Read the detailed instrument sheet by clicking on the link below.
Overview
Grants are direct, non-repayable transfers used when commercial potential is low or to prepare projects/funds for investment readiness. They include:
- Development grants: Direct support where no commercial solution exists.
- Technical assistance (TA): Build institutional & stakeholder capacity (sometimes returnable).
- Project preparation facilities (PPFs): : Fund feasibility and design to attract concessional/private capital.
Risks addressed
Credit risk
Liquidity risk
Market risk
Applications
| Adaptation and resilience | Coastal protection, ecosystem restoration |
| Energy transition | Early-stage renewables, feasibility studies |
| Agriculture and food security | Climate-smart agriculture |
| Disaster risk management | Early warning, reconstruction |
| Fiscal/debt management | Budget tagging, risk assessments |
Types of instruments and providers
- Philanthropic and crowd funders: Gates, Ford, Rockefeller; Acumen, Root Capital; GlobalGiving, Kiva.
- Public / climate and environment funds / Bilaterals: World Bank, AfDB, ADB; GCF, GEF, Adaptation Fund, CIFs; USAID, KfW, AFD, EU, JICA
- TA Providers: UNDP, OECD-DAC, Convergence, CPI, I4CE.
Debt sustainability
- Direct: Reduces borrowing needs for climate priorities.
- Indirect: Improves creditworthiness, supports reforms, prevents fiscal crowding-out.
- Example: GCF readiness grants help MoFs integrate climate into fiscal planning.
Internal and regulatory capacity
| Minimum | Advanced | Pathway |
| Fiduciary controls, audits, donor compliance, legal authority to accept grants. | Strategic planning, portfolio management, transparency platforms (e.g., Ghana AMP). | 0–2 yrs build fiduciary capacity → 2–5 yrs expand donor coordination → 5+ yrs integrate into fiscal frameworks. |
Pathways to adoption based on financial market readiness
- Shallow: UN/INGOs, capacity-building grants, mobile payments.
- Emerging: MoF multi-donor portfolios, PPP pilots, regional coordination.
- Mature: Grants mainly for innovation pilots, policy experiments, and global knowledge sharing.
Pathways to adoption based on financial market readiness
- Overheads: 10–20% in strong systems; up to 35% in fragile states.
- Deployment: 6–18 months (social/TA) to 5–10 yrs (climate/environment).
Peer examples
- Ethiopia PSNP (USD 3.2bn safety net with graduation pathways)
- Rwanda Aid Coordination (40% more effective aid, 30% lower costs)
- Grants targeted at innovation pilots, knowledge leadership transferable to EMDEs.
