NDC Uganda Support Program

Dialogue on Private Sector Engagement in Climate Action

25th-26th October 2018

Workshop Report

Submitted to:

Project Manager – NDC Uganda Support

Programme

United Nations Development Programme

Plot 11, Yusuf Lule Road

P.O Box 7184, Kampala, Uganda.

Web: www.un.undp.org

Submitted by:

Private Sector Foundation Uganda

Plot 43, Nakasero Hill Road

P. O. Box 7683

Kampala, Uganda

Tel:+256 312 263 850

Web: www.psfuganda.org.ug

2

Contents

1.0. Introduction ......................................................................................................................... 5

1.1. Workshop Objectives ....................................................................................................... 6

1.2. Workshop Methodology .................................................................................................. 6

2.0. Workshop Proceedings on Day One - 25th October 2018 .................................................... 7

2.1. Remarks from the Team Leader, ECDR, UNDP ................................................................ 8

2.2. Remarks from the Executive Director, PSFU .................................................................... 9

2.3. Remarks from the Assistant Commissioner, MWE ........................................................ 10

2.4. Workshop Presentations ................................................................................................... 12

2.4.1. Overview of Uganda’s NDC and NDC Partnership Plan .......................................... 12

2.4.2. Context of Uganda’s NDP II and Linkage with SDGs ................................................... 13

2.4.3. The NDC Support Program ...................................................................................... 14

2.4.4. Key Issues Arising from the Deliberations of the Workshop Participants .............. 15

2.5. International Climate Finance Landscape and Opportunities ....................................... 15

2.5.1. Financing for Green Growth Projects and Investments - GGGI .............................. 16

2.5.2. Results Based Financing - UN Framework Convention on Climate Change- Regional

Collaboration Centre, Kampala ............................................................................................. 17

2.5.3. Bridging the Gap between Investors and Clean Energy Entrepreneurs - PFAN ..... 19

2.5.4. Carbon Finance and Carbon Market Approaches to Trigger Investment - GIZ ...... 20

2.5.5 Potential role of Article 6 in future carbon finance approaches under the Paris

Agreement ............................................................................................................................. 21

2.5.5. Key Issues Arising from the Deliberations of the Workshop Participants .............. 22

2.6. Exploring the Role of the Private Sector in Climate Action............................................ 22

2.6.1. How Prepared is the Ugandan Private Sector to Participate in Climate Action? ... 22

2.6.2. Key Issues Arising from the Deliberations of the Workshop Participants .............. 25

2.7. Regional and National Climate Financing Opportunities for the Private Sector ........... 26

2.8. Workshop Proceedings on Day Two - 26th October 2018 .............................................. 28

2.8.1. USAID’s Power Africa Uganda Electricity Supply Accelerator ................................ 29

2.8.1.1. Key Issues Raised in the Deliberations of the Workshop Participants ................... 29

2.8.2. The UMA Energy Management Center ................................................................... 30

3

2.8.2.1. Key Issues Raised in the Deliberations of the Workshop Participants ................... 31

2.8.3. Policy and Legal Framework to Enable Private Sector Investment in Climate Action

31

2.8.4. Group Work and Plenary Discussions ..................................................................... 33

2.8.4.1. What can be done to increase access to financing to implement mitigation

projects (e.g. in the renewable energy and energy efficiency sectors)? .............................. 33

2.8.4.2. What viable financing options should be adopted to increase access to finance? 33

2.8.4.3. What policy incentives need to be put in place and how can we strengthen public-

private sector partnerships in overcoming risks and barriers? ............................................. 34

2.8.4.4. How can we improve coordination between the different players including private

companies, associations, government and development partners? .................................... 34

2.8.4.5. How can we encourage the private sector to mitigate climate change impacts

within their business operations? ......................................................................................... 35

3.0. Closing Remarks from the Vice Chairperson of the PSFU Board of Directors ............... 35

Dialogue Activity Pictorial ............................................................................................................. 41

Annex 1: Workshop Programme ................................................................................................... 42

- What can be done to increase access to financing to implement mitigation projects

(e.g. in the renewable energy and energy efficiency sectors)? ............................................. 44

- What viable financing options should be adopted to increase access to finance? 44

- What policy incentives need to be put in place and how can we strengthen public-

private sector partnerships in overcoming risks and barriers? ............................................. 44

- How can we improve coordination between the different players including private

companies, associations, government and development partners? ..................................... 44

- How can we encourage the private sector to mitigate climate change impacts

within their business operations? .......................................................................................... 44

4

List of Acronyms

CCD Climate Change Department

CSO Civil Society Organization

GGGI Global Green Growth Institute

GIZ German Development Corporation

LG Local Government

MDA Ministries, Departments and Agencies

MEMD Ministry of Energy and Mineral Development

MOFPED Ministry of Finance, Planning and Economic Development

MWE Ministry of Water and Environment

NCCP National Climate Change Policy

NDC Nationally Determined Contribution

NDP National Development Plan

NPA National Planning Authority

PFAN Private Financing Advisory Network

PSFU Private Sector Foundation Uganda

UMA Uganda Manufacturers’ Association

UNDP United Nations Development Program

UNFCCC United Nations Framework Convention on Climate Change

5

1.0. Introduction

One of the biggest threats to the productivity and sustainability of the private sector in Uganda

and the social-economic growth and development of the country is climate change. Exacerbated

by the degradation of the environment, the disasters that the country has recently witnessed

including the recurring floods and landslides that have destroyed various infrastructure and the

long droughts that have affected the productivity of the agricultural sector on which over 70% of

the local population depends for its livelihood exemplify some of the potential effects of climate

change on the socio-economic growth and development of the country. Business transactions

within various supply chains have been disrupted by these events and the level of insecurity

resulting from loss of jobs increased. The depletion of the raw materials required by the local

manufacturing, construction and extractives sectors and destruction of the natural attractions

that are critical for the growth and success of the tourism sector have also put their growth and

sustainability at risk.

About 169 countries in the world including Uganda signed a new international climate accord,

the Paris Agreement, which aims to strengthen global response to the threat of climate change

by keeping the global temperature rise in this century well below 2 degrees Celsius above pre-

industrial levels and to pursue efforts to limit the temperature increase even further to 1.5

degrees Celsius. The Paris Agreement requires all Parties to put forward their best efforts through

“Nationally Determined Contributions” (NDCs) and to strengthen these efforts in the years

ahead.

In line with its national and global development commitments, Uganda developed its Nationally

Determined Contribution (NDC) to the Paris Agreement which seeks to help the country reduce

vulnerability to climate change in priority sectors as well as contribute to GHG emissions

reductions in the agriculture, forestry, wetlands, energy, manufacturing and transport sectors.

The local private sector has been recognized by the Government of Uganda and its development

partners as a critical development stakeholder that should be actively involved in the

implementation of the country’s NDC. To successfully engage its support and gain commitment

from its various actors towards realizing the goals of the country’s climate agenda, sensitizing

them about climate change, its potential impact on their business operations, the specific

mitigation and adaptation initiatives they can undertake, and the existing financing opportunities

is critical.

To stimulate private sector engagement in climate action, Private Sector Foundation Uganda

(PSFU) and the Government of Uganda through the Ministry of Water and Environment, Ministry

of Finance, Planning and Economic Development, National Planning Authority and the United

6

Nations Development Programme (UNDP) organized a two days’ dialogue on Private Sector

Engagement in Climate Action at Premier Best Western Hotel in Entebbe, on the 25th and 26th of

October 2018.

Over 130 participants including officials from the Government of Uganda, development partners

like African Development Bank (AfDB), German Development Corporation (GIZ), Global Green

Growth Institute (GGGI), Private Finance Advisory Network(PFAN) and United Nations

Framework Convention on Climate Change (UNFCCC), civil society organizations (CSOs) and

private sector enterprises from the agriculture, manufacturing, energy, waste management and

finance sectors took part in the workshop.

1.1. Workshop Objectives

The objectives of the workshop were to;

i) Discuss the role that the private sector can play in financing and implementation of

mitigation actions in sectors such as renewable energy, energy efficiency, forestry,

agriculture, transport, manufacturing and waste management

ii) Identify challenges, risks and opportunities for the private sector to be involved in

financing and implementation of mitigation actions

iii) Discuss and share information on the different climate finance opportunities and

incentives for private sector to implement mitigation actions both at sectoral, regional

and international levels.

iv) Share best practice examples on how the private sector has financed mitigation actions,

for example in the energy sector

1.2. Workshop Methodology

The dialogue began with remarks from the representative of the UNDP and Executive Director of

PSFU. This was followed by presentations about Uganda’s NDC, the NDC Support Programme

that is being implemented by the MWE, MOFPED, NPA, PSFU with support from UNDP.

Discussions were centered around how the private sector can be involved in implementing

Uganda’s NDC.

Following this was a discussion about the climate financing opportunities that the public and

private sector can take advantage of. The presentations in this session were made by Global

Green Growth Institute, the German Development Cooperation (GIZ), Private Finance Advisory

Facility(PFAN), Perspectives, and the UNFCCC Regional Collaboration Centre- Kampala.

