11 / 2 0 1 3N o r d i c D e v e l o p m e n t F u n d

NEWSLETTER

NDF shows results in integrating

development and climate-related objectives

After three and a halfyears of climate changeoperations NDF has ap-proved, by the end of2012, a total of EUR 134,5million for altogether 50projects in 14 countries.Nearly half of the ap-proved euro volume is al-located to countries inSub-Saharan Africa, andthe rest for low-incomecountries in Asia andLatin America. The num-ber of approvals is note-worthy, especially takinginto account the rigorouspreparation procedurethat each operation un-dergoes prior to discus-sion at the NDF Board of Directors.

In order to ensure thatall its projects were incompliance with NDF’sclimate change mandate,NDF started elaborating,in late 2009, its own cri-teria for project identifi-cation and screening forclimate change contents.The first version of thecriteria, which concen-trated its efforts on defin-ing quantitative climateadaptation and mitiga-tion criteria, was endorsedby the NDF Board of Di-rectors in December 2010.After some time of test-ing the criteria on actualprojects, the criteria werefurther refined to includemore detail on multipledevelopment issues. Therevised criteria were ap-proved by the Board ofDirectors in September2012. “In my view, theNDF criteria and NDF’snew role as an active con-tributor to project designrepresent a substantive

intellectual and practicalcontribution to the identi-fication and putting intoaction of activities gen-uinely linked to causesand consequences of cli-mate change,” says PasiHellman, NDF ManagingDirector.

NDF-funded projectswhich are effectively com-bining the climate anddevelopment objectivesinclude, for example, miti-gation projects targetingthe urban and rural poor,projects involving small-scale businesses as wellas projects with stronggender elements.

Regarding adaptationactivities, the combinedscreening criteria devel-oped by NDF can help inidentifying investmentopportunities which pri-marily benefit the poor.Current activities fundedby NDF include activitiestargeted, for example, atethnic minorities, small

farmers and residents ofcoastal areas; NDF activi-ties can have a significantimpact on the adaptationability of these at-riskpopulations.

In early 2012, an inde-pendent evaluation ofNDF’s progress under thefirst two years of the cli-mate mandate concludesthat NDF’s instrumentsand work fit well into theinternational climate fi-nancing agenda and thatNDF’s funding reachesthe countries that need it most. Furthermore, the report states positiveresults regarding fulfil-ment of objectives, in-creased value added,streamlined approval pro-cedures, a high level ofdevelopment effectivenessand the organisation’s results orientation. According to Mr Hellman,“these findings form a good foundation for future work at NDF.”

Approved Financing by Region - 134,5 m€

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Joint seminar on integrity and anti-corruption arranged by NDF, NIB and NEFCO

On December 12, NDF, theNordic Investment Bank(NIB) and the Nordic Envi-ronment Finance Corpora-tion (NEFCO) arranged ajoint seminar on integrityand anti-corruption for theboard members, manage-ments and anti-corruptioncommittees of the three in-stitutions. All three organi-sations have existingprocedures to prevent anddetect fraud and corrup-tion, and the seminar hadthe dual objective of pro-viding additional knowl-edge and awareness forthe participants as well asto deepen the cooperationon common topics betweenthe three institutions.

Three highly notablespeakers were invited toshare their knowledge and experiences, namelyJannik Lindbæk, formerPresident of NIB and for-mer Executive Vice Presi-dent of IFC, and one of the founding members ofTransparency Interna-tional Norway; IntegrityVice President LeonardMcCarthy of the WorldBank; and Duncan Smith,Deputy Head of Fraud Investigations at the European Investment Bank(EIB). Jannik Lindbækgave an introduction tohow the international financial institutions (IFIs)have handled the questionsof integrity and anti-cor-ruption over the last couple

of decades as well as to howand why Transparency International was founded,while Leonard McCarthygave examples of the dev-astating effects of fraudand corruption and howthe World Bank fightssuch misconduct today.Duncan Smith gave a pre-sentation from the EIB andEU perspective includingexamples on proceduresfor investigation and pre-vention.

