## 16.      International financing aid plays

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### Role of international financing and recent initiatives
- International financing aid plays a critical role in assisting The Gambia to achieve its goals.
- Multinational and bilateral donors support The Gambia’s mitigation and adaptation developments, including supports to renewable energy, marine protection areas, costal area management, etc.
- The IMF established the Resilience and Sustainability Trust (RST) in April 2022 to provide long-term financing to support policy reforms that reduce macro-critical risks associated with climate change and pandemic preparedness, and augment policy space and financial buffers to mitigate the risks arising from such long-term structural challenges (IMF, 2022).

### Climate adaptation financing gap and key statistics
- The Gambia’s annual adaptation annual needs are three times of the aid flow received (45 million USD versus 16 million USD) (Fiscal Monitor Oct 2020).
- Continued and strengthened financing aids are much needed.
- Investment in adaptation to climate change needs and aid flows are illustrated in Figure 12 (In hundreds of millions of Dollars).

### Selected Climate Financing Announced in 2022-2023 (Table 1)
- 1. Grant from the Government of Canada on climate related problems  
  Canada   Dollar   20   million
- 2. Grant from the West Africa Coastal Area Management funded by the World Bank  
  USD 45 million
- 3. Grant from the French Development Agency to support five marine protected areas and the communities around them  
  Euro 6.9 million
- 4. Grant from the electricity restoration and modernization project co-financed by the World Bank and the European Investment Bank to build the solar plant and an eight megawatts energy storage system  
  USD 27 million

### Public Finance Management (PFM)
- Strong Public Finance Management (PFM) can attract the climate finance aids.
- Cheng and Han (2023) documented that the quality of the budget and financial management and the quality of public administration assessed in the World Bank’s Country Policy and Institutional Assessments (CPIA) significantly enhanced the likelihood of receiving aid, and the quality of public administration contributed to attracting larger amounts of funding for adaptations.
- Across countries, an increase of the quality of the budget and financial management to the frontier peer level (best performance in the group) could boost the annual adaptation funds by 9.2 percent and an increase of the quality of the public administration to the frontier could boost the funds by 33.6 percent.
- IMF (2021a) highlighted that compliance with key PFM requirements, such as effective internal and external audit functions, robust control frameworks, and effective procurement processes and procedures supports access to global climate funds.
- The Gambia has been seeking strengthening in these areas reflected by the new PFM Act, which would allow better access to global climate funds.
- The Gambia has both indicators assessed as 3.0 in 2018 compared to the frontier peers’ scores of 4.5 for the quality of budgetary and financial management and of 4 for the quality of public administration.

### Public Investment Management (PIM) and Climate-PIMA (C-PIMA)
- Strengthening the Public Investment Management (PIM) benefits climate investments.
- A Public Investment Management Assessment (PIMA) was conducted with IMF assistance in 2019.
- Progress during the Extended Credit Facility (ECF) program 2020-2023 includes:
  - use of the investment selection tool under The Gambia Strategic Review Board (GSRB) to strengthen appraising, prioritizing and selecting infrastructure projects;
  - approval of a three-year public investment program (PIP) in 2022 for selected priority sectors (i.e., health, education, agriculture, infrastructure, energy, and environment) to strengthen investment planning while rationalizing public investment and anchoring debt sustainability.
- The Climate PIM emphasizes climate change consideration in PIM for efficient green and resilient public investments.
- “Climate-PIMA” (C-PIMA) adds a climate-responsive dimension into the PIMA framework and assesses countries’ capacity to manage climate-related infrastructure.
- Five institutions of public investment management are reckoned by the C-PIMA as key for climate-resilient infrastructure:
  - climate-aware planning;
  - coordination between entities;
  - project appraisal and selection;
  - budgeting and portfolio management;
  - risk management.
- Three cross-cutting issues of equal importance: the legal and regulatory framework, information systems, and government staff capacity.
- A C-PIMA assessment and integrating climate considerations in PFM processes, procedures and tools can bring large benefits to The Gambia, including enhancing the attractiveness of resilient investments and reducing disruptions to public services, asset exposure to natural hazards, and need for maintenance and reconstruction.