A panel discussion was conducted on involving financial institutions such as AfDB, Centenary

Bank, Diamond Trust Bank (DTB), Stanbic Bank, Rwanda Green Fund (FONERWA) and Uganda

Development Bank was held thereafter. The purpose of this session was to explain the specific

7

financial support that these institutions are offering local enterprises undertaking climate

adaptation and mitigation initiatives and the requirements they must fulfill to access climate

finance

The second day of the dialogue involved presentations about the kind of support that USAID

Power Africa and Uganda Manufacturers’ Association (UMA) are offering private sector actors

who wish to invest in energy efficiency and renewable energy. This was followed a presentation

from the Ministry of Energy and Mineral Development about the policy and legal framework that

the Government of Uganda has established to enable private sector investment in climate action.

In the final session, participants offered suggestions on how the private sector can be encouraged

to invest in climate action, financing opportunities that can be provided to support its investment

in the climate agenda, policy incentives that can be implemented to enable private sector

investment in climate action and strategies for strengthening public-private sector partnerships

in climate action.

2.0. Workshop Proceedings on Day One - 25th October 2018

Ms. Esther Namukasa, the Business Development Manager at PSFU and focal person for the NDC

Support Program in the organization, welcomed the participants to the meeting, recognizing

their commitment to supporting the implementation of the country’s climate agenda and its

development aspirations, therefore, by agreeing to invest their time in the deliberations that

would take place over the next two days. She explained the objectives of the workshop and

thereafter invited them to introduce themselves and share their expectations which generally

included;

i) To identify opportunities for private sector investment in climate action

ii) To establish sustainable solutions to climate change mitigation in the country

iii) To learn about the initiatives that the government and its development partners are

implementing to support the local private sector to invest in climate action

iv) To understand the legal and policy framework that has been established to support

private sector investment in climate action

v) To identify opportunities to collaborate with public and private sector stakeholders in

climate adaptation and mitigation

vi) To understand how gender can be integrated in the climate adaptation and mitigation

initiatives that are being implemented by the public and private sector in the country

Ms. Namukasa invited officials from the partner organizations under the NDC Support

Programme to share their remarks and officially open the workshop. These included: Mr.

Onesimus Muhwezi, the Team Leader, Environment, Climate and Disaster Resilience (ECDR) at

8

UNDP, who was representing Ms. Almaz Gebru, the UNDP Country Director, Mr. Gideon

Badagawa; Executive Director, Private Sector Foundation Uganda, and Mr. Bob Natifu, the

Assistant Commissioner, Climate Change Department, Ministry of Water and Environment, who

was representing the Mr. Chebet Maikut,, Commissioner, Climate Change Department, Ministry

of Water and Environment.

2.1. Remarks from the Team Leader, ECDR, UNDP

Speaking on behalf of the UNDP Country Director, Mr. Muhwezi thanked the government

officials, development partners and private sector actors present for taking time to share their

ideas on how Uganda can fulfill the commitments it made at international level to mitigate the

effects of climate change. He noted that in 2015, a huge milestone in the efforts to achieve this

goal was achieved when 169 countries adopted the Paris Agreement on Climate Change.

A sequence of events aimed at supporting the country to meet its obligations under the Paris

Agreement have occurred one of them being the launch of the NDC Support Program on Tuesday,

25th October2018, whose goal is to scale up public and private investments in climate change

action to reduce GHG emissions and deliver low carbon climate resilient development.

He further noted that Uganda was the first country in Africa to develop the NDC Partnership Plan.

Periodically, the country gets reminders that climate change is real. The October 12th Bududa

climate related disaster in the Mt. Elgon region in Eastern Uganda, shows how susceptible and

vulnerable the country is to climate change. Uganda has also experienced an increase in erratic

Figure 1; Mr. Onesimus Muhwezi, Team Leader, Environment, Climate and Disaster Resilience, UNDP

9

weather patterns; with long dry spells which on end give way to torrential rains that lead to

flooding.

The private sector cannot afford to be an indifferent or disinterested observer. The environment,

which is the single biggest contributor to climate stability, is also a big source of raw materials for

its actors. The private sector, in fact, has a bigger stake, although in the interim, the rural poor

who directly depend on the environment for their livelihood are the most affected. The world is

also looking up to it because it can provide the resources and technological innovations required

to support climate action.

Mr. Muhwezi concluded the speech by paying tribute to all the partners of UNDP who have

supported its efforts to deal with the challenges of climate change: the delegation of the

European Union, the governments of Germany and Spain, the Government of Uganda which

through the Climate Change Department in the Ministry of Water and Environment has played a

huge role in the NDC planning and implementation process, PSFU and development agencies like

the UNFCCC, GIZ and GGGI have supported its various initiatives.

2.2. Remarks from the Executive Director, PSFU

Figure 2 Mr. Gideon Badagawa; Executive Director; Private Sector Foundation Uganda (PSFU)

Mr. Badagawa began by conveying his appreciation to the Government of Uganda, UNDP and

other development partners for the development support they have provided to the country,

and to the private sector, over the years.

10

He said that private sector is one of largest contributors to climate change in Uganda and

therefore has a responsibility to aggressively support climate mitigation and adaptation actions.

However, because most of its actors are not aware of its potential climate change effects on their

operations and cannot therefore relate it to their development objectives, investing in climate

action is not a priority for them. Intensive sensitization is therefore very critical.

Addressing the barriers to private sector involvement in climate action, including lack of the

necessary skills and resources, must also be addressed since most private enterprises, especially

MSMEs, lack the capacity to efficiently and effectively green their operations. An enabling policy

environment is also critical if the private sector is to provide the required support. In addition,

information about climate change and the principles and practices being promoted by the

different institutions promoting climate action should be packaged in a way that the private

sector will be able to understand.

He expressed confidence that the dialogue would help development stakeholders in both the

public and private sector to understand the development needs and priorities of the private

sector and identify practical measures for encouraging it to actively support the climate agenda

of the country.

2.3. Remarks from the Assistant Commissioner, MWE

Mr. Natifu thanked UNDP for its continued support to Uganda through the different climate

change and environmental sustainability projects, recognizing, specifically, its contribution to the

development and implementation of the NDC Support Programme. He also appreciated the

Figure 3; Mr. Bob Natifu, Assistant Commissioner, Climate Change Department (CCD), Ministry of Water and Environment (MWE)

11

European Union and Governments of Germany and Spain for the financial support they are

providing to the program as part of their contribution to the NDC Partnership.

He said that the goal of the NDC Support Program is to strengthen and harmonize policies,

institutional frameworks and establish a national measurement, reporting and verification (MRV)

system to mainstream national mitigation policies and targets in the context of NDC

implementation; enhance the institutional, technical and financial feasibility of Uganda’s Green

Growth Development Strategy (UGGDS) and Nationally Appropriate Mitigation Actions (NAMAs)

and align them with NDCs; and apply innovative financial de-risking activities to attract private

sector investment in mitigation actions. The program also emphasizes gender mainstreaming in

all planned activities.

In Uganda, the NDC Support Programme is being implemented by the Climate Change

Department at the Ministry of Water and Environment in collaboration with the Ministry of

Finance, Planning and Economic Development, National Planning Authority and Private Sector

Foundation Uganda (PSFU).

Under the Paris Agreement, Uganda committed 22% GHG emissions reduction by 2030 compared

to the business as usual. This emission reduction is contingent upon receipt of ongoing and

planned international support to complement domestic efforts set out in the 2015 National

Climate Change Policy and NDC commitment. Subsequently, the country’s Vision 2040 and

National Development Plan 2015/2016-2019/2020 have prioritized climate change actions.

Uganda’s Nationally Determined Contribution (NDC) seeks to help the country reduce

vulnerability to climate change as well as contribute to greenhouse gas (GHG) emissions

reductions in forestry and wetlands, energy, transport and agriculture sectors.

Mr. Natifu noted that with the limited public finances available for climate change mitigation,

private sector support is critical. To enable transformational change to low carbon development,

its momentum must be turned into more ambitious climate action. Climate change recognizes

no boundaries and its impacts will therefore affect everyone. Unity amongst all stakeholders is

hence extremely vital.

The Ministry of Water and Environment is committed to and is actively involved in supporting

the formulation and implementation of laws and policies aimed at enabling private sector

investment in mitigation and adaptation actions and supporting other development stakeholders

to engage in the country’s climate agenda.

Mr. Natifu officially opened the workshop.

12

2.4. Workshop Presentations

The workshop involved discussions from officials from the Government, development partners,

financial institutions and the private sector who provided information about the legal and policy

framework at national and international level guiding the implementation of the Uganda’s NDC

and the existing and emerging opportunities for private sector investment climate action.

2.4.1. Overview of Uganda’s NDC and NDC Partnership Plan

Mr. Natifu noted that the livelihood of the people in Uganda is highly dependent on the

exploitation of the Country’s natural resources, which means that the country is highly vulnerable

to the impacts of climate change. Reducing vulnerability and addressing climate change

adaptation in sectors such as agriculture, livestock, forestry, infrastructure, water, energy, health

and disaster risk management is therefore a key priority for its NDC.

