Accelerating Urban Climate Finance in Low- and Middle-Income Countries: An Important Strategic Dimension of MDB Reform

The report argues that while MDBs have increased overall climate finance, urban climate investments in L&MICs have plateaued and remain insufficient. It identifies critical gaps in strategy, operating models, and private capital mobilization, recommending a shift from project-by-project approaches to programmatic strategies and increased direct financing for cities to meet global climate goals.

• Between 2015 and 2022, urban projects received 21% of tracked climate-related MDB finance directed toward low- and middle-income countries, a share that has remained relatively stable despite increasing urbanization in regions like Sub-Saharan Africa and the Middle East and North Africa (MENA).
• MDB urban climate-related finance is more heavily weighted toward adaptation (32%) than the overall MDB climate-related finance portfolio, where adaptation accounts for 18%.
• The majority of MDB urban climate finance is channeled through national governments, with only 2% of tracked flows provided via non-sovereign operations and 4% through financial intermediaries.
• There is a severe lack of risk-mitigation instruments and local currency financing for urban projects; guarantees and grants make up less than 0.1% of MDB urban climate-related flows, and only 6% of such finance is reported in currencies other than US dollars or euros.
• Urban climate-related opportunities in L&MICs are projected to exceed USD 29.4 trillion by 2030, yet global cities received only USD 384 billion annually from 2017 to 2018, representing only 7-8% of the required annual global climate finance.

APA

Climate Policy Initiative (2023). Accelerating Urban Climate Finance in Low- and Middle-Income Countries: An Important Strategic Dimension of MDB Reform. https://www.climatepolicyinitiative.org/publication/accelerating-urban-climate-finance-in-low-and-middle-income-countries-an-important-strategic-dimension-of-mdb-reform/

Chicago

Climate Policy Initiative. Accelerating Urban Climate Finance in Low- and Middle-Income Countries: An Important Strategic Dimension of MDB Reform. 2023. https://www.climatepolicyinitiative.org/publication/accelerating-urban-climate-finance-in-low-and-middle-income-countries-an-important-strategic-dimension-of-mdb-reform/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Accelerating Urban Climate Finance in Low- and Middle-Income Countries: An Important Strategic Dimension of MDB Reform |date=23 November 2023 |url=https://www.climatepolicyinitiative.org/publication/accelerating-urban-climate-finance-in-low-and-middle-income-countries-an-important-strategic-dimension-of-mdb-reform/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2023accelerating, author = {{Climate Policy Initiative}}, title = {{Accelerating Urban Climate Finance in Low- and Middle-Income Countries: An Important Strategic Dimension of MDB Reform}}, institution = {Climate Policy Initiative}, year = {2023}, month = nov, url = {https://www.climatepolicyinitiative.org/publication/accelerating-urban-climate-finance-in-low-and-middle-income-countries-an-important-strategic-dimension-of-mdb-reform/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }