African countries overwhelmingly committed to building climate resilient and low-carbon  economies through their NDCs1 However, African countries have outlined bold aspirations to build  climate resilient and low-carbon economies in their NDCs under the Paris Agreement, along with  considerable financing needs to meet these objectives. Progress is being made globally towards  mobilizing and scaling up climate finance – notably with the recent establishment of the Green Climate Fund (GCF).Therefore, the amount of climate finance flowing to the African continent remains below the estimated needs. Several factors contribute to African countries’ limited access to climate finance to date, including a weak enabling environment to attract climate  investment; limited institutional capacity to access and manage finance as well as cumbersome  processes and requirements of international funds and institutions.

Uganda successfully developed its green growth development strategy which is estimated to cost  USD 11 billion over a period of 15 years. The public sector is expected to contribute 44% towards  this cost, leaving a huge financing gap. To close it, innovative financial instruments and innovative  approaches grounded on local and communal structures must be designed to reduce risk and  enable capital flows within communities in the country to be able to drive and bring climate action  solutions to scale. Based on NDC assessments need to be developed and connected with suitable  sources of finance; national financing vehicles must be designed to support the country to accept  and effectively use climate finance3. It is against this backdrop, that UNEP-EBAFOSA Uganda  started to leverage on existing traditional communal financial structures in the Buganda Kingdom  through the power of innovative volunteerism to establish innovative financial approaches  specially the innovative financing risk sharing facility to enable vulnerable communities access  climate financing to implement climate action solutions which contribute to the achievement of  Uganda’s NDCs goal and the 17 sustainable development goals especially SDG 13 (Urgent action  to combat climate change and its impacts). This work is contributing to the achievement of  Uganda’s commitment of a 22% reduction in GHG emissions by 2030 compared to business-as usual (BAU). Contributions from the private sector in Uganda will be critical to meeting these  ambitious goals.

UNEP EBAFOSA/ PEWOSA work is targeted to devising innovative financial approaches which brings climate action enterprises impact to scale in rural farming communities of Buganda Kingdom. A very innovative approach has been employed and a formation of communal local  structures called Village Saving and Loans Associations (VSLAs) has been formed and created. So far two VSLAs have been created bringing people together- farmers, women and youth for the  common purpose to tap opportunities in the agro-value addition using climate action solutions. This is helping them to tap opportunities- which is that while they were cultivating their cassava,  now they have an opportunity to have it dried hygienically and effectively to cut losses. And once  they do so, the dried agro-produce are been bought off as they put something in their pocket and  with this they are growing their savings together in a group, and using the saved resources for  their own use as well as to also finance other opportunities along the agro-value addition chain that will come up. Specifically, EBAFOSA is looking at VSLA members investing in using cassava flour for instance to make snacks and other delicacies that can be marketable to earn them more. Or they  can start trading in other cassava by-products like fuel briquettes and purchase cookstoves and earn more and save better and grow. In addition, the establishment of three additional VSLA is ongoing in Kyaggwe county with each VSLA consisting of 60 members. The five VSLAs are  established on the spirit of working together called Innovative Volunteerism in Buganda kingdom  traditionally known as “Bulungi byw nsi”. The VSLA are fitting back into PEWOSA which is the  mother communal cooperative within the Buganda Kingdom. Through this work technical  guidance is been provided on how to integrate climate action solutions of clean energy and EBA  as part of their credit portfolio to their farming clients across the entire agro-value chain.

Through this financing products, climate action solutions of solar dryers and EBA inputs are set to be financed at below-market interest rates –the de-risking provided by EBA crop  failure mitigation and low financing risk of solar dryers are helping to avail this opportunity and has provided a new product facility line to PEWOSA. The facility is open to start-ups where they  have 100% coverage and actors who may not have enough collateral, as well as established  enterprises. Over 100 agro-value chain actors within the VSLAs have been engaged and the  number is growing, with financing covering both individual and cooperate actors. This work has also availed a risk sharing cash security to be used by PEWOSA cooperative as a climate action  innovative financing cash guarantee to indemnify any potential defaults from beneficiaries of the  risk sharing facility and where both parties shall be signatories to this account.  

Intervention  

• Women skills have been retooled to make fuel briquettes; developing the capacities of  women to promote smokeless fuel from waste biomass to reduce carbon emission whilst enhancing better livelihood through conservation and climate action micro-enterprises development in Nakisunga village saving and loans association (VSLA).
• Mapping and formation of Village Savings and Loans Association; One challenge that faces microfinance as an industry is how to reach the poorest of the poor and more so in a way  that builds their socio-economic resilience.
• Financial Inclusion for Women: A Way Forward.
• Decentralizing clean energy to rural areas of Buganda kingdom; This work has managed to  finance the establishment of the five solar dryers in five village savings and loan association  (VSLAs) including Nakisunga, Ngogwe, Nagojje, Kawolo and Nakifuma VSLAs.
• Training farmers ecosystem-based adaptation approaches; this work has empowered and  boosted cassava farmers groups to invest in agricultural enterprise and EBA approaches.
• Acceptability of the of village savings and loan association initiative; this work has created trust  and confidence in the VSLA members of Nakisunga VSLA, cassava farmers started adding value on  the cassava they grow using a community solar dryer.
• Establishment of the the Village Savings and Loans Model in partnership with financial services for  example PEWOSA cooperative; this work has managed to prepare Nakisunga VSLA to be linked to  PEWOSA microfinance cooperative to attract the climate action innovative financing risk facility to assist rural farming communities in Buaganda Kingdom to save and access finances to access climate action solution.
• Climate action enterprises established in Nakisunga Village savings and loan association; Beyond  enabling participation, this work has also touched on greater need to ensure equitable and  inclusive management of VSLA groups.

Read the full report from the attached document to see more details and next course of action.

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