Accelerating Inclusive Gender Responsive Climate Finance for NDCs – Lessons from Antigua and Barbuda

09 May 2024

Women and girls account for half of the world’s population and are among the most vulnerable to the impacts of climate change. This is how Nationally Determined Contributions (NDCs) are changing that.

It is imperative that we tackle the inequalities and barriers that women face if we are serious about managing this global threat. This is particularly important in small island developing states where the consequences of global warming are profound, and women and girls are disproportionately affected.

The links between gender equality and achieving climate targets are well documented: climate change amplifies existing inequalities such as poverty and access to resources and brings unique threats to the health and wellbeing of women and girls. Understanding this can strengthen efforts by each country to reduce emissions and adapt.

The impact of NDCs on gender equality

By integrating gender considerations into Nationally Determined Contributions (NDCs), countries can better access and mobilise climate finance to meet the needs of their whole populations through public and private financing mechanisms.  

Antigua and Barbuda submitted the second iteration of their NDCs to the United Nations Convention on Climate Change (UNFCCC) on 2 September 2021, with targets for mitigation and adaptation, as well as targets for gender, youth and other vulnerable communities. 

The gender-responsive green business development programme will focus on:

  • Small and medium enterprises (SMEs) to access green technologies and climate-related investment;
  • Green entrepreneurs via the Entrepreneurial Development Programme Fund; and
  • Businesses transitioning to low carbon development.

The Commonwealth Secretariat, working in collaboration with the NDC Partnership has supported the government of Antigua and Barbuda in determining the feasibility of a gender responsive blended finance window under the Sustainable Island Resource Framework (SIRF) Fund, which serves as the main funding instrument for Antigua and Barbuda’s mitigation and adaptation projects. The SIRF Fund has mandatory targets to ensure the equitable distribution of financial resources to address the vulnerability of SMEs on the island and remove the barriers which hinder gender equitable access to finance.

The barriers for both SMEs and financial institutions

In preparing recommendations for the finance window, the Secretariat and the NDC Partnership looked at the barriers for that both SMEs and financial institutions.

Financial institutions identified the barriers as:

  • A lack of specific sectoral knowledge and technical climate solutions knowledge;
  • assessment of credit risk based on credit history and accumulated wealth/collateral of SMEs;
  • The perceived high risk and limited growth and earning potential of SMEs, leading to high interest rates (currently between 8 and 12%);
  • Unknown external risks, leading to the exclusion of those SMEs at perceived highest risk from economic or environmental/climate shocks, especially by commercial banks who respond to shareholder preferences;
  • Gender-agnostic lending policies, which do not account for differences in business set up, financial product appetite and operations; and
  • Lack of defined institutional pro-climate resilience lending policies or plans that address physical and transactional risk and could support SME climate adaptation and mitigation lending and insurance products.

Constraints identified by SMEs included:

  • Their limited capacity to produce bankable business plans supported by economically viable financial projections;
  • The complexity of loan application processes and SMEs’ inability to satisfy financial institutions’ eligibility criteria;
  • Unaffordable interest rates on loans or insurance products;
  • Risk-averse behaviour due to the uncertain and volatile external environment, which could negatively impact their business operations and potential profitability;
  • The informal nature of many SMEs, with unreliable, uncertain or seasonal revenue streams that make rigid repayment plans more challenging;
  • Their inability to access finance providers either via a branch or through online services due to lack of confidence, trust or skills; and
  • A focus on short-term credit lines, which may not be well-suited to longer-term investments in innovation or new technologies.

If successful, the blended finance window will help Antigua and Barbuda to meet their NDC gender responsive targets and can also serve as a blueprint for other countries.

Ahead of the curve

Once implemented, Antigua and Barbuda’s blended finance window will be the first of its kind to offer a micro equity option which allows beneficiaries to make repayment in kind for finance.

The key lessons for the future development of NCFs:

  1. Recognising that gender equality and inclusivity is a critical driver of climate action, the incorporation of gender considerations in the development of NCFs from the onset can make these funds more successful.
  2. The country-driven nature of NCFs underscores the importance of establishing national inclusivity principles. Stakeholder engagement, sector-specific focus on inclusion, and utilising gender-based metrics for monitoring progress are important elements for success.
  3. Setting realistic targets and indicators backed by robust data collection is crucial for the effective implementation of gender-responsive climate finance projects. Tailored approaches and strategic partnerships are also essential for achieving the desired outcomes.

If successful, the blended finance window will help Antigua and Barbuda to meet their NDC gender responsive targets and can also serve as a blueprint for other countries.