11 - 17 May

 

CONTENTS:
Montreal Protocol Excom 39 - milestone for Article 5 Parties
A path out of poverty "bottom up"
CDM Investor Guide Brazil
COMING SOON
OTHER INDUSTRY NEWSLETTERS
Feature Story: UNIDO Business Partnerships Programme
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Montreal Protocol ExCom 39
milestone for Article 5 Parties

Montreal, Canada, April 2003
The 39th Meeting of the Executive Committee (ExCom) of the Multilateral Fund for the Implementation of the Montreal Protocol in April, 2003, was a milestone in the implementation of the Protocol.

Developing countries (Article 5 Parties, in the parlance of the Protocol), 65 of which have been assisted by UNIDO, have now entered a more serious phase of commitment to the Montreal Protocol. They have moved from the "grace period" marked by no control measures, to a "compliance period", in which they have to achieve specific reductions in national ODS phase-out programmes. As of ExCom 39 it is not "business as usual" for the developing countries, or for UNIDO.

The Montreal Protocol came into force in 1989 to deal with the problem of ozone depletion. Since then, 184 countries have signed, 70% (129) of which are developing countries. The Montreal Protocol Multilateral Fund (MLF), financed by developed countries, was set up to assist the less-developed countries comply with their obligations under the Protocol. In October 2002 UNIDO completed ten years as one of four implementing agencies of the MLF. In that time UNIDO's plant-level intervention, mainly in six areas: refrigeration, plastic foams, halons, solvents, fumigants and aerosols, have proved both cost-effective in terms of reducing atmospheric ozone-depletion and beneficial in improving competitiveness, enhancing export potential, generating employment and transferring technology.

By the end of 2000, most Article 5 Parties to the Montreal Protocol met their commitments to freeze their Chloroflurocarbon (CFC) consumption at 1995-1997 averages. Article 5 Parties now have to focus their efforts on reducing the consumption and production of CFCs to 50 % of their 1995-1997 averages by 1 January 2005. In the case of Carbon Tetrachloride (CTC), the target reduction is 85%; for Methyl Bromide, 20%. The next reduction target date after 2005 – reduction of consumption and production of CFCs by 85%, is due on 1 January 2007 and by 2010 no more CFC, CTC and halons should be produced and consumed by the Article 5 countries.

In preparation for ExCom 39 and to accommodate the move of Article 5 Parties into the compliance period, UNIDO, along with the other Implementing Agencies, was requested to prepare a three year rolling business plan, covering the new replenishment triennium (2003 - 2005) of the Fund. The plan had to be based on firm government requests and in line with compliance priorities. ExCom 39 reviewed and approved the plans in principle and set the maximum funding levels for 2003.

To enable Article 5 Parties to meet their new obligations, the Executive Committee at its previous meetings decided to: map the compliance need of each country until 2010; prioritise the funding requests according to compliance needs, and offer increased flexibility to recipient countries in programming and implementing their phase-out programmes. Two major aspects of the latter decision are: the introduction of National and Sectoral Phase out Progammes (NPPs and SPPs) with multi-year performance based agreements; and a change in the traditional distribution of funds among the implementing agencies.

NPPs and SPPs mean a departure from stand-alone projects and give full flexibility to the countries to implement the phase out programmes in the way they deem most appropriate and effective. However, the recipient countries have to bear the full responsibility for meeting their performance targets (timely phase out of agreed tons of ozone depleting substances (ODS)). The implementing agencies will assist in: the formulation of the programmes; providing technical, policy and institutional strengthening and training support. They will also monitor, verify and evaluate progress and achievements of the NPPs and SPPs.

The flexibility introduced by the NPPs and SPPs meant that ExCom 39 had to institute changes in funding arrangements. The traditional distribution of funding among the implementing agencies of 25% for UNIDO, 30% for UNDP, and 45% for the World Bank no longer applies. This fixed share arrangement meant, in the past, that Article 5 Countries might not have always been able to work with their Agency of preference due to the limitation on funds allocated to the preferred agency.

UNIDO's Montreal Protocol specialists are excited by the "free market" changes in funding distribution and the prospect it holds for increasing UNIDO’s contribution to the phase out of ODSs. Field surveys are underway for the formulation of NPPs and SPPs for submission to following ExCom meetings. UNIDO project managers, working closely with Ozone office staff and national consultants are looking at critical points in the implementation process and working on reducing the likelihood of bottlenecks in site preparation, customs clearance installation, commissioning and safety certification, and monitoring of the destruction of CFC-related equipment.