To mitigate the effects of climate change, Uganda is working towards achieving a 22% reduction

in GHG emissions by 2030 compared to the business as usual (BAU) scenario, and a series of

policies and programs in the energy supply, wetlands and forestry sectors have been developed

to achieve this. Mr. Natifu went on to describe some of the actions that the Government in

collaboration with other stakeholders will undertake to achieve the NDC.

Following this was a discussion about the NDC Partnership and NDC Partnership Plan of Uganda.

He explained that the Partnership is a global coalition of countries and institutions working to

mobilize support for and achieve ambitious climate goals while enhancing sustainable

development. Launched in November 2016, the Partnership supports countries to enhance and

implement their NDCs through technical assistance, capacity building, knowledge sharing and

facilitating access to finance.

Uganda is one of the first countries in Africa to join its membership and the very first country on

the continent to develop and publish an NDC Partnership Plan for Climate Action The main

objectives of the Plan are to;

i) Ensure efficient and gender responsive climate governance

ii) Increase climate financing and reflect climate change in relevant planning frameworks

iii) Strengthen capacity of MDAs and non-state institutions to integrate NDC-SDGs

iv) Accelerate project financing for NDC implementation

v) Establish an effective MRV system

Mr. Natifu went on to highlight some of the areas in the Plan that the private sector can support

including supporting the planning processes of the Government and its development partners,

13

investing in research and development of technologies that can support mitigation and

adaptation efforts, awareness creation, monitoring and reporting of climate impacts and actions

undertaken by different stakeholders, supporting learning and knowledge sharing.

2.4.2. Context of Uganda’s NDP II and Linkage with SDGs

Mr. Aaron Werikhe, Planner, Environment and Natural Resources at the National Planning

Authority, noted that the role of the private sector in implementing the NDP II, which is the

second national development plan that was created to facilitate the realization of Uganda’s

Vision 2040, cannot be overstated.

He noted that the Government recognizes that climate change is one of the biggest threats to

the achievement of the country’s Vision 2040 and its effects did undermine, partly, the realization

of the targets that were set out in its first development plan, the NDP 1. In the current

development plan (NDP II), actions laid out have emphasized the adoption of strategies that will

increase the country’s resilience to the impacts of climate change, improve climate change legal

and institutional framework and enhance implementation, monitoring, reporting and

coordination of national, regional and global commitments.

The aspirations of the global sustainability agenda to which the Government of Uganda is a

committed signatory are well-aligned with the goals of the NDP II. To demonstrate the linkage

between the two development agendas, Mr. Werikhe outlined the linkages between the SDGs in

the NDP II.

Table 1: Linkage between the SDGs and NDP II

SDG 13: Take Urgent Action to Combat

Climate Change and its Impacts

SDG 15: Protect, Restore and Promote

Sustainable Use of Natural Resources and

Halt Biodiversity Loss

NPA Related Interventions;

i) Implement the National Climate

Change Policy (NCCP) and create

awareness in MDAs, LGs, CSOs and

the private sector

ii) Develop a National REDD+ Strategy

and costed action plan

iii) Establish an appropriate legal

framework for NCCP to enhance

compliance

NPA Related Interventions;

i) Develop wetland management plans

ii) Increase forestry coverage to 18% by

2020

iii) Increase wetland coverage to 12%;

iv) Promote PES & other benefit sharing

schemes

v) Promote value addition of ENR goods

& services

14

iv) Build institutional capacity for climate

change response

Mr. Werikhe closed his presentation by highlighting the role of the private sector in supporting

the realization of the SDGs, encouraging its actors to align their business strategies and

operations with them, partner with government and its development partners to create

awareness about them and tap into the vast financial opportunities that have been redirected

towards their implementation to provide solutions in renewable energy innovations and clean

technologies.

2.4.3. The NDC Support Program

In this session, Mr. Muhwezi explained the initiatives under the NDC Support Program that will

be implemented to support the private sector to participate in climate action.

A baseline study will be conducted to determine the status of climate action within the private

sector in Uganda and identify opportunities for investment in climate change adaptation and

mitigation activities. Various awareness campaigns will also be conducted to sensitize the private

sector about climate change and its effects on their businesses. In addition, a Private Sector CEO

Roundtable where CEOs, managers, investors and entrepreneurs can come together to discuss

the NDC, the impact of climate change on their operations and how they can support the

reduction of GHG emissions in the country.

Furthermore, a Private Sector Climate Action Seal aimed at encouraging private enterprises to

commit to climate action and providing them with guidelines on how they can become more

climate smart will be operationalized. Various initiatives will be implemented to support the

private sector to develop and implement climate action investment plans and access climate

finance.

Learning and advisory networks aimed at promoting experience sharing amongst key

development stakeholders on the technical and financial feasibility of the sectoral NDC action

plans and the potential role of private sector in achieving their objectives will also be established.

The Program will also identify and support the establishment of inclusive policy instruments to

reduce risks and incentivize the participation of the private sector in NDC implementation.

Stakeholder consultations on a public-private strategy addressing the main risks preventing

enhanced private sector engagement in NDC actions will be held and gender-responsive

sustainable finance mechanisms established to scale-up NDC mitigation action.

15

An NDC Innovation Grant Scheme will be established to engage NGOs and the local community

to start initiatives that can contribute to the implementation of Uganda's NDC. It will also build

the capacity of women in the private sector to make effective decisions on climate related issues.

2.4.4. Key Issues Arising from the Deliberations of the Workshop Participants

Following the above presentations, the participants raised several concerns about the initiatives

that the Government and its development partners are undertaking to deal with climate change.

i) Active involvement of the private sector in all planning, implementation, monitoring

and evaluation activities is critical in the goals of the climate strategy of the country are

to be achieved.

ii) The local private sector will only pay attention to discussions about climate change and

climate action if it sees a direct linkage to its development objectives which are business

and finance.

iii) Practical solutions about how the private sector can engage in climate action must be

provided by the Government and its development partners. Because the climate

ambitions of the country are quite generic, the private sector will have a hard time

implementing the required changes.

iv) Defining the standards that private operators should meet while conducting business

clearly and strengthening regulation is very critical. However, the private sector should

be provided with incentives so that they can sign up to them.

v) Uganda, which is highly vulnerable to climate change, has a very weak emergency

response system; the Government should actively invest in strengthening it and very

importantly, building trust in its communications.

vi) The poor farming practices of the local communities have greatly contributed to the

degradation of the environment: the extension system in the country needs to be

strengthened to effectively equip smallholder farmers with the skills they need to

protect the environment while increasing the productivity of their farms.

2.5. International Climate Finance Landscape and Opportunities

The purpose of this session was to sensitize participants about the financing mechanisms that

have been put in place at local and international level to support climate action. Presenters

included officials from GGGI, UNFCCC, GIZ, Perspectives and PFAN.

This session was moderated by Ms. Gloria Namande- Project Manager- NDC Support

Programme.

16

2.5.1. Financing for Green Growth Projects and Investments - GGGI

Mr. David Sengozi Kyeyune, Investment Officer at the Global Green Growth Institute (GGGI),

began by explaining to the audience what green growth is and why it is an important initiative

for governments to undertake. He said that it refers to a coordinated advancement of economic

growth, environmental sustainability, poverty reduction and social inclusion, and countries, by

adopting a green growth model, seek opportunities for economic growth that are low-carbon

and climate resilient, prevent or remediate pollution, maintain healthy and productive

ecosystems, create green jobs, reduce poverty and enhance social inclusion. By developing and

implementing a sound green growth strategy, they can better manage or even avoid experiencing

the negative impacts of climate change on their economies, secure long-term growth and

enhance the well-being of their people.

GGGI is a treaty-based international organization that is committed to promoting strong,

inclusive and sustainable growth in developing countries and emerging economies. In pursuit of

this goal, it assists them to design and deliver programs that demonstrate new pathways to pro-

poor economic growth, providing them with the tools they need to build institutional capacity,

develop green growth policy, strengthen peer learning and knowledge sharing and engage public

and private sector stakeholders in their development initiatives. Through this support, its

member countries can advance their development programs and therefore achieve the

commitments expressed under both the 2015 Paris Agreement and 2030 sustainable

development agenda.

So far, the institution has a membership of 28 countries. It works with their government

ministries and departments as a neutral and trusted advisor to explore the value of green growth

opportunities in the context of the development goals, responding, therefore, to their specific

development needs and taking their national circumstances into consideration. The specific

support it offers their governments includes conducting green impact assessments, facilitating

sector and sub sector planning and strategy development as well as the design, financing and

implementation of green finance projects and financing vehicles aligned with national priorities.

The interventions of the institution are currently focusing on four priority areas which it considers

to be critical for transforming the economies of its member countries: sustainable energy, water

and sanitation, sustainable landscapes and green cities.

