Through our REACT pillar, we offer a full suite of programme and challenge fund management services
We offer a full suite of programme and challenge fund management services
Today, climate change and sustainability are rising to the top of the international agenda. Countries at all stages of development are increasingly establishing national climate change mitigation and adaptation strategies, within which donors are pooling funding, while the international architecture to respond to climate change continues to evolve.
Renewable sources of energy are becoming ever more important to sustainable economic growth. There is also a recognition that the countries likely to be hardest hit by changing climate are those least equipped to respond, but offer the greatest potential for innovative low carbon development and green growth pathways.
Through our REACT pillar, we offer a full suite of programme and challenge fund management services the following areas:
— Renewable Energy,
— Off-grid & Technology,
— Climate change,
— Innovative Finance,
— Low Carbon Development,
— Sustainable Trade,
— Green Growth.
1. Forest Governance Markets and Climate (FGMC)
The Forest Governance Markets and Climate FGMC is a global DFID programme with the broad aim of bringing about governance and market reforms that reduce the illegal use of forest resources and benefit poor people who depend on forests for their livelihoods.
FGMC supports the EU Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan, as part of a global effort to tackle deforestation, in particular by tackling illegal logging in developing timber-producing countries and the trade in illegally-produced timber products. It also seeks to apply lessons from the timber trade to trade in other commodities that impact forests and people who depend on forests for their livelihoods.
Over the 10-year period 2011-2021, FGMC has a total budget of £250 million funded from the UK International Climate Fund (ICF). In the period from 2011-2015 DFID has supported activities in close to 50 countries, with activities including: advocacy, private sector support, government capacity support, CSO capacity support, training, legal research, policy work and mapping. Of the nearly 50 countries, DFID’s support has particularly supported work in Cameroon, CAR, China, Congo, Côte d'Ivoire, Ghana, Guyana, Indonesia, Liberia and Vietnam. For the period from April 2015 to March 2018 DFID has a secured budget of £80 million, which will be allocated primarily through accountable grants, service contracts and Memoranda of Understanding.
In 2015, DFID appointed a KPMG led consortium to assume responsibility for its programme management. KPMG, LTS and ONF have put in place an independent Programme Management Support Team (PMST) to work with DFID on delivering the FGMC programme. The PMST is working closely with DFID’s assigned Forestry Adviser and DFID staff to enable the appropriate management of grants, service contracts and Memoranda of Understanding (MoU).
2. The Strategic Climate Institutions Programme (SCIP)
The Strategic Climate Institutions Programme was a multi-million-dollar fund designed to build Ethiopia’s capacity to cope with climate change across the public, private and civil society sectors and to respond to the challenges of transitioning to a climate resilient green economy. KPMG was the fund manager for SCIP, an approximately GBP 9.7 million DFID/Norway/Denmark-backed fund designed to build Ethiopia’s capacity to cope with climate change across the public, private and civil society sectors and to respond to the challenges of transitioning to a climate resilient green economy. SCIP sought to remove key obstacles to building climate resilience, or seizing opportunities in the green economy – and supports critical institutions charged with delivering Ethiopia’s Climate Resilient Green Economy Strategy
Through SCIP, we managed 27 grantee projects maintaining technical quality and rigorous fiscal standards for the projects. An independent verification confirmed that our work affected 10,504 people directly so that they are now better able to cope with climate shocks with 2,575,605 benefiting in the same way indirectly and 3,407 jobs created. In its lifetime, our delivery of the SCIP project scored consistent A's.
3. Africa Enterprise Challenge Fund (AECF) – REACT Window
KPMG is programme manager for the US$ 244 million AECF, hosted by the Alliance for a Green Revolution in Africa (AGRA), and backed by some of the biggest names in development finance.
One of AECF’s biggest competitions is the Renewable Energy and Adaptation to Climate Technologies (REACT) Window. With an overall portfolio US$ 73 Million in funds to date, AECF REACT has invested in sixty companies across East Africa and twelve in Mozambique. The AECF has been instrumental in catalysing the renewable energy off-grid solar sector in East Africa. To date over 1.6 million people have benefitted from off-grid lighting and other green energy services and more than 120,000 tonnes of carbon have been avoided.
The REACT window provides patient risk capital to for-profit businesses with potentially transformative climate change solutions. It helps them go to scale and effect catalytic change in the clean energy, climate change and financial services market place for deeper social impact. The AECF targets innovative business ideas that have the potential for development impact and systemic market change in agri-business, rural finance and renewable energy. The fund is designed to accelerate pro-poor growth in Africa, increasing employment, livelihood opportunities and incomes, and reducing poverty.
As Fund Manager of the AECF, KPMG designed a robust, flexible, transparent mechanism to attract, appraise and competitively select innovative businesses that impact market systems to benefit the rural poor. KPMG manages AECF funding competitions, selects (with the AECF’s Independent Investment Committee) projects eligible for AECF funding and monitors performance of projects in terms of their business performance and development impact on rural African communities.
M-KOPA offers pay-as-you-go solutions through mobile money for purchase of small solar systems in Kenya. We selected this exciting company as a grantee in our first REACT window because we saw the opportunity to address a persistent market bottleneck: the inability of low-income customers to pay for RE products up front. We have since funded three more companies offering pay-as-you-go solutions through REACT round two, recognizing that with a little support this promising business model can change the market going forward.
Nuru Energy is hoping to market a simple pedal charger for LED lights across East Africa. The business model only works if the company secures a lot of customers in multiple countries – the volume game. To cover that ground, Nuru is building a network of agent franchises. Customers pay agents and agents pay Nuru via mobile money, at which point Nuru unlocks the technology for use remotely, and the agent charges his customer’s light.
Simgas BV is mass producing biogas systems for rural households in Tanzania, distributed through a piggy-back model that leverages an existing, already widespread distribution network. Simgas is a joint venture between a well-established, large Tanzanian company and a smaller Dutch company. The local Tanzanian partner has manufactured and distributed water tanks widely in Tanzania for years. It brings to the table an existing distribution network, local market knowledge and credibility. The Dutch company provides the new biogas technology, which is distributed now along with the Tanzanian water tanks. This is an excellent example of technology transfer from a Western market into Tanzania, leveraging the value of an established local business. Fund for Rural Prosperity that is bridging the financial inclusion gap by supporting financial innovation. The US$50 Million challenge will enable 1,000,000 poor people in rural Africa to have access to appropriate savings, credit and insurance products and services. For the programme, KPMG IDAS is providing the full range of fund management services including design, competition management, grantee contracting, financial and Programme management oversight, monitoring and evaluation. Specifically, we run an Innovation competition and a Scaling competition.
The Innovation Competition seeks applications from organizations aiming to design, pilot, test, and launch new financial products and services that can effectively meet the financing needs of people living in poverty in rural and agricultural areas. The Scaling Competition aims to take proven concepts, products and business models and to adapt and launch them at a larger scale across new geographies and markets.