Climate Finance

The County Climate Change Fund Mechanism

Devolved Climate Finance has emerged as an innovative approach for adaptation planning and finance systems targeted at delivering adaptation for all. It decentralises climate finance and decision-making processes right down to the local communities empowering them to identify and implement climate action that is tailored specifically to meet their unique needs. The Adaptation Consortium (ADA) supports county governments to mainstream climate change response into development and planning through the County Climate Change Fund (CCCF) mechanism. In addition, we have supported counties to develop innovative green climate finance approaches such as green bonds.  

The County Climate Change Fund (CCCF) mechanism is a legal and institutional framework through which county governments can  access and use climate finance from different sources to build community resilience to climate change. The framework enables communities to make decisions that allow them to prioritise public good investments that build their resilience to climate change in development.It is aimed at addressing climate change adaptation priorities, building community resilience and fostering sustainable economic growth.

The  CCCF, initially called the ‘Climate Adaptation Fund’ (CAF),  was piloted in Isiolo County between 2012 -2013 through the Ministry of State for Development of Northern Kenya and other Arid Lands (MDNKOAL) with support from the International Institute for Environment and Development (IIED), Kenya Meteorological Department (KMD) and the Resource Advocacy Programme (RAP). Drawing on the lessons learnt in Isiolo, the pilot was expanded to four other Arid and Semi-Arid counties, i.e. Garissa, Kitui, Makueni, and Wajir, and became the County Climate Change Fund to incorporate mitigation initiatives under the Fund. This pilot phase took place from 2013 to 2018.

By 2019, the CCCF Mechanism had demonstrated its viability and success and through the support of partners, ADA scaled it out to Narok, Kwale, Siaya, Kisumu, Vihiga, Nandi, Bomet, Kisii, Kakamega, Kericho, Embu, Nakuru, Laikipia, Taita Taveta, Makueni, Tharaka-Nithi and Embu. Having gained national recognition and approval, the national government, through the National Treasury under the project Financing Locally - led Climate Action (FLLOCA), has been expediting the scale out of the Mechanism to reach  the remaining counties in Kenya. Currently, all 47 counties in Kenya are in different stages of implementing the CCCF with technical support from ADA.

Market Based Climate Finance Initiatives

According to the African Development Bank (AfDB), Africa received USD 30 billion in Climate Finance in 2023, compared to its needs estimated at USD 277 billion per year. This is a clear indication that the available  resources are not enough to address climate change through  adaptation and mitigation actions. Subsequently,  financing climate needs requires broad sources including public and private (market). ADA has been looking to support county governments to explore other sources for financing climate actions including market sources and the private sector. 

In 2023, ADA, as part of a Consortium including Financial Sector Deepening (FSD-K), Agusto and Co., Kenya Markets Authority and the Nairobi Stock Exchange in partnership with the county governments of Makueni, Wajir, Kirinyaga, Kisumu, Nandi, Laikipia, Embu, Vihiga, Taita Taveta and Nairobi, undertook a preliminary review of county assets with a potential for green bonds as a financing mechanism for climate change.  The reports of these assessments, available here, indicated that counties have immense potential to raise additional resources for green investments through green bonds. ADA and her partners will continue to support counties to prepare for green bonds and other market based climate finance options.