Kenya Climate Finance Landscape - Sharing experiences from Kenya

Kenya Climate Finance Landscape - Sharing experiences from Kenya

1. THE KENYA CLIMATE FINANCE LANDSCAPE
By
Hillary Korir
The National Treasury
Sharing experiences from Kenya during the Peer Exchange Workshop
with the Government of Zambia, 19
th
Feb 2025 in Nairobi

2. Outline
•Background – Challenges of access to climate finance
•Role of The National Treasury in Climate Finance
•Climate Finance Actions and Programs
•Green Bonds
•Tracking and Reporting of Climate Finance
National Treasury 2

3. Background - Common challenges in climate finance
mobilization
▪Complex international financing architecture
▪Huge financing gap -$30 billion received v $277 billion per year
needed in Africa
▪Imbalance of climate finance flows – Adaptation v Mitigation
▪Gaps in policies, legal and institutional framework on climate
financing.
▪Capacity constraints to design transformative projects and
programmes
▪Upfront cost/investments for designing bankable funding
proposals
▪Sovereign Debt - debt crisis is linked to the climate crisis.
▪Uncertainty in emerging climate finance sources and instruments
▪High cost of capital for climate investments
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4. The National Treasury - The Climate Finance & Green
Economy Unit
❑The establishment of the Climate Finance &
Green Economy (CF&GE) Unit within the
Financial &Sectoral Affairs Dept
✓Recommendation of the National Policy on Climate Finance
❑The Unit is responsible for coordinating all
climate finance actions in the country.
Specifically, the Unit undertakes, among others:
✓Operationalizing the work of the National Treasury
as the National Designated Authority (NDA) for the
Green Climate Fund (GCF);
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5. Responsibilities of the Climate Finance & Green
Economy Unit
•Policy development and review of climate finance and green economy;
•Green Climate Fund (GCF) - National Designated Authority (NDA)
•Climate Investment Funds (CIFs)
•Lead in the implementation of the National Policy on Climate Finance and Green Fiscal
Incentives Policy;
•Lead Climate Finance technical negotiations
•Convener, Inter-ministerial Technical Committee on Climate Finance
•Implementation climate finance actions as outlined in the National Climate Change
Action Plan and other policy and legal frameworks
•Conduct capacity building and awareness on matters related to climate finance
•Liaise with PDMO on mobilization of climate finance and green finance
•Tracking and reporting of climate finance flows
•Implementation of the green/climate finance programs in MTPIV
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6. Policies, Strategies and Legal Frameworks on
Climate Finance
•National Policy on Climate Finance, 2018
•Sovereign Green Bond Framework – approved by Cabinet in Dec 2023
•National Green Fiscal Incentives Policy – approved by Cabinet in Jan 2024
•National GCF Strategy
Under Development:
oPublic Finance Management (Climate Change Fund) Regulations
oNational Climate Finance Mobilization Strategy
oCarbon Trading Regulations
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7. Reports & Strategic Documents developed
•Climate Change Budget Coding (CCBC), 2015
•Climate Public Expenditure and Budget Review (CPEBR), 2016;
•Climate Finance Training Handbook, 2019
•Climate Finance Synthesis Report, 2020;
•Kenya Landscape of Climate Finance, 2021;
•Carbon Pricing Study Report, 2022;
•Case Study Report of Green Banks, 2022
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8. Programs/Activities under the CF&GE Unit
Programmes / Projects/
Activities
Objective Achievement/ Status Remarks
The Green Climate Fund
(GCF)
The National Treasury is
the National Designated
Authority
The objective of the GCF
is support the efforts of
developing countries to
respond to the challenge
of climate change
•3 Entities Accredited:
o NEMA &
oKCB Bank Ltd
oAcumen Fund Inc.
•Twenty (20) funding
proposals approved and
funded by the GCF valued at
USD 314 million
•Seven (5) GCF Readiness
Support Grants approved
and funded valued at USD
5.7 million
Development of
the GCF Country
Programme 2024-
2027
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9. GCF – Global
Portfolio
GCF – Global Portfolio

10. Green Climate Fund – Africa Portfolio
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11. GCF Readiness Funding Portfolios
11
Global (Portfolio rank)
Africa (Portfolio rank)