The Purchase and Contracts section at Vienna HQ also has a very important role to play. They have been working hard to streamline procedures to speed up delivery and installation of equipment and internal flow of Montreal Protocol-related documentation.

Sooner or later, of course, working with Article 5 Parties under compliance conditions will be "business as usual" for UNIDO and the Parties. Quite likely, by then it will also be much more business than usual.
Seniz Yalcindag, Tel: +43 1 26026/3347, E-mail: S.Yalcindag@unido.org

A path out of poverty "bottom up"

view or download a path out of poverty

People living in the rural peripheries, and especially women, shoulder the burden of the world’s poverty, particularly in the Least Developed Countries and sub-Saharan Africa. For long they have been deprived from participating in the opportunities and benefits of economic growth and globalization. Reducing urban-rural disparities and gender inequalities is a crucial element for any poverty reduction strategy. Mobilizing the potential productivity of rural people and particularly of women is indispensable to achieve the resilient economic growth that will pull people above the poverty line.

A staggering 75 per cent of the world’s poor live in rural areas. And yet, resources and policies continue to be biased in favour of urban development. An imbalance in development is the consequence, with detrimental effects on both rural and urban people. With rural areas not able to provide enough opportunities for people to sustain their lives, the burden of supporting the poor and rural population falls increasingly upon cities. The growing number of rural poor seeking work in overcrowded cities stretch social and physical infrastructure and economic opportunities in the urban areas beyond their capacity. On the other hand, the migration of rural men to urban areas leaves unbalanced family structures behind, with women, children and elderly expecting remittances.

Most of the rural population depends, directly and indirectly, on small-scale food crop agriculture, fishery, pastoral animal husbandry or rural wage labour associated with plantations and ranches, and ancillary activities linked to the economies of the rural life and rural townships. Many rural families need to diversify their sources of income and employment in view of increasingly smaller parcels of land, low agricultural productivity, volatile weather conditions and soil erosion.

The rural non-farm economy plays an important role for wealth creation and well-being across countries. For example, small rural households with fewer than 0.5 hectares earn over half of their total income from non-farm sources. The composition is generally one-third manufacturing, one-third commerce and services with mining and construction accounting for the rest.

Women and girls constitute three-fifths of the world’s poor. Their poverty level is worse than that of men as clear gender disparities in education, employment opportunities and decisionmaking power exist.

A large number of women are mainly engaged in subsistence agriculture as well as in micro and small-scale enterprises (MSE). In most of the developing countries, particularly in Africa, women constitute 70-80 per cent of the total agricultural labour force and they account for over 80 per cent of food production. It is not surprising therefore to find many women engaged in food processing, weaving, personal services, beverage preparation, and selling of snack foods. In the MSE sector worldwide, women make up one-quarter to one-third of the total business population and in manufacturing they constitute one-third of the global labour force.

In addition to their economic and income-generating activities, women assume multi-faceted roles in society, i.e. as breadwinner of a family, unpaid family workers, service providers in the communities and mother/care-taker of the family.

In spite of their important contributions to socio-economic development, women suffer from various constraints, which inhibit them from fully realizing their potential for development. Cultural values and social norms hinder the equal participation of women in society. One of the major constraints women face as entrepreneurs is the unequal access to productive resources and services, including finance and skill upgrading opportunities. Some legal provisions and legislative systems make it difficult for women to take initiatives for business development. Furthermore, their reproductive role in the family and the community puts women in a disadvantaged position to engage in entrepreneurial activities.

It is very clear that resolving these issues is central to finding any path out of poverty. It is also very clear that it is necessary to take a multi- dimensional perspective on poverty reduction. One fundamental perspective advocated by UNIDO’s Rural and Women Entrepreneurship (RWE) Development Programme is “bottom-up growth strategies” to encourage the broad-based rise of entrepreneurial initiatives.

In a recently published booklet on its RWE Development Programme, UNIDO says bottom-up growth strategies are fundamental to finding any path out of poverty because the benefits of economic growth generated by a handful of modern industries do not necessarily trickle down to those business sectors where the largest proportion of the population is engaged, and not at an acceptable pace. Most Least Developed Countries (LDCs) and sub-Saharan African countries are characterized by a polarized industrial system of a handful of large enterprises — owned by either the state, foreign investors or a few rich local entrepreneurs — and a large number of micro enterprises, mostly in the informal sector. Only a few of these businesses have the capacities to respond to the emerging opportunities from the export sector and the changing international economic regime.

