How the International Climate Initiative (IKI) strengthens the local embedding of projects

The IKI is part of the Federal Republic of Germany's international climate and biodiversity finance commitments. It is therefore obliged to ensure that its funds are implemented in developing and emerging countries.

A close involvement of stakeholders in the partner countries of IKI projects and a strong focus on the local context have always been a quality feature of IKI projects. The core assumption is that the stronger the local embedding, the more effective and sustainable the IKI project. Climate and biodiversity measures are particularly effective if they are adapted to local conditions, are based on local knowledge, involve local expertise, and offer opportunities for local participation. 

The significant involvement of local actors in the co-design, management and implementation of projects is extremely valuable. IKI projects are thus embedded more deeply and sustainably in the institutional, political, cultural, socio-economic and ecological context of the partner countries. Local actors provide an important insight into local perspectives. This makes the projects more effective and they reach a broader target group.

Through a stronger sense of ownership of the project measures, local actors in particular can make a major contribution to ensuring that projects continue to have a positive impact after they are completed. Working on a project can be an opportunity for all organisations involved to gain knowledge and expertise. It facilitates a lively exchange of knowledge and learning. This, in turn, contributes to the institutional consolidation and further development of administrative and technical skills of organisations and can greatly increase the adaptability of international organisations and theirwork to local contexts. 

One criterion for promoting these effects in IKI projects is the local action requirement. This stipulates that at least half of the IKI funds of the respective projects must be implemented by organizations that are anchored in the partner countries/regions, generate added value there and offer jobs and training for local experts.

With the launch of the IKI Thematic Call 2024, the concept was renamed from Local Content to Local Action in order to differentiate it, inter alia, from existing international definitions, such as the WTO definition of ‘local content’, and to emphasize the implementation-oriented nature of the concept (see The Strategy of the International Climate Initiative up to 2030).

Strengthening the involvement of actors in partner countries

IKI projects should implement at least 50 percent of the IKI funding (based on the applicant's requested IKI grant) in the partner countries/regions through local members of the consortium, contractors/subcontractors, and/or funding recipients. In order to monitor this more closely, the IKI has developed local action targets and continually reviews them as part of the selection process as well as during project implementation (e.g. through the annual reporting of the projects). With this highly ambitious target, the IKI is deliberately taking a pioneering role in the international donor community.

An overview of the local content regulation 

At least 50 percent of the IKI funding (based on the applicant's requested IKI grant) are implemented by organisations in the partner countries of the IKI projects: 

Project funds are counted as local action if they are received and implemented by “local” organisations as part of the consortium or as subcontractors. Organisations are considered local if they have their own legal personality under the applicable national law in the partner country or, in the case of regional organisations, focus their activities on the respective project region. 

The following applies to local civil society, semi-governmental, and private sector organisations in the consortium or as subcontractors:

1. Local organisations must have their own legal personality according to the respective national law in force in the partner country.
2. Partner ministries and authorities are generally excluded from funding. IKI funding may not be used to finance government activities.

The following applies to national and regional offices of international civil society, semi-governmental, and private sector organisations: 

1. Offices must be registered in a partner country of the respective IKI project and pay taxes there; and
2. The national or regional office can make independent decisions and is largely independent of instructions from the “umbrella organisation” in the operational design and implementation of project funds.

International organisations that do not meet these criteria cannot count their project budget share as local action – even if national personnel are employed in the project. National offices of international multilateral organisations (e.g. UN agencies, the GIZ, or the KfW), embassies of other countries, or the national offices of other bilateral donor countries therefore do not count as local action. 

The following applies to regional organisations such as regional development banks, regional associations of states / economic communities: 

1. The organisation is based in a country of the region in which the IKI project is implemented and focuses activities on the partner countries. 
2. At least one of the partner countries is part of this region.
3. National partner institutions are involved in the implementation at the country level. 
4. For banks and networks: partner countries are members of the regional bank or network.

In justified exceptions, IKI projects may deviate from the target of 50 percent: 

1. In the spirit of promoting South-South exchange, there may be an exception to the 50 percent rule if a substantial part of the project budget is implemented by organisations from the Global South that are not registered in the partner country or region. 
2. Projects may deviate from the 50 percent rule if they can plausibly justify that meeting the local action requirement is not possible because of specific country or subject contexts and/or represents a high obstacle to the effectiveness and implementation of the project or there are other reasons inherent in the specific project constellation.

It shall be decided on a case-by-case basis whether exceptions are permissible. Even in the case of exceptions, the local action should be as high as possible.