Uganda successfully developed its green growth development strategy which is estimated to cost

USD 11 billion over a period of 15 years. The public sector is expected to contribute only 44%

towards this cost, so the financing gap is huge. To close it, innovative financial instruments must

be designed to reduce risk and enable capital flows into the sector; bankable projects based on

17

NDC assessments need to be developed and connected with suitable sources of finance; national

financing vehicles must be designed to support the country to accept and effectively use climate

finance.

It is critical to note that private sector support will be very critical if the desired outcomes are to

be achieved. Typically, the financial instruments it offers and the types of institutions that provide

it include;

i) Private equity firms: equity and debt financing

ii) Foundations: concessional debt, debt, equity, grants and guarantees).

iii) Commercial lenders: concessional debt, debt, equity, grants and guarantees

iv) Patient capital firms: concessional debt, debt, equity, grants and guarantees

The kind of support that can be obtained from the public sector mainly includes;

i) Donor funds: concessional debt, debt, equity, grants and guarantees

ii) National funds: concessional debt, debt, equity, grants and guarantees

Mr. Kyeyune concluded his presentation by describing some of the innovative financing

mechanisms that the public and private sector can adopt;

i) Blended finance: a mix of different instruments to finance green projects (loans grants;

concessional loans; et-cetera)

ii) Syndicated finance: a loan offered by a group of lenders who work together to provide

funds for a single borrower

iii) Annuity: a series of payments made to a financier or project developer at different

intervals – Usually applied in infrastructure development projects

iv) Green bonds: providing financial support to projects that have positive environmental

and/or climate benefits

2.5.2. Results Based Financing - UN Framework Convention on Climate Change- Regional

Collaboration Centre, Kampala

Achieving the ambitions of the Paris Agreement, according to Mr. Kunal Sharma, the Team Lead,

Regional Collaboration Center, UNFCC, requires committed financial investment from both the

public and private sector. Global investment towards climate change reached a record high in

2015 with USD 437 billion invested by both public and private actors in climate change initiatives.

About 93% of the global investments in climate action is in mitigation focusing on areas such as

renewable energy generation, energy efficiency in industry and buildings, sustainable transport,

agriculture, forestry, land use and livestock management. Only 7% of the investments are

currently going into adaptation measures and the specific areas in which this support is being

18

offered include water supply management, climate-resilient infrastructure, coastal protection,

disaster risk reduction, agriculture, forestry, land use and natural resource management.

Several strategies are being undertaken to promote private sector investment in climate action

in different countries. Many governments have recognized the need to provide an enabling

environment for the private sector through policy incentives such as feed-in tariffs, tradeable

certificates, tax incentives and clean energy subsidies. Addressing investor concerns about risk

and risk management by providing guarantees, relevant insurance policies and contract-based

instruments has also been very helpful. Enabling scale-up of investments by providing grants and

concessional loans has also proved to be vital. In addition, many countries around the world are

promoting the development of carbon markets. Of the 176 INDCs submitted, 110 (62%) have

proposals for emissions trading schemes, carbon taxes or other carbon pricing initiatives.

The UNFCCC Regional Collaboration Centres are supporting efforts to substantially scale up

finance and investment in contributing to the objectives of the Paris Agreement. The specific

areas in which support is being provided in various countries include;

i) Identification of co-financiers to form consortia

ii) Providing access to project development funding to support investment-mature

projects

iii) Providing access to risk mitigation instruments and assisting with structure projects and

financing

iv) Providing project owners with increased visibility for their projects among financiers

v) Working with financial institutions (commercial banks, financial intermediaries,

bilateral funds, regional, multilateral development banks and the Green Climate Fund)

to mobilize private capital

One of the key initiatives that have been established to support these efforts include the Green

Investment Catalyst Roundtable (GIC-RT) process whose purpose is to mobilize private sector

finance for the implementation of the NDCs. Each GIC-RT cycle is to catalyse several investment

or finance vehicles such as debt (loans), equity (working capital), risk-sharing (guarantees, first-

loss funds) or creditworthy intermediaries, connect the dots on finance for climate by bringing

together sources of finance with investment ready projects while ensuring implementation that

supports alignment with a below 2 degrees Celsius pathway and provide a platform for effective

translation of policies, NDCs and national roadmaps into investment plans, producing integrated

pipelines of bankable green and climate projects for long term capital market investment.

19

Figure 4: Ms. Gloria Namande- Project Manager NDC support Programme moderating session 2

of the dialogue

2.5.3. Bridging the Gap between Investors and Clean Energy Entrepreneurs - PFAN

This session was presented by Mr. Bill Farmer, the Head, Private Financing Advisory Network

(PFAN) Uganda, who began by describing the historical background of PFAN and the services it

offers. He said that PFAN is a multilateral public private partnership initiated by Climate

Technology Initiative and the UNFCCC that provides advisory support to low-carbon, climate

resilient businesses in developing countries and matches their projects to appropriate private

financing. Established in 2006, the organization mobilizes private finance to support reduction of

GHG emissions and build climate resilience, thus contributing to the achievement of the Paris

Agreement and SDGs. He noted that one of the main impediments to large scale deployment of

low carbon, climate resilient technologies in developing countries is inaccessibility to the

required finance.

The organization supports entrepreneurs who have invested in climate action by building the

capacity of their businesses to access financial support through training and advisory in business

planning and investment management. It also assists them to develop investor-ready proposals

and establish relationships with institutions that can finance their development projects. Through

its support, it can help mitigate investor risk by ensuring that the businesses it links to them have

the capacity to implement and manage the projects they for which they are seeking financial

support and that those projects are indeed of high quality and can deliver the expected returns

on investment. Unlocking frontier markets for climate technologies, building financial service

20

ecosystems, identifying and promoting best practices and replicating promising business models

are the goals of its services.

The projects it supported must be technically and commercially viable, have a high growth

potential and be operated by an experienced management team. Very importantly also, the

project must be able to support the achievement of the SDGs and their gender equality and

climate change action agendas.

Pipeline project by region include 42 in Southern Africa, 74 in East Africa and 99 in West Africa.

By technology, 111 solar projects will be supported, 89 in the biomass sector, 68 in the hydro

sector,58 biogas sector, 40 in the energy efficiency sector, and39 in the bio fuels sector.

2.5.4. Carbon Finance and Carbon Market Approaches to Trigger Investment - GIZ

The session, which was made by Gloria Namazzi, Technical officer, Climate Change Department

at GIZ, discussed the different approaches to carbon markets that the private sector and other

development stakeholders can undertake. She provided a brief description about how a carbon

market operates, noting that it is one where carbon emission allowances are traded to help

companies or countries limit their carbon emissions and thus reduce the GHGs they produce. By

putting a price on carbon emissions, carbon market mechanisms help to internalize the

environmental and social costs of carbon pollution, encouraging investors and consumers to

choose lower carbon paths.

Ms. Namazzi went on to explain the two main categories of carbon markets that exist in the world

including voluntary markets which offer businesses, NGOs and individuals an opportunity to

offset their own emissions on a voluntary basis by purchasing carbon credits. Such markets do

not operate because the government requires them to; rather, their participation is usually either

part of their corporate social responsibility (CSR) programs and/or a response to market pressure

and public opinion.

Compliance markets, on the other hand, are those that are created and regulated by national,

regional or international provisions or policies. Under the Clean Development Mechanism (CDM),

for example, countries that signed onto the Kyoto Protocol are required to account for their

greenhouse gas emissions and fulfill certain GHG emission reduction targets. The CDM allows

companies from developed countries to purchase Certified Emission Reduction (CER) credits,

each equivalent to one ton of carbon dioxide, which can be used for compliance purposes.

Ms. Namazzi noted that to promote investment in the carbon markets in the East African region

and Uganda in particular, policy advice and capacity building for political decision makers and

21

regulatory authorities that support carbon market projects and the tools and methodologies that

can ease the set up and validation of carbon market projects should be provided. In addition,

technical support about project identification and development should be given to the private

sector and regional exchange of information and experiences facilitated to enable continuous

improvement.

She ended her presentation by emphasizing that the successful implementation of Uganda’s NDC

is heavily dependent on private sector investment, so its involvement in activities relating to it is

very critical.

2.5.5 Potential role of Article 6 in future carbon finance approaches under the Paris

Agreement- Perspectives

This presentation was done by Mr. Axel Michaelowa, Senior Founding Partner of Perspectives.