The bottom up approach taken by the UNIDO RWE Development Programme is clear to see in its programme principles. These, and the methodologies and tools used to apply them are all described in the booklet. Practical examples of how it looks on the ground are given in nine case studies, from Mozambique; Uganda; Central America; Pacific Islands; Rwanda; Uganda; Viet Nam; Morocco; and Kenya. One of the success stories accompanying the case studies is about Adolf H. and his carpentry workshop.......
 

Adolf H. is a young and dynamic businessman in his twenties. He owns a carpentry workshop in Mubende, 200 kilometres west of Kampala. His equipment mostly consists of hand tools and one bench. Adolf used to complain about not having enough customers, and consequently low sales. When he attended a Master Craftsman Programme (MCP) workshop on carpentry he realized that his problem was not the lack of customers but the quality of his work. He approached Mzee, one of the MCP advisors in the district. Mzee reviewed the work of Adolf and, during two weeks at Adolf's own workshop, gave him hands-on advice to improve the product design, material selection, surface preparation, joints etc. Before the training, Adolf used to sell his Johnny set at 120,000 to 150,000 shillings. The set they worked on during the training was sold for 450,000 shillings. Adolf paid for the training fee of 35,000 shillings at the USSIA office. All his other products are now fetching about 20-30 per cent more than before. He has managed to attract orders from a coffee factory that used to buy furniture from Kampala. His average sales have multiplied five-fold. He has now asked Mzee to give him more training. Picture shows Ms. Mzee at Adolf's workshop.

A path out of poverty - developing rural and women entrepreneurshipis available here for viewing or downloading.
Sei Hisakawa, Tel: +43 1 26026/3179,  E-mail: S.Hisakawa@unido.org

CDM Investor Guide BRAZIL

view or download CDM Investor Guide BRAZIL

Brazil was the first country to sign the United Nations Framework Convention on Climate Change (UNFCCC), on 4 June 1992, and the Brazilian National Congress ratified it on 28 February 1994. The Convention entered into force for Brazil on 29 May 1994, 90 days after its ratification by the National Congress.

Brazil also played a seminal role in the development of the Clean Development Mechanism (CDM). In party discussions before the Third Conference of the Parties (COP3), held in Kyoto, Japan, in 1997, the Brazilian government proposed that, if a developed country exceeded its greenhouse gas (GHG) emissions requirements, an economic penalty would be assessed, and this would be collected in a Clean Development Fund. Monies from this fund would be directed to developing countries, which, then, would use these funds for mitigation projects designed to prevent or mitigate global climate change. During the COP3 discussions the proposal evolved into the CDM, a fully- fledged flexibility mechanism of the Kyoto Protocol.

UNIDO's recently published CDM Investment Guide for Brazil, aims at providing CDM project proponents and CDM investors interested in CDM opportunities in the country, with reliable, updated sources of information regarding CDM opportunities in the energy and industrial sectors of Brazil. Although it is apparent that CDM could operate in other sectors of the Brazilian economy as well, including the potential applicability of CDM sinks in the forestry sector, or the potential for CDM projects in the transportation sector as well, the focus of this report is the energy and the industrial sectors.

The report was produced from February 2002 through February 2003, is structured in six sections and eight annexes, and provides: (1) An overview of the institutional infrastructure for climate change/Kyoto Protocol activities and the current views and position of Brazil respect to climate change issues; (2) An analysis of the energy sector in Brazil, discussing the potential, and priorities, for CDM projects in both the supply and demand sides; (3) An analysis of the industrial sector in Brazil, discussing the potential, and priorities, for CDM projects in this sector with respect to process change, fuel substitution and energy efficiency gains; (4) A review of the current state of CDM project development in Brazil, types of projects, location, status of development, etc; (5) Some final conclusions; and (6) A list of institutions/organizations that are involved with climate change and CDM activities in Brazil, and that could be a useful source of information and contacts for CDM project proponents and investors in Brazil.

The Executive Summary of the report lists five main findings.