### Conclusion and policy implications
- Despite The Gambia being situated within the mid-range of countries in terms of Climate-driven risk, the impact of natural disasters on affected populations and economic losses can be both persistent and substantial, with the agriculture sector being the most vulnerable.
- Mitigation measures:
  - increase renewable energy generation to enhance energy security and reduce emissions given high dependence on fossil fuel imports;
  - implement fossil fuel subsidy reforms to support transition to a greener economy and improve revenue mobility.
- Urgent adaptation actions:
  - enhance regulations to restrict agriculture and livestock grazing activities to promote better land cover;
  - strengthen early warning systems;
  - increase crop diversification and rotation;
  - transition to drought-tolerant crop and animal species.
- To bridge the gap between climate financing requirements and actual aid received, The Gambia should enhance:
  - public finance management;
  - public investment management;
  - Climate Public Investment Management capabilities.
- These efforts are instrumental in attracting climate financing aid and progressing towards achieving net-zero greenhouse gas emissions by 2050 while simultaneously enhancing resilience to climate risks.

### Annex note
- This annex provides background information for a broad set climate-related diagnostic assessment in the future.
- The broad set assessment would be crucial to identify critical policy, legal, data, and institutional gaps in terms of climate resilience and guide effective reform measures that climate-resilience financing, e.g., Resilience and Sustainability Facility, should be used for.

*Source: sipea2024005 - 16.      International financing aid plays*

### 2.   Economic Loss in The Gambia After Natural Disasters, 1990-2023 _______________ 3

### 2.   Economic Loss in The Gambia After Natural Disasters, 1990-2023

### A. Vulnerabilities to Climate Hazards
- Average temperature rise over the past sixty years: 1.0°C, an average rate of 0.19°C per decade.
- IPCC (2022) estimates for West Africa by end of 21st century: temperature may rise by 3–6 °C; sea level rise anticipated by 0.26–0.55 m under low-emission scenario.
- The Gambia’s coastal zone: 80 km of open ocean coast and 200 km sheltered coast.
- Climate-driven risks and impacts noted:
  - Higher risks of flooding, droughts, coastal erosion, food insecurity, damage to infrastructures, and losses to tourism and fishing.
  - Ranked 106th out of 191 countries on Climate-driven INFORM Risk Indicator 2022.
- Natural disaster frequency and impacts:
  - At least one natural disaster approximately every two years over the past three decades.
  - Flooding accounts for more than half of events.
  - 2012 drought affected 428,000 people (population 2.06 million in 2012).
  - 2021 storm affected 16,849 people.
  - 2022 flood affected 17,201 people.
- Agriculture exposures:
  - Agriculture covers about a quarter of total output and about a half of total employment.
  - Reliance on rain-fed subsistence farming; vulnerable to rainfall variability, increased temperatures, and sea level rise.
  - Cereal yields in The Gambia have continuously declined over the past two decades while Western and Central Africa remained steady and slightly increased.

### B. Economic Losses from Natural Disasters
- Cross-country evidence:
  - GDP per capita can be 2-5 percent lower in the four years after large natural disasters (IMF, 2019).
  - Public debt is 6 percent of GDP higher in the three years after disasters (IMF, 2019).
- Modeling and assessments:
  - Cheng and Han (2022): economic loss due to flooding damage on infrastructure can reach 3.8 percent of GDP when flooding probability is one third per year (once every three years).
  - The Gambia’s historical probability of flooding in past three decades is higher than one half, implying potentially larger loss than 3.8 percent of GDP under similar assumptions.
  - Koks et al. (2019): The Gambia is among top twenty countries with the highest multi-hazard Expected Annual Damages (EAD) relative to GDP for exposure of road and railway infrastructure, at above 0.2 percent of GDP annually.
- Local projection regression result:
  - Real GDP growth remains 2.0–3.1 percent lower than the pre-disaster level in the five years after natural disasters hit.

