52
BOX 12: GRANT-BASED CLEAN COOKING PROGRAMS
The Modern Cooking Facility for Africa (MCFA) is a multi-donor facility, established and managed by the Nordic Environment Finance Corporation, an inter- national finance institution established by Denmark, Finland, Iceland, Norway and Sweden funding green initiatives. It offers a combination of results-based financing, non-reimbursable catalytic grant financ- ing and technical assistance to companies active in clean cooking to grow and scale up their business- es. As a result of the first funding round, launched in 2022, MCFA is financially incentivizing cooking service providers to deliver their services to almost four million people in Africa by the end of 2027. 114 • Program Management: Financiers may elect to support a public body as the primary implementing partner, a social en- terprise or a mix of the two. Public-body engagement en- sures a level of political buy-in and better integration with national priorities. However, it also involves more complex set-up arrangements and can increase the risk of delay. • Monitoring, Reporting and Verification (MRV): RBFs re- lease funding only following demonstrated results and there- fore need strong MRV processes. These can be costly and resource intensive, so their design is a key issue. Most clean cooking RBFs rely on manual verification – that is, user sur- veys via telephone or SMS. Experience has shown that sur- veys tend not to capture the extent of utilization. As a result, there is increasing interest in the potential of remote monitor- ing systems to improve accuracy. Smart monitoring systems can be integrated with pay-as-you-go systems and mobile money payments. They also generate useful customer data for clean cooking companies beyond the RBF requirements. 118
The World Bank launched the Clean Cooking Fund (CCF) at the UN Climate Action Summit in Septem- ber 2019. The US$500 million fund seeks to scale up public and private investment and accelerate progress toward universal access to clean cooking by 2030. It provides financial and technical sup- port, primarily through technical assistance and re- sults-based grants to help countries incentivize the private sector to deliver modern energy cooking services. Operational since early 2020, the CCF is expected to leverage US$2 billion in investments to support businesses delivering clean cooking solu- tions, with a view to transforming the market. Result-based Financing: Results-based financing (RBF) is in- creasingly the instrument of choice for publicly funded inter- ventions in clean cooking. RBF is an umbrella term for a range of financing mechanisms linked to the delivery of pre-agreed and independently verified results. This contrasts with the traditional input-based finance in which the financing is pro- vided upfront before any results have been achieved. 115 RBF thereby shifts the delivery risk from the financier to the pro- ject implementer. RBF programs allow implementers greater flexibility to select the mix of interventions most likely to de- liver the agreed results. The positive feedback loops creat- ed through robust monitoring arrangements add to the likeli- hood of successful outcomes. 116
Some key design considerations around RBF programs in- clude:
• Eligibility: Most RBF programs define upfront which clean cooking technologies they are willing to support. While most programs are technology-neutral, some contain pro- visions pushing suppliers towards higher-tier and more cli- mate-friendly options. 117
• Operating in Low-Income or Fragile Settings: So far, RBF has principally been used in relatively mature clean cooking
114 Modern Cooking Facility for Africa (n.d) Increasing access to high-technology cooking solutions, https://www.moderncooking.africa/ 115 MECS (2021) ‘Clean cooking: results-based financing as a potential scale-up tool for the sector’, https://mecs.org.uk/wp-content/uploads/2021/10/Clean- cooking-results-based-financing-as-a-potential-scale-up-tool-for-the-sector.pdf
116 Stritzke, S., et al (2021) ‘Results-Based Financing (RBF) for Modern Energy Cooking Solutions: An Effective Driver for Innovation and Scale?’, https://www. mdpi.com/1996-1073/14/15/4559 117 MECS (2021) ‘Clean cooking: results-based financing as a potential scale-up tool for the sector’, https://mecs.org.uk/wp-content/uploads/2021/10/Clean- cooking-results-based-financing-as-a-potential-scale-up-tool-for-the-sector.pdf
AN OPEC FUND KNOWLEDGE SERIES REPORT 2024
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