INTRODUCTION TO GGGI

The Global Green Growth Institute (GGGI) is a treaty-based international, inter-governmental organization dedicated to supporting and promoting strong, inclusive and sustainable economic growth in developing countries and emerging economies. To learn more please visit about GGGI web page.

BACKGROUND INFORMATION

The engagement of the GGGI in Ethiopia started in 2010 by supporting the Government of Ethiopia in developing its CRGE Strategy and advising on the implementation and integration of its concepts and objectives into the Country’s Development Plans. GGGI has supported the implementation of the CRGE Strategy through deployment of Senior Advisors funded by GGGI at key CRGE sector ministries (MoF, MoP, MoA, EDRI, MoWE). GGGI has significantly contributed to the establishment and operationalization of the CRGE Facility and the successful mobilization of climate finance from GCF and AF. GGGI closely works with Ethiopian Institutions in the development of the Updated NDC, LT-LEDS, National Adaptation Program (NAP), National MRV Framework, and development of sector specific Climate Resilient Strategy documentaries. Furthermore, it has led the technical team, which oversaw the CRGE Implementation progress review work for the period 2011-2019[1].

The ongoing GGGI Ethiopia Country Planning Framework (2023-2027) is well aligned to the GoE climate change strategies and has strong relevance to the FCDO’s priorities. Some of the key targets of the Government of Ethiopia (GoE’s) planning framework include:

• Assist the government to mobilize USD >150 million for climate change actions.
• Assist MOF’s accreditation upgrading to GCF from 50 to 250 million category.
• Create over 7,000 green jobs, benefit 80,000 people from improved climate adaptation.
• Restore and sustainably manage 20,000 ha of agricultural and 30,000 ha of forest landscapes.
• Mainstreaming gender equality and equity actions plans.
• Create modalities for Public-Private Partnerships (PPPs) awareness for green finance access.

PROJECT BACKGROUND

REDD+ Investment Program Phase Two (RIP-II) is a three-year program, building on good practices and lessons learned in phase I. The second phase will scale the successes of RIP-I and promote innovation and transformational practices to further accelerate action. The overall objective of RIP II is to contribute to NDC targets of emission reduction, increased forest cover, and to increased GDP. In order to achieve this overall objective, RIP II is designed to deliver the following four outcomes.

1. Outcome 1: Forest sector transformation strengthened, and private sector engagement enhanced
2. Outcome 2: Conservation of biodiversity and carbon rich natural forests scaled up
3. Outcome 3: Degraded forest landscapes restored and commercial and species diverse plantations established
4. Outcome 4: REDD+ MRV strengthened and Results Based Payment piloted

GGGGI is among the three Technical Advisory Partners that engage in the implementation of RIP-II. One of the tasks assigned to GGGI is to facilitate development of a forest sector financing strategy, which enables the sector to mobilize and attract sustainable financing for the management, conservation and development of existing forests and afforestation and reforestation activities among others.

Significance of Ethiopian forest sector

The forest sector in Ethiopia plays a crucial role in the nation’s economy, contributing approximately 4% to the national GDP. This sector provides employment for millions, especially in rural areas where job opportunities are scarce. Through activities like non-timber forest product collection, and ecotourism, the forestry sector generates substantial income, supporting both local communities and the national economy. This economic contribution highlights the importance of sustainable forest management to maintain and potentially increase this economic benefit.

Ecologically, forests are vital for maintaining biodiversity and supporting various ecosystems. Ethiopian forests are home to numerous species of flora and fauna, some of which are endemic to the region. These forests help in maintaining soil fertility, regulating water cycles, and preventing soil erosion, which is particularly critical for a country reliant on agriculture. By acting as natural water reservoirs, forests ensure the availability of clean water, essential for agriculture and domestic use. This ecological role underscores the importance of forest conservation for sustaining the country’s environmental health.

The forest sector is also a cornerstone of Ethiopia’s climate change mitigation efforts as outlined in the updated Nationally Determined Contributions (NDC). Forests play a crucial role in sequestering carbon dioxide, significantly reducing the country’s greenhouse gas emissions. Through ambitious reforestation and restoration initiatives, Ethiopia aims to transform its forests into substantial carbon sinks. The updated NDC targets reforesting 3 million hectares and restoring 5 million hectares of degraded land by 2030, which is expected to result in substantial carbon sequestration. Additionally, sustainable forest management practices, including reducing biomass fuel use and promoting alternative energy sources, further enhance the sector’s contribution to mitigating climate change by lowering emissions from deforestation and forest degradation.