### C. Climate Strategy and Planning
- Key national strategies and targets:
  - National Climate Change Policy (NCCP, 2016): aim to mainstream climate change into national planning, budgeting, decision-making, and program implementation by 2025.
  - The Gambia 2050 Climate Vision (2021): aims for net-zero carbon emissions by 2050; identifies four strategic axes: (1) Climate-resilient food and landscapes, (2) Low emissions and resilient economy, (3) Climate-resilient people, (4) Climate-aware Integrated Coastal Zone Management.
  - Second Nationally Determined Contribution (NDC2, 2021):
    - Assessed as overall almost sufficient; policies and action against its fair share as 1.5°C compatible (Climate Action Tracker).
    - GHG reduction target: 49.7 percent by 2030, compared to baseline emissions expected to increase from 4,935 GgCO2e in 2020 to 6,617 GgCO2e in 2030.
    - Covers sectors: AFOLU, IPPU, Energy, Transport and Waste; includes wastewater emissions and entire AFOLU sector per 2006 IPCC guidelines.
  - Long-Term Climate-Neutral Development Strategy 2050 (LTS):
    - Designed to achieve net zero GHG emissions by 2050.
    - Financing needs: 4 billion USD.
    - Recommendation: include transparent quantifiable targets to switch LULUCF sector from net carbon source to net carbon sink by 2050 or extend coverage of GHG emissions from current 81 to 95 percent.
  - National Development Plan 2023-2027: climate resilience as a pillar with seven program priorities including AFOLU, sustainable waste management, coastal resilience, hazardous chemical and pesticides management, greening energy and transport, integrated water resources management, and disaster risk reduction.
- Specific coastal and disaster risk actions proposed:
  - Nature-based solutions (re-vegetation), technical advice to reduce coastal hazard risks, creating natural sinks by avoiding infrastructural development within adjacent wetlands, finalizing Integrated Coastal Zone Management (ICZM) Bill and Strategy.
  - Disaster risk management: urban flood risk measures, raising risk awareness, introducing preventative measures, emergency relief fund, risk-transferring policies to support insurance schemes, Weather Index Insurance (WII).

### D. Emissions, Energy, and Mitigation
- Emission profile and drivers:
  - The Gambia contributes less than 0.01 percent to global CO2e emissions.
  - Emissions increase in the last two decades driven primarily by population growth and more recently carbon intensity; energy intensity remained broadly stable.
  - Main source of emissions: agricultural sector (over 40 percent of total emissions excluding LULUCF), with livestock a major contributor.
  - LULUCF contributed almost one fifth to the country’s total emissions in 2019.
- Energy security and renewables:
  - High dependence on fossil fuel imports; vulnerability to oil market disruptions.
  - Potential discovery from ongoing oil exploration could reduce import dependence but raises stranded asset risks.
  - Renewable energy capacity pipeline: total of 170 MW in solar PV projects for 2021-2025, partially financed by World Bank and European Investment Bank.
- Policy measures and recent reforms:
  - Fossil fuel subsidy reforms advocated to achieve greener economy and enhance revenue mobility.
  - The Gambia initiated process to allow full pass-through of fuel prices as a first step; technical assistance from IMF for automatic price mechanism analysis.
  - Electricity tariff increased by 30 percent in April 2023 to be more cost reflective and reduce indirect subsidies needed by NAWEC.

