The Fund at COP 28

The Mastercard Foundation Fund for Resilience and Prosperity recently participated in COP 28 as part of the Blue zone and Green zone which are hosted by the UNFCCC and the Climate Action Innovation Zone hosted by Climate Action between 4 - 8 December 2023 in Dubai, United Arab Emirates (UAE). This was the third consecutive year where the Climate Action Innovation Zone ran alongside COP with an aim of mobilising the innovation ecosystem to facilitate concrete climate action at COP28. The Flagship Forums of the Climate Action Innovation Zone include the Sustainable Innovation Forum, Sustainable Finance Forum, UK Climate Action Forum, Hydrogen Transition Summit and the Agri-Food Systems Summit.

The Fund’s Engagement Partner Smita Sanghrajka participated as a panelist in the Estonian pavilion on the Blue Zone on a panel titled ‘Unlocking Billions: Private Capital's Role and Opportunities in Africa's Climate Resilience Revolution’ hosted by 1MTN. Smita participated alongside Nassima Sadar-Gravier, Obama Leader and CEO of Afro climate and Sheri Hickok, CEO of Climate Impact Partners, and the panel was moderated by Kristjan Raude co-founder and CEO of 1MTN. The panel discussion focussed on how Africa can increase climate finance from the private sector through innovative investment instruments delivering both impact and compelling risk-reward ratios in the nature-based solutions landscape. In her contribution to the panel, Smita noted that the private sector’s contribution to climate finance flows in Africa has been low due to the real or perceived elevated risk of investment and the subsequent expected low returns. She noted some the key factors that increase the risk for private sector investment in Africa such as the sustainability of investment, weak policies, institutions and regulatory frameworks on land administration and technical capacity gaps challenging sustainability of projects.

In regard to de-risking the climate space in Africa, Smita noted that Challenge Funds as a de risking tool, provide an opportunity for early-stage finance for climate innovation laying the foundation for other funding instruments such as loans and equity at the scaling phase of the innovative ideas for SMEs i.e., blended finance. In addition, she highlighted that Challenge Funds that are set up with a matching fund element ensure that recipient organizations (participants) are expected to co-invest in their business to ensure risks are shared and incentives are aligned. She also mentioned that the Mastercard Foundation Fund for Resilience and Prosperity y has technical assistance as one of its interventions which is important to have as an accompaniment to other funding instruments. She explained that this aids in building the capacity of players in the space leading to development of feasible projects that can attract private investment.

During the Agri-Food Systems Summit at the Climate Action Innovation Zone, Smita Sanghrajka was also a panelist in a panel titled ‘Upscaling appropriate funding mechanisms for sustainable agri-food systems’. Her fellow panel participants included Lifeng Li, Director of Land and Water Division, FAO, Jiunn Shih, Chief Marketing, Innovation & Sustainability Officer, Zespri and Natalya Zhukova, Director, Head of Agribusiness, EBRD, it was moderated by -Peter Elwin, Director, Head of Food & Land Use Programme, Planet Tracker. The panel aimed to unpack how we can harness innovative investment mechanisms to ensure transformation of our agri-food systems while noting that private-sector investment is required to close the funding gap on agri-food systems and efficiently channel investment. In her contribution to the panel, Smita noted that climate finance flow to agri-food systems can be upscaled through de-risking the sector to increase the flow of private investment.

She highlighted the role of grant funding, which will be part of the financial support offered by the Fund, in providing an opportunity for early-stage financing for innovative projects within the agri-food systems space which allows entities to endure the long timelines and high costs associated with developing new projects. In turn, she noted that this lays the foundation for other funding instruments such as loans and equity at the scaling phase of the innovative ideas for SMEs and reduces the level of risk associated with investment in the agri-food systems space increasing local and international private finance flows. She also highlighted the importance of technical assistance as an accompanying offering to funding as a tool for de-risking agrifood systems and encouraging private sector investment.

Within the Climate Action Innovation Zone, the Fund’s Program Director Grace Mberia had an onsite filmed interview. In the interview, Grace noted that the Global Stocktake has emphasised the need for facilitation of climate resilient, sustainable agriculture. In the African context, she noted that sectors related to Agri-food systems employ approximately 70 percent of Africa’s labour force and contribute to almost 40 percent of GDP. Unstable agri-food systems do not only threaten livelihoods, but they also exacerbate food insecurity. The Mastercard Foundation Fund for Resilience and Prosperity , managed by KPMG Development Services, is focusing on supporting SMEs in the Agriculture, Climate Adaptation and Digital Economy sectors which are all linked to Agri-food systems either directly or indirectly. She noted that the Fund aims to address a broad spectrum of SME specific challenges using four interventions across 20 countries in Sub Saharan Africa. The Fund will offer direct financial support to SMEs through a challenge fund; technical assistance and capacity building; investor readiness support to SMEs as their projects mature and connecting them to potential financiers to ensure sustainability and growth; and finally, convening and influencing relevant stakeholders to drive systemic change.

Grace Mberia, the Fund Program Director alongside the Fund’s Communications and Knowledge SharingLead, Nashipae Leteipan and the Grants and Finance Senior Associate Winfred Kinuthia also attended other panel sessions within the Climate Action Innovation Zone as well as the Green Zone. The sessions covered a myriad of subjects around food and agriculture, sustainable finance as well the role of youth and women in the climate conservation. The team was able to network with various stakeholders after each of the sessions and share information on the objective of the Fund for Resilience and Prosperity and how this objective intertwined with the various objectives. At the Climate Action Innovation Zone, the Fund team also managed the Fund’s exhibition stand where they had an opportunity to share information on the Fund including the objectives as well as the focus sectors and countries with interested potential stakeholders. This also further provided an opportunity to interact with key players in the climate space from an agriculture, digital economy lens who will form prospective participants as well as connect and technical assistance partners.

In general, COP 28 provided an opportunity to amplify the objectives of the Fund for Resilience and Prosperity (FRP) within the climate change sector with a focus of climate smart agriculture solutions and climate related digital economy solutions with key industry players at the global level. It also enabled the Fund team to raise awareness to potential SMEs within the sectors on the upcoming competitions and add to the Fund database of prospective participants, connect partners and technical assistance service providers who will be reached out to at different phases of the implementation process.