The worst Peruvian floods in recent memory earlier this year have sharpened the climate and development challenges facing Peru and its neighbours, according to Antonio Garcia, a leading member of the Development Bank of Latin America (CAF) and focal point to GCF.
“One of the biggest challenges in Latin America is keeping a long-term focus on investment that considers climate change, when there are other more short-term priorities to tackle - such as basic infrastructure, education and poverty alleviation,” said Mr Garcia.
“But these terrible floods have shown we cannot ignore the effects of climate change until later,” said Mr Garcia, a Spaniard who worked in his country’s Institute for Foreign Trade before joining CAF as a climate finance specialist.
“It is important to make the right investment decisions now. Only by doing so can countries in the Latin American region move towards sustainable development and fulfil their Nationally Determined Contributions under the Paris Agreement,” he added, referring to the national climate action plans submitted by signatories to the United Nations Framework Convention on Climate Change (UNFCCC).
CAF has been a GCF instigator of change in Latin America since its accreditation as one of the Fund’s Direct Access Entities in July 2015. Direct Access Entities are homegrown organisations in developing countries that drive GCF climate finance by proposing and implementing climate initiatives.
The decision by CAF, or Banco de Desarrollo de América Latina as the bank is known in Spanish, to seek GCF accreditation followed a growing realization since its establishment in the late 1960s that its mandate to support Latin American development also needs to consider the climate challenge.
He pointed to great opportunities for introducing climate innovations in forestry management and in Latin American cities, seen to be at the forefront of moves to introduce low-carbon innovation. CAF has been supporting cities measure their water and carbon footprints and carry out vulnerability studies. This helps them adopt astute public policies and investment decisions.
Climate finance opportunities in both mitigation and adaptation arising from such technical and financial support include moving to electric cars and clean urban transport, waste management, restoring public spaces, enhancing urban forests, and seeking ways to expand energy efficiency and renewable energy.
“The private sector is indispensable in dealing with climate change,” said Mr Garcia.
CAF has extensive experience tapping the private and public sectors in generating sustainable development through a variety of financial products and services, including loans, equity and guarantees. It provides loans to development projects at longer tenors and lower interest rates than charged by commercial banks. While CAF is a public institution, it works with commercial banks and is able to issue bonds and borrow money from capital markets.
Mr Garcia pointed to CAF’s local proximity to its member countries and global linkage with the International Development Finance Club (IDFC), as well as its financial independence, as major strengths. CAF is supporting sustainable economies across 17 countries.
“CAF has shown how developing countries can lead in finance, including climate finance, on their own,” said Mr Garcia.