They may be over 6,600 kilometers apart but for the Climate Investment Funds (CIF), the journey from Paris to Dushanbe is a natural one. Because a CIF project in Tajikistan’s capital reflects, in its own unique way, the agreement made by world leaders in the French capital last December.
At COP21, we saw a strong consensus around and commitment to the importance of a wide range of stakeholders coming together to tackle climate change. Especially the private sector whose role in climate resilience is crucial to help combat climate impacts. Tajikistan’s CLIMADAPT is a pioneering project and a powerful and practical example of what this consensus and commitment look like.
In Paris, the private sector were not just present; they were persuasive advocates for a shift towards low-carbon, climate resilient economies. Investment decisions are becoming more climate-smart and being reviewed against their resilience to a changing climate. Tajikistan may indeed be a long way from Paris but it’s amongst the most vulnerable countries to climate change in the world so the decisions that were made in the French capital, and their implementation, have real-life implications for Tajik communities and businesses.
With funding from the CIF’s Pilot Program for Climate Resilience (PPCR) and the European Bank for Reconstruction and Development (EBRD), Tajikistan is pioneering CLIMADAPT, a climate resilience financing facility - one of the first of its kind in the world. It combines $5 million in concessional funding from the CIF’s PPCR and $5 million in loan and grant funding from the EBRD to scale up financing for climate resilience through local financial institutions.
Effective climate resilience technologies already exist in Tajikistan but market barriers, such as the high cost and low availability of medium-term finance along with a scarcity of suppliers and installers, can limit their uptake. That’s where CLIMADAPT comes in - it offers loans to private businesses, farmers and households via local Financial Institutions (FIs.) These FIs already have a good market presence and are interested in climate resilience technologies which many have high demand. And it’s a win-win – climate-resilient technologies have long-term benefits for the community and they benefit investors too.
CLIMADAPT works in three area – water use improvement, energy use improvement and sustainable land management. Funding is available for agriculture, business and manufacturing small and medium-sized enterprises (SMEs) and residential needs.
For farmers, this could mean drip and sprinkler irrigation, improved water pumps and developing new orchards for growing apples. For SMEs, this could mean improved processing technologies or energy-efficient production. And for households, this could mean improved insulation or shifting to renewables.
So far, loans totaling the Tajik somoni equivalent of $8 million have been provided to one Tajik bank and two microfinance institutions to on-lend to small and medium-sized enterprises, small farmers, and households in rural areas.
At the project’s launch, Jamshed Hasanov from the PPCR Secretariat, Tajikistan said: “The PPCR is initiating transformational change. We’ve already seen that the multi-stakeholder approach to program implementation is an important asset. With its community-driven development focus, community members, women’s groups and local farmers are taking the lead in decision making on investment choices. NGOs and other civil society organizations are regularly consulted on issues related to implementation.”
Hasanov and his team along with EBRD and the CIF Secretariat will be following the results of this innovative facility - and learning how it can be replicated in other countries to deliver climate-smart development.