Deadline: 01-Sep-20
The Global Environment Facility (GEF) has announced a Call for Proposals for GEF-7 Non-Grant Instrument Program.
The pilot demonstrated that the use of non-grant instruments as blended finance can provide high leverage to the GEF investment. Project developers and GEF Partner Agencies are increasingly able to offer innovative financial instruments not only in climate change projects but also in “frontier” areas such as land degradation, biodiversity, chemicals and waste, and international waters where private sector investment is scarce.
The Seventh Replenishment of the GEF Trust Fund includes a Non-Grant Instrument Program (the GEF-7 “NGI Program”) which builds on the lessons learned in GEF-6 and expands the envelope of blended finance to USD 136 million. Under GEF-7, the GEF will accelerate the use of non-grant instruments in support of delivering global environmental benefits and continue to catalyze investments from capital markets at global and national levels aligned with focal area objectives. This is the third time that the GEF invites GEF Partner Agencies to submit proposals and investment opportunities under the GEF-7 NGI Program. The first call for proposals resulted in the approval of three projects by the GEF Council in December 2019 for a total amount of USD 35.4 million. The second call for proposals resulted in the approval of four projects by the June 2020 Council for an amount of USD 59.1 million. The total remaining funds in the GEF-7 blended finance envelope is USD 41.5 million.
Funding Information
The maximum financing amount per project/program is USD 15 million. In exceptional cases innovative proposals with the potential to demonstrate impact at scale may request funding exceeding USD 15 million. An initial list of non-grant instruments for blended finance includes: (i) debt, (ii) risk mitigation products (guarantees and structured finance) or; (iii) equity instruments as noted in Policy – Non-Grant Instruments, GEF FI/PL/02, October 10, 2014.
Eligibility Criteria
Proposals must meet the following criteria to be eligible for the NGI Program financing:
- Geography: project beneficiaries must be in eligible GEF recipient countries;
- GEF Partner Agency eligibility requirements: the GEF will accept proposals submitted by Partner Agencies that are eligible to administer concessional finance as described in the Guidelines of Project and Cycle Policy. The Partner Agencies will also be required to comply with the reflows procedures established in their respective Financial Procedures Agreement with the GEF Trustee.
- Modalities: middle-sized projects, full-sized projects and programs; Non-grant instruments: include but are not limited to: (i) debt, (ii) risk mitigation products or (iii) equity instruments disclosed in Policy – Non-Grant Instruments, FI/PL/02, October 10, 2014;
- Alignment with GEF-7 programming directions
Selection Criteria
The selection criteria will focus on the following:
- Scalability. Specific emphasis will be placed in financial structures or investment platforms aimed at scaling-up proposals beyond a “one-by one” projects. Partner Agencies are encouraged to submit a transaction diagram in the Project Justification or Programmatic Justification sections of the PIF/PFD respectively.
- Investment platforms that combine grant and non-grant investment services;
- Capital markets transactions;
- Structured finance;
- Investments aligned with GEF-7 Impact Programs, such as value chains in agribusiness and commodities.
- Appropriate and enhanced co-financing ratios in line with the intended impact of the proposal and in the context of each focal area and country capacity;
- Attractive financial terms. Each proposal will be requested to submit a termsheet with indicative terms and conditions. Agencies can use their own termsheet, or use the template provided in Annex A of this call for proposals;
- High financial additionality. In the termsheet, each proposal must specify: (i) the financing barriers addressed with the GEF blended finance resources and (ii) quantification of financial additionality;
- Capacity to generate reflows. Any financial returns/gains/interests earned on non-grant instruments, will be transferred to the GEF Trust Fund as noted in the Guidelines on the Project and Program Cycle Policy. Additional detailed information on reflows will be required ahead of CEO endorsement.
- Innovative financial solutions. These include but are not limited to: digital and technology solutions for environmental protection, platforms linking major suppliers and consumers in the supply chain, fintech, blockchain, special purpose vehicles, or multi-stakeholder platforms, among others.
- Global environmental benefits. Proposals will be evaluated based on their contribution to GEF focal areas, Impact Programs and their capacity to generate global environmental benefits.
For more information, visit https://www.thegef.org/documents/third-call-proposals-gef-7-non-grant-instrument-program