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ERD steering Bangladesh’s journey to GCF: A reality check

The term “NDA,” that stands for National Designated Authority, is not new in multilateral cooperation mechanisms, especially for international climate finance sources. Clean Development Mechanism (CDM) of Adaptation Fund, for each of its member countries, has a Designated National Authority (DNA), which is the organization granted the responsibility by a country to authorize and approve participation in CDM projects. The Adaptation Fund as a whole, at the country level, uses a DA (Designated Authority) who is a government official and acts as the point of contact. On behalf of the national government, the DA endorses the accreditation applications of national or regional Implementing Entities before they are sent to the fund’s secretariat for assessment and/or proposals by national, regional, or multilateral Implementing Entities for adaptation projects and programs in the DA’s country. Green Climate Fund (GCF) has actually replicated this model with some modifications, like incorporating the international entities and not limiting the entities’ number as was done for Adaptation Fund. GCF also has created an opportunity for the NDAs to directly access to their resources in the form of “preparedness and readiness supports.” According to GCF’s financial architecture, for accessing the resources from GCF, the GCF board has made a requirement for the recipient countries to appoint NDAs. NDAs are chosen by governments to act as the core interface between countries and the GCF. They are to provide broad strategic oversight of GCF’s activities in a country and to serve as the point of communication with the fund. Funding proposals will have to be submitted through these NDAs, ensuring that investments are aligned with local needs, national priorities, and climate change planning.

ERD Activities

Selecting an NDA

The government of the recipient country has the full authority to select any national organization as its NDA. However, GCF recommends the NDA to be placed within a ministry or an authority conversant with the country’s national budget, economic policies, and their interrelation with climate change-related priorities and development plans. The selected institution should ideally have a mandate that enables it to work on and influence an appropriate combination of economic policy and development planning, along with climate change, energy, sustainability, and environmental resource management priorities, strategies, and plans. The ability to convene representative stakeholders across these priority areas is a critical function of an NDA. Taking all these points into considerations, in November 2014, GoB made the conscious decision of nominating Economic Relations Division (ERD) to be the NDA of Bangladesh to GCF. As one of the Divisions of the Ministry of Finance of GoB, ERD is responsible to mobilize external resources or ODA for socio-economic development of the country. ERD assesses the needs of external assistance, devises strategy for negotiations and mobilizing foreign assistance, formalizes and enables aid mobilization through signing of loans and grants agreements, determines and executes external economic policy. Taking the involvements and requirements into consideration, ERD and the Ministry of Environment and Forests (MoEF) were inherently considered the most appropriate two organizations to be the NDA of Bangladesh to GCF. However, as the single NDA, selection of ERD was reasonably agreeable taking the mandate and rules of business of ERD into account. At the same time, MoEF would be involved in climate change negotiations, but they would not have adequate knowledge on climate finance. Moreover, the NDA’s major role is financial diplomacy and ERD is better positioned in that respect. It is not only Bangladesh who has selected a Division of its Ministry of Finance as its NDA to GCF, rather quite a number of countries -- including China, Brazil, Nepal -- have selected their Ministries of Finance as their NDAs to GCF.

Barriers and challenges for NDA Bangladesh

Although ERD has made a reasonably good start, there are couples of challenges, like making the country’s system GCF compliant, and enhancing institutional capacity and engagements that ERD as NDA needs to overcome. Capacities like knowledge on national strategies, plans, and priorities; familiarity with CC activities and country’s needs; ability to monitor and evaluate project proposals against GCF and country criteria; over-viewing capacity of international climate finance flows in the country and all the sources of international climate finance; ability to contribute and drive national strategies and plans; ability to run own and stakeholders readiness; ability to understand and internalize GCF’s procedures and decisions, and ability to converting NDA into a service centre or helping body are essential in overcoming the challenges. ERD as the NDA also needs to develop an accessible and open governance mechanism, and a one-stop service center for issuing No Objection Letter (NOL) in a timely and transparent manner. ERD at its NDA secretariat has an acute human resource shortage. As NDA secretariat has no permanent setup till today, there is a high risk of institutional memory loss. NDA Secretariat needs immediate permanent setup, and engaging more people with some technical posts as well. NDA also needs to show strong leadership or capacity to initiate or push for reforms like, in making the present planning process GCF aligned or making country’s fiduciary system GCF compliant.

Way forward

Bangladesh fights with climate change for its own existence and it is a continuous fight that demands huge resource mobilization. The largest fund ever built in the history of mankind, the Green Climate Fund, offers a great solution to Bangladesh in meeting this demand. ERD, as the NDA of Bangladesh, needs to steer the country’s journey to GCF with proper planning, effective strategies and policies, good systems, strong institutions, stakeholders’ coordinated efforts, and hard determination.

This article has been authored by Mohammad Iftekhar Hossain, Former Deptury Secretary of ERD. See original article published in Dhaka Tribune here