He noted that the key features under Article 6 mechanisms include artcile 6.2 on Cooperative

Approchaes and Artciel 6.4 on the Sustinaable Development Mechanism (SDM). Cooperative

Approaches shall take place between two or more countries, based on bilateral agreement and

shall involve the use of internationally transferred mitigation outcomes (ITMOs). The SDM is open

to all countries contribute to GHG mitigation and sustainable development and could be a

successor mechanism for the Clean Development Mechanism (CDM). Both mechanisms subject

to international negotiations, rules to be finalized by 2018 at COP24 in Katowice. He further

added that governments need the private sector to mitigation emissions effectively however

there is lack of private sector trust in governments. Empirical evidence shows that CDM

generated over 7500 projects and they have been over 50 transactions under the International

Emissions Trading Schemes. he advised that government should encourage private sector

participation and build on CDM. He added that the challenges of market fragmentation under

Article 6.2 include different levels of stringency/credibility, different credit import rules

(qualitative/quantitative), lack of transparency, increase of mitigation costs, less liquidity and

deterrent for financial institutions to engage. Some of the pros include Faster agreements among

frontrunners, innovation due to competition between approaches and possibility of side

payments. Mr. Michaelowa To effectively implement article 6 mechanisms, he mentioned that

the following need to be put into consideration;

▪ Ensure robust baseline setting and additionality determination for upscaled crediting

(policies/sectoral level) with standardization

▪ Increase trust among private sector players that market mechanisms will remain

relevant in the long term

▪ Engage private sector in design of policy instrument/sectoral level crediting schemes

22

2.5.6 Key Issues Arising from the Deliberations of the Workshop Participants

i) Most of the private sector in Uganda does not have the capacity to access climate

finance: 80% of its actors are in the informal sector and are thus not registered with the

Government and many have poor governance systems and structures. Capacity building

is therefore vital.

ii) Development partners mainly engage with the Government; little effort has been made

on their part to reach out to the private enterprises in the country and the business

associations they work with, which explains why they are not aware about the

opportunities they offer.

iii) In the eyes of the private sector, political commitment towards ensuring that the

climate agenda of the country is implemented is lacking, and that is why it is not willing

to actively invest in climate action.

iv) Barriers to participating in and benefiting from the carbon market in Uganda should be

critically examined and addressed. Many private actors are also not aware of the

opportunities that these markets offer, and the risks involved in investing in them.

Sensitization is therefore critical.

v) Carbon markets are created by politics. If policymakers do not create demand, they will

falter. Also, the concerns of the media and CSOs which believe that carbon markets only

encourage increased emmissions need to be addressed.

2.6. Exploring the Role of the Private Sector in Climate Action

Facilitated by Engineer Godfrey Ssebuggwawo, the Director, Energy for Rural Transformation,

PSFU, this session discussed the reasons why the private sector may not be interested in taking

part in the climate agenda of the country and what needs to be done to motivate its actors to get

involved.

2.6.1. How Prepared is the Ugandan Private Sector to Participate in Climate Action?

Eng. Ssebuggwawo began by providing a brief overview about Private the organization and its

role in private sector development. Founded in 1995 as a company limited by guarantee, PSFU,

the apex body of the private sector in Uganda, is a member- based institution with over 200

business associations, corporate bodies and government institutions that support private sector

development constituting its membership. Its core mandate is to carry out policy research and

advocacy on behalf of the private sector in Uganda as well as build its capacity to compete in the

marketplace. Over the years, the organization has implemented several business development

programs for the private sector, including projects that promote environmental sustainability.

23

Eng. Ssebuggwawo then noted that understanding the private sector that the development

stakeholders in the country wish to engage in climate action and its priorities is critical if their

efforts are to deliver the desired outcomes. Over 90% of the private sector in Uganda is

constituted by micro, small and medium enterprises (MSMEs) which have been recognized by

the Government and its development partners as the engine of growth for economic

development in the country.

According to the MSME Policy that was drafted by the Ministry of Trade, Industry and

Cooperatives in 2015, 49% of MSMEs in Uganda operate in the service sector, 33% in commerce

and trade, 10% in manufacturing and 8% in others. They are a source of innovation, wealth

creation and job creation in the country, employing over 2.5 million people and contributing

about 20% to the local GDP. It is critical to note, also, that over 80% of these enterprises are

informal, meaning that they are not registered with the relevant government authorities and lack

standard management systems and structures.

In the local context, micro enterprises refer to businesses whose total assets do not exceed UGX

10 million and employ less than 5 employees. Small scale enterprises employ between 5 to 49

employees and their total assets are between UGX 10 million and UGX 100 million. For medium

sized enterprises, their total assets amount to more than UGX 100 million but do not exceed UGX

360 million, and they employ between 50 and 100 employees. The large-scale enterprises in the

country are mostly multinational companies contributing over 70% to the GDP of the country.

Climate change has certainly had a significant impact on the local private sector, interrupting its

business operations and damaging critical production assets. The recurring landslides and floods

in different parts of Uganda have not only destroyed many smallholder farms but also the

transport and communication infrastructure in the country. The droughts it has recently

experienced have also contributed to the decline in the productivity of the agriculture and agro-

processing industries on which thousands of households in Uganda depend for their livelihood.

The effects of these disasters on local production have also contributed to the inflation in the

economy, which has increased the cost of doing business.

The private sector, like many have said, has a role to play in helping the country deal with the

effects of climate change, and doing so is critical for its growth and sustainability. However, its

priorities must be appreciated. Like all other businesses in the world, it is a profit-driven entity,

so any initiative that any development stakeholder wishes to introduce to it or engage it in should

be able to directly contribute to its bottom line. Understanding and providing practical solutions

to the challenges of its businesses which would eventually contribute to its profitability is also

very critical: businesses in Uganda are struggling with issues such as;

24

i) Access to profitable markets

ii) Access to cheap and reliable sources of raw materials

iii) Technologies that will increase the productivity of their businesses

iv) Affordable sources of finance for business growth and expansion

v) Affordable and reliable sources of power

vi) Governance

With these concerns at the back of our minds, Engineer Ssebuggwawo said, it is critical to

understand why engaging in climate action may not be a priority for the local private sector.

First, the costs of adapting or non - action for the private sector in general and its different

individual businesses may not be known. Secondly, the effects of climate change on business are

long term and uncertain. While the climate change horizons are between 10 and 50 years, the

business planning horizons of our local enterprises are between 3 and 5 years.

Also, it is difficult to translate investment in climate action into business profits. As earlier noted,

usually, the private sector will only move if it believes that a proposal brought to its attention

directly contributes to its bottom line. Like one of our local manufacturers once asked in a

different forum, how will planting trees benefit an industry that produces galvanized sheet

materials?

It is important to also note that there have been few occurrences of climate-induced

catastrophes in Uganda compared to the countries in North America and Asia, so most of our

local businesspeople cannot quite relate with this story. Our private sector, in addition, lacks the

technical and financial capacity to engage in climate action: it is unaware, first of all, abut climate

change and its potential impact on its operations and cannot therefore acknowledge the risks

that it poses; secondly, it lacks the money and skills required to conduct the necessary risk

assessments; and finally, it does not have the capacity to develop, implement, monitor and report

risk management measures.

So, what should be done to motivate the private sector to get involved in climate action? How

should the above limitations be addressed?

First, the costs of adapting and non - action should be quantified. The public sector and providers

of climate finance should take the lead on this because of the costs involved in engaging in such

an initiative. At individual business level, because they have the capacity to do so, large

enterprises can take the lead with support from providers of climate finance. It is also important

to determine whether climate finance in its current structure is attractive and affordable.

25

Additionally, and very importantly indeed, an intensive, targeted awareness campaign should be

conducted. The public sector should offer a strong value proposition to providers of climate

finance so that they can help it finance this activity.

To deal with the challenge of the short planning horizons of the local private sector, awareness

about current and potential climate change effects is required as a persuasion tool, especially for

MSMEs. Large enterprises can address this much easier as part of their usual risk assessment,

and again, because of their capacity, they can more easily access the financing required to do so.

To demonstrate how investments in climate action would contribute to and translate into

business profits as well as build their capacity to manage the risks that climate change poses,

MSMEs especially need the support of the public sector which should be ready, also, to provide

the incentives they need to take part in the climate agenda of the country. For the large

enterprises to support it, awareness, as earlier noted, is very important.

In his concluding remarks, he reminded the workshop participants about the need to understand

the composition and priorities of the private sector and urged the government officials and other

development stakeholders present to align their support accordingly. MSMEs need handholding

by the public sector because of their inadequate capacity and existential challenges, but the large

enterprises, with adequate awareness and cost-benefit information, can be more easily

persuaded to invest in climate action. He also emphasized the need for the public sector to take

the lead in supporting efforts to quantify the costs of adapting and non - action and creating

awareness about climate change and its effects amongst the local enterprises.

2.6.2. Key Issues Arising from the Deliberations of the Workshop Participants

i) Demystifying climate change and its impact on the operations of the private sector is

critical. Many private actors do not understand what this phenomenon is and why they

should care about it.

ii) The businesses in the different sectors also need to understand how exactly they

contribute to climate change. Many do not see the connection and can therefore not

invest the time and resources required to support the national climate agenda.

iii) The private sector is a profit driven entity, so what specific benefits shall it obtain from

engaging in climate mitigation and adaptation initiatives? How will its involvement

translate into reduced operational costs, increased productivity and competitiveness?

iv) It is also to define the costs and risks involved in supporting climate actions and how

can they be managed. Also, is there statistical evidence that improving their

environmental performance will result in increased growth and profitability for the

private enterprises in the country? Case stories, if they exist, should be shared.

