$50m climate fund in danger

(Originally published here)

Bangladesh is about to lose $50 million (about Tk400 crore) of climate funds because of tension between the World Bank and donors, and a lack of commitment on the government’s part.

Even as the government is grappling to find funds for dealing with the climate change impacts, the donors have decided to pull the plug on Bangladesh Climate Change Resilience Fund (BCCRF).

Set up with foreign funds six years ago, the fund has not been successful in its intent or purpose, according to an evaluation of the UK Aid, a key donor.

UK Aid’s 2015 annual report, acquired by the Dhaka Tribune, says: “The lack of understanding between donors and the World Bank on the operation of the Bank’s Trust Fund model led to much of the tension between donors and the bank over the slow delivery of BCCRF.”

The World Bank, which acted as a secretariat for disbursing money from the fund, intimated its reluctance to continue it stewardship.

The UK Aid report also observes that the lack of commitment by the Bangladesh government has also hampered delivery of the fund. It then goes on to speculate that this might have been due to a competition from the government-financed Bangladesh Climate Change Trust Fund (BCCTF).

Another point that the report made is that the fund was under high risk due to last year’s political instability in Bangladesh. “Political unrest continues to slow down project delivery. Risk for BCCRF is assessed as high.”

According to the sources aware of this turn of events, the resilience fund will be officially closed out by December 2016 although its functions may be allowed to continue until June next year. The remaining money, to the tune of $50m, in the fund will thereafter be returned.

Abdullah Al Mohsin Chowdhury, additional secretary of the Environment and Forests Ministry, told the Dhaka Tribune that the World Bank’s reluctance to act the intermediary had led to such a pass.

Since its inception in May 2010, the fund received around $130m from donors – the European Union, Denmark, Switzerland, Australia, Sweden, the UK and the USA. The donors primarily pledged to raise $189.2m for the fund.

The resilience fund has managed to disburse around $80m for different projects till date. Most of the projects are at final stage, said officials.

The managerial role of the fund has always rested with the World Bank at the insistence of the donors. According to the 2012 agreement between Bangladesh and the World Bank, the latter would manage the fund with a 1% service charge until June 2017.

Earlier in July 2014, the World Bank expressed its reluctance to continue with the BCCRF due to a misunderstanding among parties, including the government and development partners. Since then, the government did not approve any new project under the resilience fund.

The World Bank did not have any comments regarding the UK Aid’s observation and did not comment when the Dhaka Tribune contacted its Dhaka office on Sunday.

Abdullah Al Mohsin Chowdhury, who is the ministry’s focal point as far as the resilience fund is concerned, said that the government had been discussing the issue with the donors to make sure that the money stays in Bangladesh.

USAID is currently conducting a study to devise means of spending the remainder of the money on climate change adaptation projects.

Dr Saleemul Huq, director of International Centre for Climate Change and Development, said: “Bangladesh will set a bad example of foreign fund management if it eventually returns the money.” He said it would appear as if Bangladesh failed to utilise the available funds.

Asked what had triggered this, he said that engaging the World Bank to manage the fund had been a wrong decision.

“The World Bank took the responsibility because the donors wanted it – not of its own volition. That is what finally pushed the World Bank to discontinue in its stewardship role,” he said.

In addition, there are definitely cases of negligence from the government, which further exacerbated the situation, he added.

Bangladesh is considered at the top of the most vulnerable countries to the negative impacts of global warming, according to studies of the Inter-governmental Panel on Climate Change (IPCC), the highest body on climate change.

The IPCC has also predicted loss of a fifth of Bangladesh’s land to submergence uprooting up to about 30 million people. Along with other smaller countries, also vulnerable to climate change fallouts, Bangladesh direly needs billions on adaptation.

In 2009, the government established the Bangladesh Climate Change Strategy and Action Plan to guide the strategies for dealing with climate change. It was in line with this action plan that the government set up the locally funded trust fund and the foreign-funded resilience fund.


Written by: Abu Bakar Siddique, Dhaka Tribune