The Corruption Percep-tions Index for 2012, rec-ently published by Trans-

parency International, gavethe Nordic countries strongrankings - between 1st and11th place. However, thisfact does not mean thatthe question of fraud andcorruption is not a rele-vant and important topicfor Nordic governmentsand Nordic/Baltic institu-tions, also. The speakersagreed that regardless ofthe type of financing orgeographical regions, it is essential to work pre-ventively and investigateand address misconductwhen appearing. “Never

give up zero toleranceagainst corruption,”Leonard McCarthy stated.For the Nordic institutions,fraud and corruption notonly risk the results ofthe projects being finan-ced, but also pose a greatreputational risk to the institutions. To mitigatesuch risks, raising knowl-edge and awareness amongstaff, management andboard members is a firststep. Preventive work alsoincludes having a well-functioning due diligenceprocess: “Make sure youknow who you are doingbusiness with,” as Lindbækstated.

Preventive and inves-tigative anti-corruptionwork is a priority for theIFIs today, and the speak-ers concluded that NDF,NIB and NEFCO have important roles to play.When cooperating andjointly working towardscommon interest, such ascombatting fraud and cor-ruption, the Nordic govern-ments and institutions canachieve good results. IFIsshould continue to cooper-ate formally and informallyon this topic: “It is impor-tant to speak with one voice,”Duncan Smith concluded.

NDF, NIB and NEFCOwill now continue to explorehow the institutions canmost efficiently developtheir cooperation in combat-ting fraud and corruption.

Duncan Smith, Jannik Lindbaek and Leonard McCarty

training and skills-deve-lopment of staff, and insti-tutional strengthening and reform. The wider eco-nomic and societal benefitsare multiple and will rangefrom higher productivity(e.g. agriculture and hy-dropower) to preventinghuman and infrastructurelosses due to natural haz-ards (e.g. cyclones and re-occurring floods).

The combination of bothinstitutional capacity-building, planning andphysical investments willenhance the long-term sustainability. “Invest-ments in meteorologicalinfrastructure and servicesare fundamental for deve-lopment of other tools toimprove adaptive capacitysuch as insurance instru-ments”, says Aage Jør-gensen, Country ProgramManager at NDF.

The project will be a spe-cial sub-project to theWorld Bank NationalWater Resources Develop-ment Project (NWRDP),which has the developmentobjective to strengthen thedevelopment and manage-ment of national water resources. The project isunder the umbrella of theStrategic Program for Climate Resilience (SPCR);a multi-donor long-terminvestment programmethat will play a catalyticrole in promoting climate-resilient growth strategiesin Mozambique.

NDF has a long-stand-ing cooperation with theWorld Bank in Mozam-bique. The cooperation between NDF and theMozambique authoritieshas also worked well.

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NDF supports strengthening of hydro-meteorological services in Mozambique

Temperature and rainfallare key indicators ofchanges in the climate.Measurements of rainfallare essential for assessingthe effects of climate changeon the water cycle andwater balance. Systematicand high-quality data onair temperature, windspeed, precipitation andriver flow are fundamen-tal to understanding andacting on climate change.

In Mozambique, deve-lopment and economicgrowth is extremely vul-nerable to hydro-climaticvariability and change.More than 60% of Mozam-bicans live in the low-lyingand flat coastal areas ofthe country; even smallchanges in sea level orriver flow have far-reach-ing impacts, including in-creased exposure to floodsand cyclones. Almost allagriculture in Mozam-bique is subsistence rain-fed farming and provideslivelihood, income andfood for 80% of the popula-tion. Changes in rain pat-terns will thus affect thefood security of largeparts of the population.

Aquaculture, commer-cial fishery and artisanalfisherfolks depend ontimely meteorological in-formation to avoid dan-gerous storms and theresulting loss of life and

resources such as nets andboats. Developing the coun-try’s hydropower potentialof 13,000MW and effec-tively operating existingand future dams relies di-rectly on an accuraterecord of hydrological data.Infrastructures such asbridges, roads and drainagestructures are improved by accurate and long-term hydrological record. Intransport, the efficiencyand security of Mozam-bique’s aviation industrydepends on high-qualityweather forecasts. Hydro-meteorological informationcan enhance productivity ofkey sectors of the economyby providing informationthat can translate into economic output. Equally,greater understanding ofextreme weather eventsfrom more accurate, rele-vant and timely hydro-meteorological informationcan minimise their nega-tive impacts.