(1) Global climate change and greenhouse gas emissions are perceived as being very important issues for Brazil, and the country is, indeed, conducting a variety of efforts in the area of climate change and CDM (including the development of criteria and indicators for appraising CDM projects in the country). Brazil already has an institutional infrastructure for climate change that is well-prepared to deal with CDM projects, including the Interministerial Commission on Global Climate Change, created for the purpose of coordinating the actions of the government in this area, with the authority to verify whether CDM project activities conform with the sustainable development objectives of the country and, if so, emit a formal approval of the CDM project activities in Brazil;

(2) A large potential for CDM projects does exist in the energy sector in the country in the areas of fuel substitution and energy efficiency, as the 80s and 90s were years marked by a growing share of fossil fuels use in Brazil’s energy sector. CDM project activities in the energy sector of Brazil are a way of helping reverse this trend, since renewable energy sources (in the form of sugarcane products, wood, urban solid and agricultural wastes, hydroelectricity, solar and wind resources), and potential efficiency gains in energy production/generation and transportation/transmission/distribution, are widely available in the country as substitutes for fossil fuels, and as such can potentially reduce carbon emissions by avoiding, or postponing, the consumption of non-renewable, carbon-intensive, fuels;

(3) A large potential for CDM projects does exist in the industrial sector in the country in the areas of process change, energy efficiency and fuel substitution, as basic materials industrial sub-sectors (aluminum, cement, chemicals, ferroalloys, iron and steel, pulp and paper, etc) are responsible for an important share of total energy use, and total carbon emissions, by industry in Brazil. CDM project activities opportunities are widely available in these industrial sub-sectors not only because these sub-sectors have, on average, a relatively high specific energy consumption (energy use per tonne of product produced) ( and as such, in most cases, high specific carbon emissions) compared to the specific energy consumption (specific carbon emissions) associated with the deployment of the best production technologies available worldwide, but also because process heat and direct heat based on the use of carbon intensive, fossil fuels are an important share of end-uses in industry in the country, and these demands can be very easily met, in most cases, by the use renewable energy sources that are widely available in Brazil, or through the use of combined-heat and power production in specific industrial sub-sectors (particularly in chemical plants, iron and steel plants, oil refineries, pulp and paper industries, and sugar mills);

(4) Various CDM project development activities and types are currently underway in the country at different stages (under consideration, in preparation, or ready to be submitted as a CDM project), which may be eligible for validation provided they are registered by December 31, 2005. This confirms the perception that Brazil is seen by the international business community as one as one of the most promising countries to host future CDM projects. These project activities are highly concentrated in three main mechanisms for carbon abatement: use of renewable energy sources, cogeneration or energy efficiency measures to displace energy obtained from carbon-intensive, fossil fuels; and

(5) Because expertise is held by a relatively small group of governmental and university officials, there is an urgent need for CDM capacity building in Brazil.

In summary, Brazil is fully aware of the many technical and political issues that surround CDM formulation and implementation. And a high potential for CDM does exist in various sectors of the Brazilian economy, in particular in the energy and industrial sectors as outlined here. As a matter of fact, the Brazilian scientific and technical expertise to deal with the climate change and the Kyoto Protocol issues is probably unique among developing countries. However, such expertise is held by a relatively small group of governmental and university officials, with high level decision-makers, both at the governmental and private sectors, normally showing little familiarity with the various and complexes issues involved in the global climate change discussions in general, and in the CDM processes in particular. As a consequence, and effort should be made, both domestically and internationally, for further capacity development for CDM in Brazil.
Marina Ploutakhina, Tel: +43 1 26026 / 5051, E-mail: M.Ploutakhina@unido.org
 

COMING SOON

Second International Forum on Trade Facilitation: Shaping the gains of Globalization in the New Security Environment. UN Office at Geneva, Switzerland, Hall XX, 14 - 15 May, 2003. Assistant Director- General and Director of UNIDO's Geneva Office, Alberto Di Liscia will speak at the forum on Practical Measures for Future Trade Facilitation .PRELIMINARY PROGRAMME AVAILABLE HERE

Africa Business Forum 2003: Building Partnerships & Foundations for African BusinessDurban, South Africa 24 - 25 July 2003. A partnership between Financial Times Business and Deloitte & Touché, the Forum will focus on the promotion of intra-Africa trade and investment. The idea for the forum came from delegates to the Second Africa-Asia Business Forum held in Durban, South Africa in July, 2001, who saw an untapped potential for intra-Africa trade and investment. The Second Africa-Asia Business Forum realised approximately US million of signed business, and organizers of July's Africa Business Forum are confident of repeating that success. The Forum will be a concrete step in supporting the economic and business mandates of the African Union, which seeks to create a political and economic union of African States. The event has been endorsed by the NEPAD and the Department of Trade and Industry (DTI) of South Africa.
more coming events

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