26

v) A sound communication strategy should be developed to inform the private sector

about climate change and climate action. Awareness campaigns should be implemented

all throughout the country.

vi) Universities and research and development companies should be involved in the efforts

to engage the private sector in climate action. It is also important that CSOs are brought

on board and that deliberate action to improve their relationship with the private sector

is created so that they can work together as partners to address issues concerning

climate change.

vii) Understanding the global perspectives on and frameworks established at local and

international level to address climate change and its impacts is very important for the

private sector because they greatly affect how business is done at the end of the day.

viii) The high costs of the cook stoves invented by entrepreneurs promoting clean cooking

as a strategy for encouraging the local communities to stop cutting down trees for wood

fuel must be quickly dealt with.

ix) The Government, while determining how much tax should be paid by the

businesspeople in the clean cooking arena, should establish the effects of those taxes

on their production costs and prices or else the industry will die.

x) A clear strategy for engaging the people in the refugee settlements around the country

and the local communities hosting them in climate action should be established. Many

trees have been cut down for timber and wood fuel in these areas. The private sector

should be encouraged to support this.

2.7. Regional and National Climate Financing Opportunities for the Private Sector

The panelists in this session included officials from the AfDB, Centenary Bank, DTB, Rwanda

Green Fund (FONERWA), Stanbic Bank and Uganda Development Bank who discussed the specific

products and services that their institutions are providing to private sector players involved in

climate change mitigation projects.

27

Figure 5; Panelists discussing climate financing opportunities for the private sector

The key messages offered by the discussants were;

i) The projects that the entrepreneurs who wish to access the climate finance support

offered by the financial institutions must demonstrate that they can and will indeed

support climate change mitigation; this does not mean, however, that a company will

be provided with the required support simply because it is involved in climate change

mitigation: a strong business case must be presented to the financiers.

ii) Before providing the financial support, the financial institutions look at the feasibility

and viability of the projects for which funding is being sought. They must be able to

deliver the expected returns on investment within an appropriate time frame. Also, the

enterprises seeking support must be able to comply with the requirements of the

financial institutions.

iii) Poor governance is a big problem in most of the local enterprises, and that is why many

financial institutions are not willing to support them. The management systems and

controls lack sound business plans. Projects in many cases seem too risky in the eyes of

financial institutions to support. Capacity building including hands-on training, coaching

and mentorship in business management skills is very critical.

iv) The cost of capital is a serious challenge for both the MSMEs and large - scale

enterprises in the region that wish to invest in projects that promote energy efficiency,

environmental sustainability and climate change mitigation. Blended finance, a mix of

different financial instruments that can support their projects, is very important.

v) The market is not aware about the products that enterprises in the renewable energy

field offer, so they are not buying from them. Before a financial institution can provide

any business with financial support, it must be convinced by the data in its income

28

statement and balance sheet that it will generate the profits required to pay it back.

Many renewable energy companies have failed to get the support they need from the

industry because their sales are very low. They therefore need to improve their

marketing systems.

vi) Interesting to note is that on the demand side, entrepreneurs are saying that there is

no money to support their climate actions. On the supply side, however, financiers say

that they have a lot of money, but the projects that they could finance with that money

do not exist. A platform to bring both sides together should be established and dialogue

between them supported.

vii) Strong public-private partnerships in the climate finance arena should be established.

It should be noted, also, that as emphasized by different representatives from the

private sector throughout the workshop, the private sector, including the financial

institutions that could support climate finance initiatives, is profit driven. It needs a

strong value proposition to get involved, and it must see the Government take the lead

to be convinced.

viii) A platform that can promote learning and knowledge sharing between institutions that

provide climate finance should be established. Conversations about this between

governments in the East African region should also be promoted. There is a lot to learn

from FONERWA, for example, about how the climate financing can be efficiently and

effectively mobilized and managed.

ix) Understanding the operations of the private sector that the Government and its

development partners wish to engage and the type of financing its different actors

need, therefore, is critical when designing climate finance products. Micro, small,

medium and large-scale enterprises work in different ways and the kind of markets and

industries they operate in are unique. Some are at start up level, others at growth stage

and there are many that are declining. Capacity building through business incubation

services for start- ups and business accelerator programs for those at growth stage is

very important.

2.8. Workshop Proceedings on Day Two - 26th October 2018

The second day of the workshop began with a recap of the previous day’s discussions. This was

followed by presentations from USAID Power Africa and the Uganda Manufacturers’ Association

29

(UMA) which informed participants about the capacity building support that the institutions are

providing to private enterprises undertaking energy efficiency and renewable energy projects.

2.8.1. USAID’s Power Africa Uganda Electricity Supply Accelerator

Power Africa is a U.S. Government led partnership coordinated by the United States Agency for

International Development (USAID) which brings together the technical capacities, capabilities,

resources and programs of 12 U.S. Government departments and agencies and 16 international

development partners to provide market-driven solutions to advance the goals of the Electrify

Africa Act of 2015 by catalyzing small businesses and the power industry in general in order to

bring electricity to millions of people for the first time.

The objective of the institution in Uganda is to identify and accelerate clean energy investments

as a means of increasing power generation (MW) capacity and to rapidly expand access to

electricity (connections) in urban and rural Uganda. It is currently working towards achieving one

million new connections, half off-grid and the other half on-grid, and 1 GW of generation.

The specific support that Power Africa Uganda provides MSMEs in the electricity supply industry

in the country includes;

i) Refining business models

ii) Developing new business models

iii) Offering business advisory services

iv) Providing support for financial applications

v) Facilitating introductions to investors and financiers

vi) Strengthening the capacity of off-grid sector associations

vii) Legal and regulatory advisory support

viii) Engaging with the digital financial services and telecommunications sectors

ix) Mainstreaming gender

While grid-based connections are typically delivered by Government, off-grid connections are

typically delivered by private companies which offer two main types of connections: mini grids

and standalone solar. The business models of the enterprises in each category are unique and so

are the markets in which they operate. Understanding their development needs and constraints

is therefore very important, and Power Africa Uganda, while working with them, ensures that the

support it gives them is customized to their specific contexts.

2.8.1.1. Key Issues Raised in the Deliberations of the Workshop Participants

i) The local companies involved in making transformers are struggling to remain

competitive in a market that prefers to import them. One of the reasons why they are

experiencing this challenge is because they have not invested in understanding the

30

needs of the market and how they are changing. Capacity building in this area is

therefore very important.

ii) To deal with the business challenges they are experiencing, industry players need to

work together to build and grow their markets, improve their product offerings and

advocate for supportive government policies and programs.

iii) The capacity of the business associations representing the different actors in the

industry to support their members to improve their business operations through

training and advisory, establish market and financial linkages and carry out the

necessary policy research and advocacy needs to be built. For sustainability, they also

need to be supported to formulate sound development strategies and establish strong

management systems and structures.

2.8.2. The UMA Energy Management Center

Mr. Joseph Kyalimpa, Training and Development Manager, UMA, noted that the largest

consumers of energy in the country are the members of UMA and that it contributes up to 30%

to the operational costs of some industries. To assist them to use energy more efficiently, the

institution, with support from SUNREF, established an Energy Management Centre in 2015 whose

objectives are to: -

i) Raise private sector awareness about energy efficiency and renewable energy

ii) Increase the capacity of the private sector to manage energy through training and

energy audits

iii) Assist companies with the technical and financial support they need to implement

energy efficiency and renewable energy projects

To inform the private sector about the existence of and services offered by the Center, various

training workshops and visits to member companies as well as participation in energy fairs such

as the Uganda Energy Week have been conducted. Also, information, education and

communication (IEC) materials have been published and shared with the relevant stakeholders.

The Center is being supported by several strategic partners including the German Development

Corporation (GIZ), SUNREF, Diamond Trust Bank (DTB), ENVIDANTEC and the Ministry of Energy

and Mineral Development (MEMD).

The Center currently has USD 30,000,000 from SUNREF to support companies that are

implementing energy efficiency and renewable energy projects. Some of the institutions

receiving support include Fine Spinners, Nile House Hotel, Amfri Farm and Trans paper.

To build their capacity to effectively operate the Center, the officials of the association have been

trained in the basics of energy efficiency and renewable energy and assisted to develop its 2015-

31

2019 Strategic Plan. Construction of the first floor of the UMA Training Centre which will house

the Energy Management Center is currently 98% complete and will host other energy service

providers and consultants.

Further support in building the capacity of the Center to deliver its mandate is however required.

One of the challenges it is facing is the lack of sufficient funding to support the projects its

members want to implement. Also, some companies have other sources of finance which are

cheaper than the one that the SUNREF-supported facility is offering.