At the moment, there isno fixed business model setup to support Mozambique’shydro-meteorological serv-ices. The mandate and re-sponsibility for collectinghydro-meteorological dataresides with three differentagencies. The absence ofsufficient resources forbasic operation and mainte-nance has undermined in-vestments in data

collection networks anderoded the overall effi-ciency of the system. Forexample, only 38 weathermonitoring stations out of 154 are in operation.Maintaining existing andexpanding long-term net-works is challenged bylimited access and trans-port to remote areas, lack-ing operation and main-tenance, insufficient financial resources, andfar-reaching calibrationneeds.

In order to strengthenMozambique’s nationalhydro-meteorological datacollection and manage-ment, NDF, together withthe World Bank, is financ-ing Transforming Hydro-Meteorological Services.With a total of EUR 12.5million, the project willcontribute to improvingmonitoring, forecastingand information productdelivery. This will beachieved by investmentsinto optimised hydro-metmonitoring networks, moreeffective data manage-ment and data exchange,advancing forecasting ca-pabilities which will feedinto more robust earlywarning systems and thedevelopment of relevant,accurate and timely hydro-met information productsto users. The project willalso focus resources on

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"Infrastructures such as bridges,roads, and drainagestructures are improved by accurate and long-term hydrological record,and forecasting."

FINANCING FOR CLIMATE CHANGEPROJECTS IN LOW-INCOME COUNTRIES

The Nordic Development Fund (NDF) provides financing for climate change interventions in low-income developing countries. NDF is the joint deve-lopment finance institution of the Nordic countries—Denmark, Finland, Iceland, Norway and Sweden—and finances projects in cooperation with otherdevelopment institutions.

NORDIC DEVELOPMENT FUND, P.O. Box 185, FIN-00171 Helsinki, Finland (Visiting address: Fabianinkatu 34), Tel: +358 10 618 002, Fax: +358 9 622 1491, E-mail: info.ndf@ndf.fi, www.ndf.fi

Nordic Development Fund

NDF Newsletter presents NDF's operations. The newsletter is published as needed. Layout Kubik, print Erweko Oy.

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Projects approved in 2012

New Managing Director takes over at NDF

Pasi Hellman started as the new NDF Managing Directoron 1 November 2012. He comes from the position ofDeputy Director General at the Development Policy Department of the Finnish Ministry for Foreign Affairs.He has also represented Finland in the Board of Direc-tors of NDF. During the last twenty years, he has servedin various positions related to international relationsand global development in Europe, Africa and Asia.

Hellman is replacing Helge Semb, who took over sixyears ago when NDF’s future was uncertain. DuringSemb’s time, NDF’s mandate was revised, and the orga-nisation is now in the forefront of emphasising climatechange aspects in development financing.

”It has been a privilege helping transform NDF to its current function,” says Semb, who is returning toNorway after 18 years of international service.

During 2012, NDF approved financing for 11 projects with a total value of approximately EUR 27.900.000million. NDF has been most active in infrastructure, natural resources and climate change capacity-building.

NDF GrantRegion Project EUR m

Global

Global SGF - Social Analysis and Adaptation to Climate Change in Developing Countries 0.2

Africa

Regional (E-Africa) Geothermal Exploration Project 5.0

Kenya Training in Geothermal Drilling 1.5

Mozambique Coastal Cities and Climate Change 3.8

Mozambique Transforming Hydro-Meteorological Services 4.5

Senegal Flood Risk Management 3.0

Tanzania SGF - Hydropower Sustainability Assessment 0.5

Tanzania SGF - Climate Smart Solutions for Water & Energy 0.5

Asia

Regional (Asia) SGF - Resilient Cities in the GMS: Adapting Cities to Climate Change 0.5

Latin America

Bolivia Rural Electrification with Renewable Energy 4.0

Nicaragua Adaptation to Climate Change in Road Transport Sector 4.4