### E. Adaptation and Agricultural Resilience
- National adaptation planning:
  - National Adaptation Plan (NAP) updated since 2015 with UNDP funding; a NAP roadmap covering a two-year implementation period to address capacity and capability gaps.
  - Strategic Program for Climate Resilience (SPCR, 2017) focuses on: enabling environment for climate resilience; climate-resilient land use mapping, planning and information systems; climate-resilient infrastructure, services and energy systems; integrated approaches to build rural climate resilience.
  - Sectors identified as particularly vulnerable: agriculture, water and sanitation, energy, and roads.
- Recommended adaptation measures:
  - Flood response: improve regulations to restrict agriculture and livestock grazing activities in vulnerable areas; enhance land cover to improve water retention; strengthen early-warning systems; bolster predictive capabilities.
  - Temperature increase response: increase crop diversification and rotation; switch to drought-tolerant crop and animal species.
  - Water scarcity response: employ water harvesting and retention; improve irrigation systems.
  - Financial and institutional tools: introduce crop insurance policies; establish a National Climate Fund; involve local authorities in adaptation design and implementation.
- Agriculture-specific needs:
  - Strengthening adaptation capacity in agriculture to improve output productivity and resilience, contributing to food security and SDG outcomes.
  - Scaling up climate-smart agriculture practices requires more and better-structured support and investment and improved efficiency of support delivery.
  - Central bank initiated development of a micro insurance program for farmers to mitigate financial impact of crop failure from natural disasters.

### F. Key Quantitative Indicators and Figures Cited
- Temperature increase over sixty years: 1.0°C; rate 0.19°C per decade.
- Coastal zone extents: 80 km open ocean coast; 200 km sheltered coast.
- Disaster occurrence cadence: approximately one disaster every two years over past three decades.
- Affected populations by specific events:
  - 2012 drought: 428,000 people.
  - 2021 storm: 16,849 people.
  - 2022 flood: 17,201 people.
- Cross-country disaster impacts:
  - GDP per capita 2-5 percent lower in four years after large disasters.
  - Public debt 6 percent of GDP higher in three years after disasters.
- Flooding damage estimate (Cheng and Han, 2022): 3.8 percent of GDP loss when flooding probability is one third per year.
- Koks et al. (2019) EAD exposure: above 0.2 percent of GDP annually for road and railway infrastructure.
- Local projection: real GDP growth remains 2.0–3.1 percent lower than pre-disaster level in the five years after natural disasters.
- NDC2 emissions baseline and target:
  - Baseline emissions: 4,935 GgCO2e in 2020.
  - Expected baseline in 2030: 6,617 GgCO2e.
  - Reduction target: 49.7 percent by 2030.
- LTS financing need: 4 billion USD.
- Renewable pipeline: 170 MW solar PV projects for 2021-2025.
- Electricity tariff change: increased by 30 percent in April 2023.

*Source: IMF — The Gambia: Climate Change Vulnerabilities and Strategies (Selected Issues Paper, December 18, 2023).*

### 16.      International financing aid plays

### 16.      International financing aid plays

### Role of international financing and recent initiatives
- International financing aid plays a critical role in assisting The Gambia to achieve its goals.
- Multinational and bilateral donors support The Gambia’s mitigation and adaptation developments, including supports to renewable energy, marine protection areas, costal area management, etc.
- The IMF established the Resilience and Sustainability Trust (RST) in April 2022 to provide long-term financing to support policy reforms that reduce macro-critical risks associated with climate change and pandemic preparedness, and augment policy space and financial buffers to mitigate the risks arising from such long-term structural challenges (IMF, 2022).

### Climate adaptation financing gap and key statistics
- The Gambia’s annual adaptation annual needs are three times of the aid flow received (45 million USD versus 16 million USD) (Fiscal Monitor Oct 2020).
- Continued and strengthened financing aids are much needed.
- Investment in adaptation to climate change needs and aid flows are illustrated in Figure 12 (In hundreds of millions of Dollars).

### Selected Climate Financing Announced in 2022-2023 (Table 1)
- 1. Grant from the Government of Canada on climate related problems  
  Canada   Dollar   20   million
- 2. Grant from the West Africa Coastal Area Management funded by the World Bank  
  USD 45 million
- 3. Grant from the French Development Agency to support five marine protected areas and the communities around them  
  Euro 6.9 million
- 4. Grant from the electricity restoration and modernization project co-financed by the World Bank and the European Investment Bank to build the solar plant and an eight megawatts energy storage system  
  USD 27 million