In terms of climate change adaptation, the forest sector provides essential ecosystem services that bolster the resilience of both natural and human systems. Forests help regulate local climates, reduce the risk of natural disasters such as floods and landslides, and support water retention and soil conservation, which are critical for agriculture and water supply. Community-based Forest management initiatives enhance the adaptive capacity of local populations by providing alternative livelihoods and reducing reliance on climate-sensitive agricultural practices. By preserving biodiversity and maintaining ecosystem health, forests ensure that communities have the resources and ecological stability needed to adapt to changing climate conditions, making them a vital component of Ethiopia’s strategy to build resilience against climate impacts.

Specifically, forests are indispensable to Ethiopia’s coffee sector. Coffee, a major export product and livelihood source for millions of Ethiopians, thrives in shaded environments provided by forest cover. Forests help maintain the microclimates necessary for coffee cultivation, ensuring optimal growing conditions. The conservation of forests is therefore directly linked to the sustainability and productivity of Ethiopia’s coffee sector, impacting both local economies and national export revenues.

Furthermore, forests play a critical role in energy generation through their contribution to water resource management in hydro-electric dams. Forests regulate water cycles, ensuring consistent water flow into rivers and reservoirs feeding hydro-electric dams. This regulation is vital for maintaining the water levels needed for electricity generation. By reducing soil erosion and sedimentation in water bodies, forests also prolong the operational lifespan of hydro-electric infrastructure. Hence, forest conservation is key to sustaining Ethiopia’s hydro-electric power production, which is essential for the country’s energy security and economic development.

Despite the immense benefits of forests in Ethiopia, the sector faces significant finance-related challenges that impede its growth and sustainability. One of the primary financial challenges is the inadequate allocation of resources for forest conservation, management, and restoration activities. Limited funding hampers the implementation of essential sustainable forest management practices, reforestation projects, and community-based conservation programs. Without sufficient financial support, efforts to combat deforestation and forest degradation are severely constrained, leading to continued loss of forest cover and biodiversity.

Securing both domestic and international funding remains a critical hurdle for the forest sector. While there are opportunities for international climate finance, accessing these funds often involves complex application processes and stringent requirements that can be difficult for local agencies to navigate. Additionally, there is a lack of investment in forest-based enterprises and value-added products, which limits economic opportunities for forest-dependent communities. Enhancing financial investments and creating more accessible funding mechanisms are vital to overcoming these challenges and ensuring the sustainable management and utilization of Ethiopia’s forest resources.

The role of the private sector in Ethiopia’s forestry sector has been historically underdeveloped, constrained by structural challenges, inadequate market infrastructure, and regulatory barriers. However, recent policy developments aim to address these challenges and promote greater private sector engagement. The recently adopted forest sector directives emphasize the importance of private sector involvement in sustainable forest management. These directives outline specific measures to attract private investment, including providing incentives such as tax breaks, access to financing, and simplified regulatory procedures. They also highlight the potential for public-private partnerships (PPPs) to leverage private sector expertise and capital in forestry projects.

OBJECTIVES OF THE ASSIGNMENT

To address these challenges, GGGI as one of the RIP-II TA partners and in collaboration with the Ethiopian Forestry Development (EFD) and the CRGE Facility in MOF is commissioning the development of a comprehensive Forest Sector Financing Strategy which will serve as a roadmap for effectively mobilizing and utilizing financial resources, promoting sustainable forest management, and fostering economic development within Ethiopia’s forestry sector. The consultant’s role will be crucial in crafting a strategy that aligns with national priorities and international commitments while addressing the identified financial and institutional gaps.

The primary objective of this consultancy is to develop a Forest Sector Financing Strategy that outlines mechanisms and instruments to mobilize financial resources from various sources, including bilateral, multilateral, public, and private sectors. The strategy will support the implementation of forest-related activities under RIP II and contribute to achieving Ethiopia’s forest sector goals. The task has the following specific objectives.

• To identify financial gaps and needs within the forest sector and propose strategies to address these gaps through diverse funding sources, including domestic budgets, international climate finance, and private sector investments.
• To develop innovative and sustainable financing mechanisms tailored to the Ethiopian context, such as green bonds, carbon credits, and payment for ecosystem services (PES).
• To create a detailed implementation plan, including monitoring and evaluation frameworks, to ensure effective execution and accountability of the financing strategy.

SCOPE OF WORK

The consultant will undertake the following tasks:

1. Assessment of Current Financial Landscape:

• • Analyze the current financial mechanisms and sources available for the forest sector in Ethiopia.
  • Identify gaps and challenges in the existing financial framework.

2. Review of International Best Practices:

• • Examine successful forest sector financing strategies from other countries and regions.
  • Extract lessons learned and best practices that can be adapted to the Ethiopian context, including innovative financing mechanisms such as carbon finance, payments for ecosystem services, and green bonds.

3. Stakeholder Engagement:

• • Conduct consultations with key stakeholders, including government agencies, private sector, development partners, and civil society organizations, to gather insights and perspectives on financing needs and opportunities.

