Localizing climate action in Egypt: A novel model for development finance

The global response to climate change is in many respects and for many reasons a collection of local climate responses. This is fitting as climate change vulnerabilities are intrinsically local. It is thus vital to implement the effective and just mobilisation of finance for localized climate action.

Egypt’s National Initiative for Smart Green Projects (NISGP) is a good example of such localization. Launched by the government in 2022, the initiative has been developed as a practical model for addressing obstacles of climate finance. It sources a pipeline of investable local climate projects across different sectors and impact systems, and provides a platform for developing financing arrangements to help get these projects off the ground.

With a specific focus on mobilizing private sector finance, the initiative started with a call to action across Egypt’s 27 governorates to submit projects across six categories: large-scale, medium-scale, small-scale, start-ups, non-profit initiatives and women-led projects. The projects must fulfil six primary criteria: green component (environmental sustainability), smart component, economic feasibility, replicability, sustainable impact and inclusion.

Across its three iterations, the initiative has received a total of 17,000 applications. The NISGP assessment process applies an equal representation system, which promotes the top three projects in each governorate across each of the six categories to a nationwide competition where a technical committee further assesses and filters these projects based on their fulfilment of the program’s six criteria. It gives priority to highly tailored localized solutions that directly address the unique climate-related challenges faced by different governorates, fostering impactful and context-specific interventions that leverage the comparative advantages of each governorate.

NISGP-funded projects exemplify successful models in mitigation and adaptation applicable to arid areas, coastal zones, agricultural lands, clean energy, water and beyond. For example, a project from the New Valley governorate devised a novel and nature-based substance that treats the water for one fifth the price per cubic meter of the previously employed method. Groundwater is the primary source of freshwater in this highly arid governorate, and without treatment the iron concentration exceeds safe levels for consumption.

Another project crafted an AI-powered pest control system in Dakahlia, an agriculture-centred governorate in the Nile Delta. Meanwhile, in Ismailia, a project uses geothermal energy to eliminate carbon emissions from gas combustion in poultry farms. These projects, and others, are replicable in other locations.

NISGP incorporates a multi-stakeholder hub that includes the UN system, multilateral development banks, the Egyptian government, private and public banks, and the private sector.

The hub supports the development of project pipelines into investable opportunities. Indeed, many of the projects have attracted investment and received the required technical assistance through successful partnerships with international stakeholders. The next iteration of the initiative will include a monitoring phase to promote the scalability of winning projects.

NISGP’s localization of climate action ensures that the communities driving these efforts directly feel the benefits of climate action. Therefore, the continued commitment from financiers to local climate projects must be encouraged to achieve equitable development, while also ensuring that the macroeconomic environment supports the success of such projects.

Moreover, generating investment opportunities through the projectization of countries’ Nationally Determined Contributions must consider local challenges and impacts, and need to follow robust development and financial models that are green, inclusive and digital in order to ensure the success and sustainability of projects. These are exactly the benchmarks that NISGP has adopted and promoted widely across Egypt in its quest to bridge the gap between macro-level climate policies and grassroots implementation.

NISGP represents a blueprint for successful localization of climate and development action that addresses urban-rural gaps, promotes knowledge sharing and dissemination, and provides capacity building and training to projects’ proponents.

It has earned international recognition from the World Economic Forum, which highlighted it as one of the best sustainable practices in the Middle East and North Africa given its high impact, scalability and contribution to global sustainability goals. It is vital that similar initiatives follow suit.