordination to effect change. The programmes address enabling environments and include accelerator programmes for individual organisations. They recognise the scale of need and the systemic change required. Climate-KIC works directly with local capital markets and companies that can influence broader systemic change.

Learning and knowledge sharing is important for addressing misconceptions, understanding action on the ground, and ultimately building a stronger narrative for investing in LLA. In addition,radical collaboration is needed at all levels of decision-making, including local communities, to support evidence-informed decision-making.Work being undertaken by the Climate Development Knowledge Network (CDKN) and the International Centre for Climate Change and Development (ICCCAD) emphasises the role of partnerships and learning. This is motivated by the idea that improved collective knowledge is a crucial catalyst for climate action.

Throughout the session, participants emphasised the need for capacity building. Nate Mathews of Global Resilience Partnership, highlighted the tailored support that GRP provides to organisations to be able to absorb finance, and emphasised that investing in programmes of support is critical. Given that adaptation and resilience action requires long-term considerations and support, these programmes need to adopt a longer-term perspective in order to understand the evolving needs and challenges of organisations in various contexts.

The session provided a valuable dialogue space to hear from project proponents working on the ground, and from programmes and organisations that aim to support them. Frank discussion, an openness to learning and advancing our collective knowledge on climate action will continue to be a crucial catalyst for realising a 1.5ºC, resilient world that leaves no one behind.

Access the event page here.