News Bulletin: January-March 2019

Volume 15 | January-March 2019

NEWS BULLETIN

Design Lessons of an EcoMicro project in Bolivia: implementing transformative financial products that promote climate change resilience

The introduction of new green finance products in a traditional market is no easy task. In what is not uncommon, Financial Institutions (FI) seeking to diversify their portfolio in green lending are confronted with the reality of Murphy’s Law “Anything that can go wrong will go wrong”.

This was no different for Diaconia, a Bolivian Development Finance Institution, as they embarked on their EcoMicro pilot project in 2014. Their task : how to reach highly dispersed farmers and help them maintain or improve their income through the application of climate-resilient farming measures?

The challenges were numerous . Foremost among these, the Latin American market lacked precedents of resilience-based loans for the agricultural sector. Second, communicating climate change and the financial rationale behind the product was a complex feat : it risked alienating farmers if concepts used were perceived to be too detached from local realities. Third, the FI had to navigate new regulation that established a fixed maximum interest rate , thereby placing the green finance product in head-to-head competition with commercial finance.

But for a FI willing to be agile and flexible, every challenge brings new opportunities for relevance, scale and systemic change . For Diaconia, this meant adopting new strategies to overcome the odds, validate market appetite for the product and prove the model’s capacity to adapt, leverage local networks, and acquire additional finance.

For example, effective stakeholder consultations as well as context-sensitive technical assistance and dissemination campaigns allowed Diaconia to validate beneficiaries' interest and align with concrete, on-the-ground circumstances. Similarly, securing access to concessional finance helped to keep interest rates within a competitive range. Finally, embracing the “Pilot-and-Demonstration” approach embedded in the EcoMicro program allowed the project to test its main assumptions before deploying on a large scale. This approach allowed some inevitable “small fails” to happen, which served to strengthen the product in the long run – as opposed to “big fails” which might have inhibited further development.

As they say, hard work pays off !

The EcoMicro pilot was completed in December 2017, meeting its set targets. The project broke ground as the first agricultural microcredit in Bolivia that places incentives for farmers to change conventional practices and adopt climate-resilient measures in their productive processes. The product also achieved sustained commitment from target populations and profitability, as reflected in a near-zero loan delinquency rate.

Credits remained on the market throughout 2018, and are planned to be scaled up during the first semester of 2019, through the Financial Products project supported by the Climate Investment Fund (CIF). Through the Pilot Program for Climate Resilience, the CIF contributed a US$4 million concessional loan to expand the resilience product created during the EcoMicro pilot.

Read more on the design lessons of this EcoMicro project here .

Global Affairs Canada hosts Partners' Forum for implementing agencies across the Region

Global Affairs Canada (GAC) invited its implementing agencies across the Region to its Caribbean Regional Development Program’s Partners Forum held on March 12-13, 2019 in Kingston, Jamaica. The aim of the Forum was to engage Executing Agencies on Canada’s new country-level approach and provide an opportunity for mutually beneficial dialogue on key priorities, including Canada’s Feminist International Assistance Policy.

As GAC supports the EcoMicro Caribbean Program, the Forum also presented a unique opportunity to learn more about Canada's ongoing work in the Region and maximize opportunities for future collaboration.

Several GAC-funded projects stood out for their particular relevance to the work being done under EcoMicro to create green finance that builds the resilience of MSMEs and low-income households to climate change:

Climate Change Action for Gender-Sensitive Resilience – implemented by the United Nations Development Program (UNDP)
Skills to Access the Green Economy (SAGE) - implemented by Colleges and Institutes Canada (CICan)
Community Resilience Building Caribbean Region Program – implemented by the Canadian Red Cross

Another insightful session was the workshop on the Government of Canada's new Gender-Based Analysis Plus (GBA+) approach. GBA+ is an analytical process used to assess how diverse groups of women, men and non-binary people may experience policies, programs and initiatives. The “plus” in GBA+ acknowledges that GBA goes beyond biological (sex) and socio-cultural (gender) differences. The workshop was participatory and interactive with case studies relevant to all participants.

