LDC Graduation: Opportunities and Challenges in Accessing Climate Finance

A S M Marjan Nur

7 December, 2019 12:00 AM printer

Bangladesh achieved robust economic growth over the last few years. It is expected that, Bangladesh will graduate from the Least Developed Country (LDC) status by fulfilling all the graduation criteria in 2021 and it will be recommended for an official graduation from the LDC status in 2024. If Bangladesh graduates, it will be the first country to meet all three graduation thresholds of the LDC criteria, namely gross national income (GNI) per capita, human assets index (HAI) and economic vulnerability index (EVI). Indeed, this graduation will bring a lot of opportunities for Bangladesh. Particularly, this will attract more foreign investors to invest in Bangladesh considering certain factors like, the size of its Gross Domestic Product (GDP), population and exports compared to other LDCs. In spite of being one of the fastest growing economy in the global south, Bangladesh still remains one of the most vulnerable countries in terms of climate change. The question is, will this graduation limit our scope of accessing climate finance?

UN General Assembly in 1971 characterised LDCs by their low levels of income and severe structural obstructions to achieve sustainable development. It is acknowledged that, countries accredited to LDC status will get special support measures among the developing countries. The first point is, if Bangladesh graduates from LDC status in 2021; the country will still remain the most climate vulnerable with devastating impact on food security and livelihoods. Countries accredited to LDC status have the privilege of duty-free access to developed country markets and recognised as the most vulnerable countries to climate change under the United Nations Framework Convention on Climate Change (UNFCCC). At the same time, LDCs are also entitled to receive Official Development Assistance (ODA) from developed countries bilaterally as grants. Public finance remains key to tackle the adverse impacts of climate change, as it is hard to attract private and other means of finance specially for non-revenue generating adaptation initiatives because of low profitability. After graduation, it will be challenging for Bangladesh to access grants from developed countries and the country will lose specific support measures (e.g. The Least Developed Countries Fund; so far, 5 projects have been approved estimated US 28.47m).

As the countries in the UNFCCC negotiate under different negotiating groups, Bangladesh negotiates as a member of the Least Developing Countries (LDC) group and was at one time the chair of the group. Currently there are 47 countries part of the LDC category. LDC countries have taken a long-term initiative on adaptation and resilience, renewable energy to support the transition towards a climate resilient future. Bangladesh delegation has played an important role within the LDC group and several individuals hold vital roles as LDC coordinators on important matters, like, loss and damages. This work has already achieved significant progress. After graduation, how Bangladesh will take these forward or what will be the position of our country will be a matter of discussion.

Most of the financing windows for climate action have special consideration towards LDCs. For example, Green Climate Fund (GCF) considers LDCs as one of the main priority regions and so far, the Fund has approved 34 funding proposals in LDCs estimating USD 2.8 billion. To date, more than 40% of all GCF adaptation funding goes to LDCs region. Furthermore, GCF has provided Readiness support to 36 LDCs in developing projects and tackling the challenges of changing climate. Graduating from LDCs will be challenging for Bangladesh as the country will lose these kinds of specific support measures which boost the capacity of a country to engage with GCF.

Climate Change is a reversing progress on poverty alleviation, economic growth and stability across the world. Bangladesh is gradually transforming itself from aid-dependent into a trade-dependent one. Graduation from the LDC status is a milestone for Bangladesh’s pursuit of development, but the most important thing we need to advocate is; we are still climate vulnerable. As Bangladesh will lose specific support measures, especially to tackle the adverse impacts of climate change, the following period of graduation might be challenging. Bangladesh has demonstrated significant achievement in disaster management, yet natural disasters remain an uncertain variable. The importance of development assistance cannot be undermined for poverty alleviation, social sector interventions and to tackle adverse climatic impacts. For ensuring a sustainable and resilient future, all relevant stakeholders shall have to do the required “Groundwork” and start preparing for the post 2024 in terms of accessing climate finance to tackle the adverse impacts of climate change. All the concerned stakeholders should think and act sensibly, improve their ideas, negotiation skills and execute plans in an effective and efficient approach in this transitional period, so that, this graduation can be turned into opportunities for the development progress.


The writer is a Researcher, Centre for Climate Change and Environmental Research (C3ER), BRAC University. Email: [email protected]