4. Development of Financing Strategy

• • Propose innovative financing mechanisms, such as green bonds, carbon finance, payment for ecosystem services (PES), and other market-based approaches.
  • Develop a comprehensive financing strategy that includes short-term and long-term financial planning, resource mobilization, and allocation.
  • Ensure the strategy addresses key principles of good financial strategy, including sustainability, transparency, inclusivity, and scalability.

5. Implementation Plan

• • Provide an implementation plan with clear milestones, timelines, and responsibilities.
  • Recommend capacity-building initiatives for relevant stakeholders to effectively implement the financing strategy.

The Consultant will be responsible for the following tasks:

1. Sector Overview and Context

• • Analyze the current state of the forestry sector in Ethiopia, including forest cover, biodiversity, key initiatives, and socio-economic significance.
  • Review existing policies, laws, and institutional frameworks related to forestry.

2. Financial Needs Assessment

• • Identify priority areas in the forestry sector, including reforestation, sustainable forest management, conservation, and commercial forestry.
  • Estimate the financial requirements for these priority areas, considering capital, operational, and maintenance costs.

3. Identification of Funding Sources

• • Explore potential domestic funding sources, including government budgets, private sector investments, and public-private partnerships.
  • Identify international funding opportunities from donors, development banks, climate funds (e.g., Green Climate Fund), and NGOs.
  • Assess innovative financing mechanisms such as carbon credits, green bonds, and payment for ecosystem services (PES).

4. Policy and Regulatory Analysis

• • Review the current legal and regulatory environment affecting forestry finance.
  • Provide recommendations for policy and regulatory improvements to facilitate sustainable investments.

5. Capacity Building and Institutional Strengthening

• • Assess the capacity of key institutions involved in forestry management and finance.
  • Propose capacity-building programs and training initiatives to enhance institutional and technical capabilities.

6. Stakeholder Engagement

• • Conduct stakeholder mapping to identify key actors, including government agencies, local communities, private sector, and NGOs.
  • Develop strategies for stakeholder engagement and community involvement in the financing strategy.

7. Final Strategy Document

• • Compile findings, analyses, and recommendations into a comprehensive Forest Sector Financing Strategy document.
  • Present the draft and final versions of the strategy to the Ministry and relevant stakeholders for feedback and validation.

DELIVERABLES

• Inception report outlining the approach and methodology for the assignment.
• Assessment report on the current financial landscape for the forest sector in Ethiopia, including a review of international best practices.
• Draft Forest Sector Financing Strategy.
• Final Forest Sector Financing Strategy, including an implementation plan and monitoring and evaluation framework.
• Presentation of the strategy to key stakeholders for validation and feedback.

DURATION OF THE ASSIGNMENT

The assignment shall be conducted for 60 days starting from the date of contract award until end of December 2024. Unless and otherwise agreed by the two parties, extension of contract is not expected. Extension might be allowed if the consultant presents compelling reasons to do so.

*Reporting

The contract will report the Climate Finance Lead in GGGI Ethiopia Office and directly work with the Climate Resilient Green Economy (CRGE) facility team members in the Ministry of Finance.

PAYMENT MILESTONES

The consultant shall be paid the lump sum contract amount upon certification of the completed tasks satisfactorily, as per the following payment schedule:

QUALIFICATIONS AND EXPERIENCE

• Advanced degree in economics, Agricultural Economics, Finance, Forestry, Environmental management, Development Studies, or a related field.
• At least 8 years (preferably 10) of experience and proven record in developing financing strategies, preferably in the forest or environmental sector.
• Proven experience in stakeholder engagement and conducting financial assessments.
• Strong knowledge of climate finance mechanisms, including REDD+, carbon markets, and public-private partnerships.
• Familiarity with international best practices in forest sector financing.
• Excellent analytical, communication, and report-writing skills.

ADDITIONAL INFORMATION

1) Logistical Support

The GGGI shall provide transportation and pay DSA for the consultant during authorized travels to the regional states for data gathering.

2) Confidentiality and Proprietary Interests

The consultant shall not either during the term or after termination of the assignment, disclose any proprietary or confidential information related to the consultancy or the Government without prior written consent. Proprietary interests on all materials and documents prepared by the consultants under the assignment shall become and remain properties of the MOF. This assignment will be administrated by GGGI, and all relevant GGGI rules, policies and procedures will apply.

3) Evaluation Criteria

Upon the advertisement of the Procurement Notice, qualified Individual consultant is expected to submit both the Technical and Financial Proposals. Accordingly, the consultant will be evaluated based on Cumulative Analysis as per the following conditions:

• Responsive/compliant/acceptable as per the Instruction to Bidders (ITB) of the Standard Bid Document (SBD), and
• Having received the highest score out of a pre-determined set of weighted technical and financial criteria specific to the solicitation. In this regard, the respective weight of the proposals are:

1. Technical Criteria weight is 70%
2. Financial Criteria weight is 30%