### Public Finance Management (PFM)
- Strong Public Finance Management (PFM) can attract the climate finance aids.
- Cheng and Han (2023) documented that the quality of the budget and financial management and the quality of public administration assessed in the World Bank’s Country Policy and Institutional Assessments (CPIA) significantly enhanced the likelihood of receiving aid, and the quality of public administration contributed to attracting larger amounts of funding for adaptations.
- Across countries, an increase of the quality of the budget and financial management to the frontier peer level (best performance in the group) could boost the annual adaptation funds by 9.2 percent and an increase of the quality of the public administration to the frontier could boost the funds by 33.6 percent.
- IMF (2021a) highlighted that compliance with key PFM requirements, such as effective internal and external audit functions, robust control frameworks, and effective procurement processes and procedures supports access to global climate funds.
- The Gambia has been seeking strengthening in these areas reflected by the new PFM Act, which would allow better access to global climate funds.
- The Gambia has both indicators assessed as 3.0 in 2018 compared to the frontier peers’ scores of 4.5 for the quality of budgetary and financial management and of 4 for the quality of public administration.

### Public Investment Management (PIM) and Climate-PIMA (C-PIMA)
- Strengthening the Public Investment Management (PIM) benefits climate investments.
- A Public Investment Management Assessment (PIMA) was conducted with IMF assistance in 2019.
- Progress during the Extended Credit Facility (ECF) program 2020-2023 includes:
  - use of the investment selection tool under The Gambia Strategic Review Board (GSRB) to strengthen appraising, prioritizing and selecting infrastructure projects;
  - approval of a three-year public investment program (PIP) in 2022 for selected priority sectors (i.e., health, education, agriculture, infrastructure, energy, and environment) to strengthen investment planning while rationalizing public investment and anchoring debt sustainability.
- The Climate PIM emphasizes climate change consideration in PIM for efficient green and resilient public investments.
- “Climate-PIMA” (C-PIMA) adds a climate-responsive dimension into the PIMA framework and assesses countries’ capacity to manage climate-related infrastructure.
- Five institutions of public investment management are reckoned by the C-PIMA as key for climate-resilient infrastructure:
  - climate-aware planning;
  - coordination between entities;
  - project appraisal and selection;
  - budgeting and portfolio management;
  - risk management.
- Three cross-cutting issues of equal importance: the legal and regulatory framework, information systems, and government staff capacity.
- A C-PIMA assessment and integrating climate considerations in PFM processes, procedures and tools can bring large benefits to The Gambia, including enhancing the attractiveness of resilient investments and reducing disruptions to public services, asset exposure to natural hazards, and need for maintenance and reconstruction.

### Conclusion and policy implications
- Despite The Gambia being situated within the mid-range of countries in terms of Climate-driven risk, the impact of natural disasters on affected populations and economic losses can be both persistent and substantial, with the agriculture sector being the most vulnerable.
- Mitigation measures:
  - increase renewable energy generation to enhance energy security and reduce emissions given high dependence on fossil fuel imports;
  - implement fossil fuel subsidy reforms to support transition to a greener economy and improve revenue mobility.
- Urgent adaptation actions:
  - enhance regulations to restrict agriculture and livestock grazing activities to promote better land cover;
  - strengthen early warning systems;
  - increase crop diversification and rotation;
  - transition to drought-tolerant crop and animal species.
- To bridge the gap between climate financing requirements and actual aid received, The Gambia should enhance:
  - public finance management;
  - public investment management;
  - Climate Public Investment Management capabilities.
- These efforts are instrumental in attracting climate financing aid and progressing towards achieving net-zero greenhouse gas emissions by 2050 while simultaneously enhancing resilience to climate risks.

### Annex note
- This annex provides background information for a broad set climate-related diagnostic assessment in the future.
- The broad set assessment would be crucial to identify critical policy, legal, data, and institutional gaps in terms of climate resilience and guide effective reform measures that climate-resilience financing, e.g., Resilience and Sustainability Facility, should be used for.

*Source: sipea2024005 - 16.      International financing aid plays*

---


_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2024/english/sipea2024005.pdf_