Nexus Blog // Access to finance for WEF Nexus in the MENA Region
How can Nexus projects get better access to financial resources in the MENA region? During this Year’s Annual Meeting of the MENA Region Initiative as a Model of NEXUS Approach and Renewable Energy Technologies (MINARET), participants discussed and learned about an array of financing modalities available for municipalities. The meeting also included a workshop on financing options at decentralized scale.
During this Year’s Annual Meeting of the MENA Region Initiative as a Model of NEXUS Approach and Renewable Energy Technologies (MINARET) under the Patronage of HRH Princess Sumaya Bint El Hassan, participants discussed and learned about an array of financing modalities available for municipalities (Link). The Annual meeting was attended by around 150 participants including high-level representatives from local municipalities, ministries, national governments, international organizations, NGOs, the private sector, community-based organizations and bilateral donors. The annual meeting was complemented by an ensuing two-day workshop for interested participants. These two events were organized by the MINARET project and its implementers: the Royal Scientific Society/ National Energy Research Center (RSS/NERC); the International Union for the Conservation of Nature (IUCN), Horizons for Green Development, and the Regional Initiative for Promoting Small-Scale Renewable Energy Applications in rural areas of the Arab Region (REGEND) together with the UN Economic and Social Commission for Western Asia (UN-ESCWA).
2nd Annual Meeting of The MENA Region Initiative MINARET
The project Manager of MINARET, Ms. Rula Al-Shaweesh, summarized the project’s achievements during 2019 and the accomplished piloting of WEF Nexus projects in Karak in Jordan, Jdaidet el Chouf in Lebanon and Monastir in Tunisia (Link). This was followed by a commemorative ceremony, in which HRH Princess Sumaya Bint El Hassan honoured the project partners, also the Nexus Regional Dialogue Programme MENA, for their contributed efforts to the success of the project.
The opening ceremony was followed by two panel discussions on:
- Setting the context for the Nexus approach in the MENA region.
- Access to Finance: Challenges and opportunities from a WEF Nexus perspective, presented by Nexus experts and speakers specialized in Finance at a municipal level. The speakers shared their knowledge and experience in decentralization and how such an approach can be responsive to both the SDGs and the municipalities’ mandate.
This panel discussion showed that activities initiated by the NRD Programme are now moving towards an implementation phase which demonstrates the need of both public and private sector involvement for investment and financing structures, e.g. in projects on Solar Powered Irrigation Systems and the Urban Nexus. Based on questions from participants, Dr. Nisreen Lahham answered questions on the framework conditions that should be in place to have the private sector as a partner to achieve SDGs 2, 6, 7 and 11 based on her experience.
Engagement of the private sector
Dr. Lahham, NRD Programme Coordinator for the MENA Region, stated that the Nexus investment possibilities are vast and cannot be implemented with the public resources and the assets of municipalities only, which is why the private sector is a vital partner who can support the ambitions of municipalities. However, engaging the private sector requires suitable framework conditions provided by both the government and municipalities.
How can investors and financing institutions be incentivized?
The government ought to provide incentives for the private sector such as tax exemptions and Green Bonds to implement Nexus projects. This should be coupled with promoting conditional subsidies for using renewable energy instead of subsidizing electricity in the agricultural sector. Moreover, financial institutions could be directed towards providing funds and soft loans for supporting sustainable development activities. Emphasis should be given to providing soft loans to support priority sectors such as water, energy, and food production for small and medium-sized enterprises (SMEs). Apart from securing additional financial resources, the focus should lay on mobilizing and redirecting existing local financial resources, both public and private, towards supporting sustainable development activities.
Increase transparency and combat corruption
As for municipalities, fiscal policies and measures are needed to combat corruption. Municipalities need to be transparent when it comes to designing, selecting, implementing and monitoring projects. Evaluation criteria need to be clear and should include a code of ethics for those responsible for the public tenders. The terms and conditions of the tender should be subject to internal audit and public scrutiny. Judicial departments should be empowered to resolve complaints and appeals of all decisions regarding qualification and awarding processes. In addition, reports on the status of the projects, the costs and method of financing ought to be prepared, whether the financing comes from the state’s budget or through partnership with the private sector. These reports should be transparent and easily accessible for civil society organizations.
Capacity building as a way forward for the implementation of the WEF Nexus in the urban context
Also, the need for a sound capacity building among mayors, planners and sector managers was emphasized by Dr. Nisreen Lahham. Especially the trainings modules of the Nexus Regional Dialogues Programme were mentioned, six of which are bundled in a training manual dedicated to the Urban Nexus approach. This training includes an introduction to the Urban Nexus approach as well as modules on policy and framework conditions for resource efficient usage of natural resources, a guiding tool to comply with global agendas, a module on how to strengthen horizontal and vertical governance structures and include an inclusive and participatory planning process (Link). It can serve the capacity development needs for effective political and fiscal decentralization to implement the WEF Nexus in an urban context.
In addition to capacity development on a decentralized scale, Dr. Lahham highlighted the need to mainstream the Urban Nexus with a bottom-up approach in the MENA Region. Enhancing the dialogue between the different stakeholders; mayors, academia, the private sector and local inhabitants, is fundamental for supporting new and innovative environment-friendly sustainable investments. It was also suggested formulating a shared vision for the future of a city or municipality to help in achieving these goals.
The aim of the two-day workshop (29th until the 30th of January 2020) on “Access to Finance for Municipalities – Nexus Thinking and Decentralization of Subnational Governments” which followed the Annual Meeting was focused on sharing experiences, building capacities of relevant institutional bodies, formulating gender mainstreaming as well as human rights-based strategies and action plans to support sub-national governments, municipalities and local institutions in accessing financial resources for WEF Nexus projects. The topics discussed included:
- Promoting integrated approaches to water, energy and food nexus in the Arab Region – Framework of the 2030 Agenda and Paris Agreement
- Operationalizing the WEF Nexus: Technologies and Regional Initiatives
- Access to Finance and Project bankability within a Nexus Framework
- Gender Mainstreaming and the Community Engagement
For further information on the sessions, Feasibility Studies and Financial Instruments within a Nexus Approach, please visit the UNESCWA website.