2.8.2.1. Key Issues Raised in the Deliberations of the Workshop Participants

i) A strong working relationship between UMA and government institutions like the

Ministry of Water and Environment and Uganda National Bureau of Standards (UNBS)

should be established to promote climate smart business practices.

ii) Most businesses in the manufacturing sector are unaware of the operating standards

that the government and the local and international markets they wish to participate in

require them to meet. Intensive sensitization, training and advisory support should be

provided to help them meet these standards

iii) In response to concerns raised about DTB being the only bank that the Energy

Management Center is working with, Mr. Kyalimpa explained that because of the risks

involved, most financial institutions in the country are still skeptical about introducing

products that support energy efficiency projects. However, efforts to engage them are

being made.

iv) Businesses in the renewable energy sector as well as those involved in promoting clean

cooking and producing charcoal briquettes need support in enhancing the quality of

their products and services. In addition, business advisory on how they can grow and

expand their markets is key: many are struggling to survive yet their offerings are key

for promoting environmental sustainability and climate change mitigation.

2.8.3. Policy and Legal Framework to Enable Private Sector Investment in Climate Action

In this session, Ms. Justine Akumu, Energy Officer in the Renewable Energy Department at the

Ministry of Energy and Mineral Development, began by stating the mandate of the Ministry

which is to establish, promote the development, strategically manage and safeguard the rational

and sustainable exploitation and utilization of energy and mineral resources for social and

economic development. She went on to describe the medium-term priorities of the institution

which include;

i) Streamlining petroleum supply and distribution

ii) Developing petroleum refining and pipeline transportation infrastructure

iii) Increasing the electricity generation capacity and transmission network of the country

32

iv) Promoting and regulating mineral exploration, development, production and value

addition

v) Promoting and monitoring petroleum exploration and development to achieve national

production

vi) Increasing access to modern energy services through rural electrification and renewable

energy development

The growth rate of the local population, Ms. Akumu noted, is at over 3%. The demand for power

is growing at about 10% per year so additional power supply is required to match the growing

demand. The level of access to energy in the country is at about 7% in rural areas and 17%

nationally. The per capita consumption of energy is about 90kWh compared to Africa’s average

of 600kWh, South Africa’s 4,300kWh, UK’s 5,500, France’s 7,000 and USA’s 11,900. The country

is rich in natural resources that are still largely undeveloped. These include, among others,

hydropower, solar, geothermal, uranium and biomass. Over 90% of energy in the country is

currently being obtained from biomass resources.

Several policies have been developed to support investments in the energy sector and these

include the 1999 Electricity Act, 2002 Energy Policy, 2017 Renewable Energy Policy and 2018 Bio

Fuels Act.

The Government is also implementing programs to support the sector including the

establishment of the Energy Investment Fund, dissemination of solar systems through the Energy

for Rural Transformation Programme and the Uganda Domestic Biogas Programme. In addition,

an initiative to connect 300,000 households to the national grid on an annual basis is being

implemented. Awareness campaigns aimed at sensitizing local communities about clean cooking

are also being implemented. The Green Schools National Appropriate Mitigation Action (NAMA),

a 5-year program whose goal is to ensure that education institutions in the country use efficient

cooking stoves is also being implemented by the Government.

The energy sector is facing challenges including;

i) Quality of energy technologies

ii) Power theft and vandalism of electrical Infrastructure

iii) High power losses and low level of efficiency in the utilization of energy

iv) Inadequate capacity in terms of personnel to meet the increased demand of energy

services

v) Limited public and domestic financial resources to invest in large infrastructure power

projects.

33

vi) The high upfront costs of renewable energy technologies like solar and small hydro

power projects

In her concluding remarks, Ms. Akumu stressed that the Government is committed to

establishing a conducive environment for private sector investment in climate action. Energy

utilization is largely responsible for Uganda’s GHG emissions, so promoting clean technologies in

the sector is a key priority for the Ministry.

The key issues raised by the workshop participants at the end of her presentation were;

i) Innovation funds for biomass electricity generation should be established by the

Ministry.

ii) It is critical that the Government establishes the infrastructure necessary to support

MSMEs operating in the bio diesel sector.

iii) National quality standards for producers and suppliers of wooden poles should be

established and enforced by the Ministry and UNBS.

iv) Strategies for securing the long - term financing required by local enterprises to

purchase, install and maintain mini grids should be developed. The technical capacity

required to produce them locally should also be enhanced.

2.8.4. Group Work and Plenary Discussions

Workshop participants were organized into 5 groups each of which was tasked to provide

recommendations on how the following issues can be addressed.

2.8.4.1. What can be done to increase access to financing to implement mitigation projects

(e.g. in the renewable energy and energy efficiency sectors)?

i) Private sector players need capacity building support to enable access to climate finance

ii) Baseline information about the status of private sector engagement in climate action

should be provided

iii) Private sector should be supported to conduct feasibility studies for projects that

support climate action

iv) To deal with impediments like the bureaucracy involved in access to financial support,

financial institutions should be supported to automate their business processes and;

develop common standards

2.8.4.2. What viable financing options should be adopted to increase access to finance?

i) A study on challenges of private sector engagement in climate action should be

conducted

ii) Sensitization aimed at creating awareness amongst private actors about climate change

and its impact should be conducted by the Government

34

iii) A participatory mechanism for providing flexible and affordable long-term financing

should be initiated by the government through Bank of Uganda

iv) Concessional loans, feed-in tariffs and tax incentives from the government should be

provided to enterprises supporting climate action

v) A climate change fund dedicated to supporting climate investments in several sectors

e.g. energy, agriculture, waste management should be established

vi) Green bonds should be provided by both the local banks and Bank of Uganda: the

capacity of these institutions to provide this kind of support should be built

vii) The government with support from development partners should establish green funds

to support private sector innovations in climate action

2.8.4.3. What policy incentives need to be put in place and how can we strengthen public-

private sector partnerships in overcoming risks and barriers?

i) A needs assessment for the MSMEs in renewable energy sector should be conducted

ii) Business development services for institutions involved in renewable energy should be

provided

iii) Stakeholders involved in renewable energy should be actively involved in ongoing policy

reviews

iv) Support for R&D projects aimed at creating innovative climate adaptation and

mitigation technologies should be provided

Figure 6: Participants during the group discussions

2.8.4.4. How can we improve coordination between the different players including private

companies, associations, government and development partners?

i) A coordination strategy should be developed

35

ii) Next, an activity plan describing the specific actions that should be taken to promote

private sector investment in climate action should be developed

iii) Mapping and profiling of private enterprises and the business associations that support

them should then be conducted

iv) A capacity building program customized to the needs of the different players in the

private sector should thereafter be implemented: this should be done by the

government with support from the business associations

v) Platforms for learning, knowledge sharing, networking and review of existing laws and

policies should be established

2.8.4.5. How can we encourage the private sector to mitigate climate change impacts within

their business operations?

i) A strong business case should be developed for the private sector

ii) Sensitization and awareness campaigns for the private sector should be implemented

iii) Economic incentives (tax holidays, awards, penalties) should be provided by the

government

iv) Financing facilities and favorable legislation is also very critical if the local enterprises

are to engage in climate action

v) Opportunities for certification for private actors implementing climate smart operations

should be provided

vi) Monitoring local businesses to ensure compliance with the required operating

standards sis critical

vii) Zero waste ecosystems and business models as well as business development support

services aimed at building the capacity of the local private sector to green their

operations should be put in place.

2.8.4.6. Key Session Outcome

The workshop participants agreed at the end of the session that the organizations implementing

the NDC Support Program including MWE, MOFPED, NPA, PSFU and UNDP should set up a multi

sectoral committee consisting of representatives from the public sector, private sector and civil

society to follow up on the recommendations made by the participants, create a clear roadmap

for implementing them, monitor and evaluate progress.

3.0. Closing Remarks from the Vice Chairperson of the PSFU Board of Directors

Dr. Gudula Basaza, the Vice Chairperson of the Board of Directors of PSFU expressed her gratitude

for the inspiring insights that the different institutions that had made during the dialogue. She

noted that the workshop provided the ideas and recommendations that are very useful and

critical. She also thanked the partners including the UNDP NDC Support Program for the

36

commitment they had put into organizing such an informative engagement, stressing the need

to organize more meetings of that nature to sensitize the private sector about climate change

and its impacts. She reiterated PSFU’s commitment to support the Government and its

development partners to promote the climate agenda of the country and at 1:00pm declared the

workshop closed.

4.0. Workshop Evaluation

A total of 50 participants took part in this exercise. Their responses were as follows: -

4.1. Extent to Which Participant Expectations Were Met

A Likert Scale measure was used to determine the extent to which participants were satisfied

with the proceedings of the workshop with ‘5’ representing those who strongly agreed that their

expectations were met and 1 representing those who strongly disagreed with this proposition.

Table 2: Extent to Which Participant Expectations Were Met

Responses No. of Respondents % of Respondents

Strongly Agree 10 20

Agree 22 44

Somewhat Agree 18 36

Disagree 0 0

Strongly Disagree 0 0

Total 50 100

While 44% of the participants ‘Agreed’ that their expectations were met, 36% indicated that they

were somewhat met. 20% on the other hand noted that they ‘Strongly Agreed’ that the workshop

met their expectations.

