The main thrust of the blended finance tool is simply to de-risk market-driven finance to close gaps for NDC implementation. It builds on actions already ongoing in the country by diverse stakeholders. Working with counterparts in the UNEP economy division and the UNEP-CCC has been backstopping the Uganda’s team of experts in developing this financing facility. In the country, the team is led by the Ministry of Water and Environment - Climate Change Department (MWE-CCD), with technical leads being the National Technical Institute (NTI), which is the Climate Change Adaptation Innovation (CHAI), and a National Project Coordinator (NPC) seated within the MWE. The overall objectives were two-fold 1) for key in-country actors to provide feedback on progress in delivering the blended finance facility, including implementing guidance provided to this end, and share any additional information on in-country plans related to a national Blended Finance Facility for NDC implementation in Uganda; 2) analyze progress made by the country in developing the blended finance facility, pending gaps that still need to be addressed, and modalities of addressing said gaps towards the formulation of a blended finance facility structure for NDC implementation in Uganda; 3) engaging national/international stakeholders for an inclusive, participatory process in closing the gaps and establishing the finance facility.

The UNEP representative participated in the internal harmonization meeting with participation drawn from the government – the MWE-CCD; the Ministry of Finance climate finance unit; the NTI, NPC, and the UNEP-CCC. Going into the discussions, the understanding was to build consensus around the blended finance facility being designed in the form of a credit guarantee scheme, domiciled within the central bank, capitalized partly by the exchequer and bilateral/multilateral sources, whose core function would be to de-risk lending to different actors, including the informal sector & youth, for actions done to implement select NDC priorities. The de-risking would be accomplished through a cash guarantee that covers against default risk by these actors to enable different financers to participate in financing NDC implementation at competitive interest rates

Deliberations brought up some key salient aspects, including the need to achieve ownership across the board and avoid having the finance facility viewed as being under a particular docket. There was also discussion on the need to avoid using the terms “finance facility” and “scheme” as other schemes were already underway in the country. The meeting also learnt that different stakeholders were undertaking various actions that resulted in de-risking effects, and all these needed to be taken onboard and built on instead of developing a facility from scratch and risking re-inventing the wheel.

These deliberations led to a consensus being reached as follows.

1. Uganda’s climate change law calls for NDC investments to be cross sectorial, meaning addressing the investment needs of different sectors. The discussion was therefore hailed as timely.
2. Building on the above, the cross-sectorial approach provides opportunities to lower the risk of NDCs investments by combining actions across diverse sectors to increase earnings and lower market risks. For example, in the case of current priorities of agroforestry, solar dryers, and solar irrigation, it was agreed that investing in solar irrigation & agroforestry in combination resulted in higher yields that investing in only one approach and combining these with solar dryers to lower postharvest losses meant increased earnings, which translated to lowered risk of financial distress and default. The need to combine NDC priorities for low-risk financing was therefore agreed upon.
3. It was noted that there is a need to build on the de-risking potential of diverse actors already engaged in the country and make the blended finance into a “public good” instead of a facility to be hosted or domiciled by government/central bank. It was therefore agreed that this be called a “blended financing tool” that will be a compendium of knowledge products/resources leveraging lessons and empirical experiences of a multiplicity of actors involved in one way or another in actions that de-risk financing

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