12. Projects/Activities under the CF&GE Unit
Programmes /
Projects/ Activities
Objective •Achievement/ Status Next steps &
Challenges
Green Bond
Programme in Kenya
To promote financial sector
innovation by developing a
domestic green bond market.
•Sovereign Green Bond Framework
developed.
•The Green Bonds Listing rules
developed
•Issuance and the listing of the first
corporate green bond in Kenya
Identification of
potential eligible
projects for financing
Establishment of the
National Climate
Change Fund
To provide for financing
mechanisms to prioritize
climate change actions and
interventions in Kenya
•Draft PFM (Climate Change Fund)
Regulations developed
•The Cabinet Memorandum developed
Inconsistencies
between the Climate
Change Act, 2016 and
PFMA 2012
Kenya Green
Investment
Bank/Facility
To provide a range of funding
instruments and associated
incentives to support the
private sector in overcoming
barriers to making green
investment at scale.
•TNT has been collaborating with the
Global NDC Implementation Partners
(GNI
plus
) and Pollination to set the
framework for the proposed KeGIB.
•Benchmarking report on review of
Green Banks developed
Stakeholder
engagement
Mission to Kenya by
Pollination and AfDB
team
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13. Other Initiatives and Coalitions
Coalitions/InitiativesObjective Achievement/ Status
The Vulnerable Twenty
(V20) Group of
Ministers of Finance of
the Climate Vulnerable
Forum
The V20 Group of Ministers of Finance is a dedicated
cooperation initiative of economies systemically vulnerable to
climate change. The V20 works through dialogue and action to
tackle global climate change.
The V20 Group was established 2015 at Lima, Peru during the
2015 Annual Spring Meetings of the WB & IMF.
The National Treasury
continues to participate in
the both technical and
Ministerial Dialogue
Meetings
Kenya’s Accession to
the Global Green
Growth Institute
(GGGI)
GGGI as a treaty-based international, inter-governmental
organization, dedicated to supporting and promoting strong,
inclusive and sustainable economic growth in developing
countries and emerging economies.
Its mission is a global transition toward a model of green growth
and thematic areas of focus include Waste, Solar Energy,
Sustainable Transport, Green Buildings and Industry, Forest
(Landscapes, and Gender and Inclusive Development.
TNT established an Inter-
Agency Committee to
advise on Kenya’s
Accession to the GGGI
Cabinet Approved Kenya’s
Accession to GGGI
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14. Other Initiatives and Coalitions
Coalitions/InitiativesObjective Achievement/ Status
Africa Green Finance
Coalition (AGFC)
Africa Green Finance
Designated Authorities
Network (AfDAN)
Kenya is a founder
member
The main objective of AGFC & AfDAN is to support African
countries to mobilize adequate long-term climate finance for
accelerating transition to a net-zero-carbon by 2050.
AGFC announced during
COP26 in Glasgow and
launched during COP27 in
Egypt
Secretariat established,
hosted and supported by
FSD Africa
Coalition of Finance
Ministers for Climate
Action
Kenya joined and endorsed Principles of the Coalition when it
was launched in 2019. The Principles are at the heart of the
Coalition designed to inspire and support ambitious climate
action in areas where Finance Ministries have influence.
The Principles of the Coalition:
oalign policies and practices with the Paris Agreement;
oshare experience and expertise;
opromote carbon pricing measures;
omainstream climate in economic policies;
omobilize climate finance; & engage in NDCs development.
The National Treasury
continues to participate in
the both technical and
Ministerial Meetings
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15. What is a Green Bond?
Green bonds are debt securities
issued by financial, non-financial or
public entities where the proceeds
are used to finance green projects
and assets
Financially, green bonds are the same
as vanilla bonds, offering comparable
risk/reward profiles and following the
same issuance procedures
It’s about the projects and assets, not
the issuer.
•Kenya Sovereign Green Bond Framework developed to guide
the project screening, management of proceeds and
reporting of impacts
•The Kenya Green Bonds Regulatory Framework launched.
Includes:
o✓Capital Markets Authority (CMA) Policy Guidance Note for
Issuance of Green Bonds and,
o✓NSE Listing Rules incorporating listing requirements for Green
Bonds.
•Issuance and the listing of the first corporate green bond in
Kenya (Acorn Holdings, USD 40M), Sovereign Bond yet to be
issued
•Second Party Opinion (SPO) rating issued by CICERO
independent verifiers on the Framework and the pipeline
project
•National Green Bond Steering Committee established
•Development of the Green Assets Register in progress
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Green Bonds in Kenya

16. Tracking and Reporting of Climate Finance
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17. Tracking and Reporting of Climate Finance
•The “Why?”
❑The demand for transparency over climate change public spending in non-Annex
I (developing) countries
−Developing country Parties should provide information on financial, technology transfer and
capacity-building support needed and received (Paris Climate Agreement 2015 – Article.
13).
❑Tracking helps to provide comprehensive data on climate change relevant
budgeting and spending, enables government to make informed development
and climate policy decisions.
❑Alongside other climate data such as the GHG inventory and vulnerability
studies, climate finance data will serve as a cornerstone of data-driven decisions
on climate investments
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18. Tracking & Reporting - The Journey
▪Climate Change Budget Coding (CCBC) Report of 2015
▪Climate Public Expenditure and Budget Review (CPEBR) Report of 2016
▪Codes for tracking climate change expenditures incorporated in the
revised Government Standard Chart of Accounts (SCOA)
▪Training handbook on coding, tracking and reporting developed in 2019
▪Circular No. 13/2020 on Tracking and Reporting of Climate Finance
▪‘Climate Finance Landscape for Kenya’ Report of 2021 published
▪Climate Budget Tagging Guidelines – Reform under IMF Resilience
Sustainability Facility
18National Treasury

19. Source: KLCF Report, 2021

20. Conclusion - Opportunities for Enhanced Climate Financing
Flows
•Green project pipeline development –
✓Structure technical assistance funds, aggregation structures, project management support and guarantees.
✓Facilitate accelerated development and prioritisation of BANKABLE projects and programmes in key sectors, eligible for consideration under all
relevant climate finance mechanisms;
•Mainstreaming climate change in the development planning and budgeting processes
•Collaborations and Partnerships - Develop mechanisms that encourage and facilitate regional collaboration of climate
change projects
•Innovative Finance Mechanisms - Explore innovative mechanisms for additional resource mobilization such as green bonds,
debt4Nature Swaps, risk pools, Cat Bonds etc.
•Catalyse Private Sector Climate Investment:
✓Policy Stability and Clarity: A predictable investment environment, incentive mechanisms
✓Data and Information: Improve information availability and transparency of general investment conditions & better aligning risk perceptions and
realities.
✓Skills and Jobs Opportunity: Technical Skills and capabilities i.e. Climate Verifiers, Standards/ Accreditors.
•Establishment of dedicated investment vehicles e.g. Green Banks, Climate Change Funds
•Greening the Financial Sector - Policy-driven transition of domestic financial sector (banking, insurance, capital markets and
pensions) to manage climate-related risks.
•Scaling-up Locally led Initiatives such as FLLoCA, 20

21. National Treasury 21
Thank You!