For the EcoMicro team, the training provided on the GBA+ approach will ensure that our EcoMicro Caribbean projects remain responsive to specific needs and circumstances of diverse groups of women and men and that green microfinance creates opportunities for women's economic empowerment.

Overall, the two-day Forum was content-rich and insight-filled. Hats off to GAC, in particular the Caribbean Development Program Team, for facilitating a fruitful and much-needed exchange. The EcoMicro Program looks forward to continued collaboration with GAC as a key development partner in the Region.

Since 2016, Global Affairs Canada supports the EcoMicro Caribbean Program with a contribution of US$5.3 million. To date, 5 projects have been approved in 5 countries (Guyana, Jamaica, Belize, Grenada & Dominica) for a total of US$1.9 million. An additional 5-8 projects are scheduled for design and approval in 2019.

Gender-based Analysis Plus (GBA+) is everyone's responsibility! We all have multiple identity factors that intersect to make us who we are. This is called intersectionality. GBA+ acknowledges that groups of people are not homogenous. Our experiences are affected by intersecting parts of our identity, the context we are in, and our lived realities.

The “plus” highlights the fact that GBA has always gone beyond sex and gender. GBA+ examines how sex and gender intersect with other identities such as: race, ethnicity, religion, age and mental or physical disability. It also considers t he different impacts on men, women, boys, girls, as based on their life situations along a range of variables including socio-economic conditions, impacts of climate change and even such everyday issues as access to health and justice.

In 1995, the Government of Canada committed to using GBA+ to advance gender equality in Canada. The Government recently renewed its commitment to GBA+ and is working to strengthen its implementation across all federal departments and implementing partners, including those in the Caribbean.

Take the Introductory GBA+ online course offered by Status of Women Canada in either English or French.

KNOWLEDGE PRODUCTS

Renewable Energy: A Gender Perspective

Renewable energy employs about 32% women, compared to 22% in the energy sector overall. Still, within renewables, women’s participation in science, technology, engineering and mathematics (STEM) jobs is far lower than in administrative jobs.

This report from the International Renewable Energy Agency (IRENA) examines the question of gender equity throughout the energy sector. Building on a ground-breaking survey of employees, companies and institutions, it finds that much remains to be done to boost women’s participation and allow their talents to be fully utilized.

IRENA estimates that the number of jobs in renewables could increase from 10.3 million in 2017 to nearly 29 million in 2050. The ongoing global energy transition offers the chance to create new jobs and reshape all aspects of how energy is produced and distributed.

Renewables offer diverse opportunities along the value chain, requiring different skill sets. But these opportunities should be equally accessible, and the benefits equitably distributed, the report notes.

Read the full publication here .

Establishing a Green Bank or Greening an Existing Bank?

The recent proliferation of green finance facilities by public sector players – at the national, subnational, regional and municipal level – is a response to the massive gaps between available funding and demand for funding for climate-friendly projects, and the vital need to mobilize private sector finance to meet international obligations of the Paris Agreement.

This paper examines the relative merits of starting a de novo Green Bank compared to “greening” an existing National Development Bank (NDB).

The report starts with a brief analysis of the general problem that demand for financing of green investments exceeds existing supply, including a description of key financial and non-financial barriers to investment. It then presents the question of whether to green existing NDBs or grow a de novo Green Bank, and identifies criteria from institutional, government, and economy-specific perspectives to help inform the decision. Finally, this paper outlines a basic process for how to ‘green’ a NDB, should that path be chosen.

Read the full publication here .

Financial Depth, Access and Inclusion in the Caribbean

The March 2019 Caribbean Region Quarterly Bulletin focuses on a specific challenge for the Caribbean economies – insufficient financial inclusion, which can hold back growth, development, and efforts to reduce poverty.

For firms – particularly small and newly established enterprises – access to financial services is associated with stronger innovation, job creation, and growth performance.

The analysis considers a number of related indicators linked to common challenges facing small and medium-sized enterprises and individuals in accessing credit and financial services. Related policy initiatives and options are also explored, with a view to highlighting country-specific recommendations with the potential to support broader financial access and inclusion.