4.2. The Most Important Lessons the Participants Obtained from the Workshop

What stood out for 36% of the respondents was the climate financing opportunities available for

the private sector. While 14% noted it was the emphasis on the involvement of all development

stakeholders in climate action, 12% said that it was the discussions on the legal and policy

framework that has been established by the government to enable private sector engagement in

climate action.

Table 3: Participant Responses about the Most Important Lessons they Obtained from the

Workshop

37

Response No. of

Respondents

% of

Respondents

Climate financing opportunities 18 36

Importance of private sector engagement in climate

action

5 10

Investment opportunities in climate action 4 8

Opportunities for players in the renewable energy

sector

4 8

Importance of stakeholder collaboration in climate

action

7 14

The Paris Agreement and NDCs 2 4

The role of Private Sector Foundation Uganda (PSFU) 2 4

Importance of awareness creation for private sector 2 4

The legal and policy framework established to support

private sector engagement in climate action

6 12

Total 50 100

4.3. The Main Takeaways of the Participants

The key takeaways of the participants were: -

i) Private sector involvement in climate action is critical

ii) Everyone has a responsibility to participate in climate action

iii) Providing incentives for private investment in climate action is very important

iv) It is possible to rally everyone to save the environment and still make money with it

v) There are several climate financing opportunities at both national and international levels

vi) Climate change can affect the economy of the country and therefore the livelihood of its

people

vii) There is a global effort to deal with climate change: various policies and programs have

been development to support climate action

viii) Better coordination of actions being undertaken by the different players in the climate

space (government, development partners, private sector) is essential for achieving the

desired outcomes and greater collaboration between them should be encouraged

ix) For private actors involved in climate action, networking is critical for learning and

information sharing as well as access to marketing and financing opportunities

x) Sensitizing the private sector about climate change and its potential effects on their

operations is key

4.4. Participant Views on What Went Well

38

40% of the respondents said that what went well for them was the discussions that they were

involved in. 30% on the other hand appreciated the presentations made by the different

facilitators who were invited by the organizers more while 25% said it was the way the workshop

was organized. 6% gave no response.

Table 4: Participant Responses to What Went Well During the Workshop

Response No. of Respondents % of Respondents

Participant discussions 20 40

Presentations made by different facilitators 15 30

Workshop organization 12 24

No response 3 6

Total 50 100

4.5. Participant Suggestions on What Could be Done Differently

According to 24% of the respondents, more stakeholders from both the public and private sector

should be involved in the future. While 20% observed that more group discussions should be held

during such engagements, 14% noted that more information about the different topics that were

discussed should be provided to the workshop participants.

Table 5: Participant Responses to What Could Have Been Done Differently in the Workshop

Response No. of Respondents % of Respondents

Involve more stakeholders 12 24

Organize more dialogues of this nature 4 8

Provide more information about topics

discussed

7 14

Simplify terminologies 2 4

Conduct more group discussions 10 20

Ensure better time management 7 14

Streamline payment of transport allowances 1 2

Workshop should be residential 1 2

Location should be in a more central place 1 2

No response 5 10

Total 50 100

4.6. Participant Reflections on What Was Left Out

In response to the question on what left out, participants offered the following information: -

39

i) Information about the National Climate Change Bill 2017

ii) The specific processes within private operations that cause climate change

iii) Options for generating climate financing domestically from the private sector

iv) Specific investment opportunities that the private sector can exploit in the climate space

v) Strategies local government institutions around the country can undertake to successfully

promote climate action within their communities

vi) More information about the technical and financial opportunities available for MSMEs

involved in climate action and how they can access them

vii) Experience sharing from private actors about their involvement in climate action, the

benefits they have obtained as well as the challenges they have experienced while

engaging in it

viii) The factors that have made it difficult for the government to control the degradation of

the environment and the actions it can take to deal with them

ix) Some critical stakeholders for example research institutions, universities, CSOs in the

climate space, government institutions like the Ministry of Trade, Industries and

Cooperatives, Uganda National Bureau of Standards and Uganda Investment Authority as

well as some of the key large scale commercial farmers and manufacturers in the country

should have been encouraged to attend

4.7. Additional Support Participants Need to Deliver on their Tasks

To effectively support the climate agenda of the country, the participants said they would need

support in the following areas: -

i) Awareness creation for the private sector

ii) More information about climate change and its effects

iii) Information about investment opportunities in climate action

iv) Financial support for climate adaptation and mitigation actions

v) Support for research and development in climate related actions

vi) More information about climate financing opportunities and how to access them

vii) Educating the community about climate change and actions they can take to mitigate its

effects

viii) More learning and networking opportunities for private actors and institutions supporting

them

ix) More forums of this nature should be created to enable greater collaboration between

the public and private actors

x) Streamlining and strengthening the legal and policy framework to encourage greater

private sector engagement in climate action

xi) Capacity building for the private sector and the business associations supporting its

various players

40

xii) Programs that will encourage youth participation in climate change adaptation and

mitigation actions

Dialogue Activity Pictorial

On the extreme

left, participants

are guided

through a groups

discussion. To the

right a presenter

from one of the

groups presents

the deliberations

of the discussions

To the extreme

left. Participants

react to some of

the

presentations

made and on the

right a delegate

from the

Ministry of

Energy makes a

presentation on

the climate

action

programmes

they run at the

Ministry

Annex 1: Workshop Programme

Time Activity Responsible institution/person

8:00-8:30 Arrival and Registration PSFU

8:30-9:00 Introduction and workshop

expectations

PSFU/UNDP

9:00-9:30 Welcome Remarks UNDP Country Director

Executive Director- PSFU

Minister- Water and Environment

Session 1: Introduction and scene setting. Moderator: CCD/UNDP

9:30-9:30 Overview of Uganda’s NDC and the

NDC Partnership Plan

Assistant Commissioner-CCD

10:00-10:20 Uganda’s NDC Support Programme

focal areas and ongoing initiatives

to support private sector

engagement

UNDP Team Lead

10:20-10:40 Context of Uganda’s National

Development plan and linkages

with the SDGs

National Planning Authority (NPA)

11:00-11:15 Q&A session

11:15-11:30 Coffee break

Session 2: International climate finance landscape and opportunities. Moderator: UNDP NDC

Project Manager

11:00-12:30 International Experience on

mobilizing private sector financing

for climate Action

- Result based finance (UNFCCC

RCC)

- Financing for green growth

projects (GGGI)

- Carbon market approaches to

trigger investment (GIZ)

- Potential role of Article 6 in

future carbon finance

approaches under the Paris

Agreement (Perspectives)

- UNFCCC Regional collaboration

Centre- Kampala

- Global Green Growth Institute (GGGI)

- German Development Cooperation

(GIZ)

- Perspectives

- Private Finance Advisory Network

(PFAN)

43

- Bridging the gap between

investors, clean energy

entrepreneurs and project

developers (PFAN)

12:30-13:00 Plenary discussion

13:00-14:00 Lunch

Session 3: Regional and national financing opportunities to leverage private sector financing

Moderator: Uganda Development Bank

14:00-15:00 National and regional Approaches

for leveraging private sector

finance in the implementation of

mitigation projects across sectors

(renewable energy, energy

efficiency, transport, agriculture

among others)

Africa Development Bank (AfDB) Rwanda

Green Fund (FONERWA), Uganda

Development Bank, Centenary bank, Post

Bank and Diamond Trust bank, Stanbic

bank,

15:00-15:30 Plenary discussion

15:30-16:00 Presentation by PSFU Director Energy for Rural Transformation,

PSFU

16:00-16:30 Wrap of Day one Facilitator

Day two

8:30-9:00 Wrap up of day one PSFU/UNDP

09:00-9:30 NDC Implementation Plan Climate & Energy Advisory Ltd

9:30-10:00 Q&A session

Session 4: Leveraging public-private sector financing. Moderator: USAID Power Africa

10:00-10:20 Climate finance initiatives, policy

and legal framework to enable

private sector investments in

climate Action.

- Ministry of Finance Planning and

Economic Development (MoFPED)

- Ministry of Energy and Mineral

Development (MEMD)

10:20-10:40 Financing approaches on financing

for private sector initiatives-

Experiences with the USAID Power

Africa Uganda and the SUNREF

Program

- USAID Power Africa Uganda

- Uganda Manufacturers Association

10-40-11:00 Q&A session

11:00-11:30 Coffee Break

44

11:30-12:00 Group discussion:

- What can be done to increase

access to financing to

implement mitigation projects

(e.g. in the renewable energy

and energy efficiency sectors)?

- What viable financing options

should be adopted to increase

access to finance?

- What policy incentives need to

be put in place and how can we

strengthen public-private sector

partnerships in overcoming risks

and barriers?

- How can we improve

coordination between the

different players including

private companies, associations,

government and development

partners?

- How can we encourage the

private sector to mitigate

climate change impacts within

their business operations?

Group sessions facilitated by

UNFCCC/GIZ/PSFU/UNDP/AfDB/FONERWA

12:30-13:00 Group presentations and plenary

discussions

13:00-13:30 Wrap up and closure

13:30-14:30 Lunch