Instrument Overview
In this case, international donors provide technical assistance (TA) via grant funding that enables sub-national governments to identify and prepare bankable projects. These grants can cover a wide range of activities, but only services, from capacity development of government staff to preparing strategies and plans for low-carbon and resilient development to directly funding project preparation facilities.
Why it matters for the cities
- Bridge capacity gap: Many cities—especially small or under-resourced ones—lack in-house expertise to develop bankable projects or navigate complex regulations.
- De-risk project preparation: These grants help with feasibility studies, business models, stakeholder engagement, and impact assessments—reducing early-stage risks and attracting further investment.
- Accelerate climate and infrastructure action: TA grants enable cities to move faster on energy transition, resilience planning, mobility systems, and sustainable urban development.
- Unlock funding opportunities: Well-prepared projects are more likely to receive initial financing from public and private sources, including loans, green bonds, or blended finance.
- Promote innovation and best practice: Grants often come with expert advisors or peer learning networks, helping cities apply cutting-edge solutions and replicate successful models.
- Support inclusive, community-driven planning: They can fund stakeholder engagement, gender analysis, and co-design processes, ensuring projects reflect local needs and priorities.
Key features
- Non-repayable funding: Grants that cover project preparation, not construction—no repayment required.
- Focus on early-stage support: Used for feasibility studies, business cases, regulatory analysis, and stakeholder engagement.
- Capacity building: Provides training, tools, and expert support to strengthen city institutions and staff capabilities.
- De-risking mechanism: Helps reduce uncertainty for future investors by improving project design and viability.
- Catalyst for investment: Makes projects "bankable," increasing access to loans, PPPs, or blended finance.
How it works
Technical assistance agencies use their initial financing to develop programs that attract direct co-financing (from donors, developing country governments or the private sector). Technical assistance also indirectly mobilizes finance, by supporting the creation of policy environments and markets that are conducive to climate-resilient and low-carbon investment, for instance, by building capacity and institutions and proving there is money to be made in new markets by demonstrating alternative approaches. Such technical assistance activities help address knowledge, policy / regulatory, risk and viability gaps that prevent low-carbon and climate-resilient investments.
The indirect mobilization effect of technical assistance is difficult to quantify due to the long-term nature of the effects and its interactions with other key drivers, but in-depth case studies can track the ways in which such assistance has contributed to increased finance and contribute to the development of refined methodologies.
The primary stakeholders in technical assistance grants are the grant providers (which could be governments, international organizations, or private foundations), project developers (which could be property developers or building owners), and consultants or other technical experts. City governments can act as both grant providers and project developers. As grant providers, they can fund technical assistance for projects within their jurisdiction. As project developers, they can apply for grants for their projects.
Benefits & challenges for the cities
Benefits
- Technical assistant grants can create deeper government capacity to take forward climate financing on a more independent basis.
- Technical assistant grants can help develop project pipelines, which is vital to attracting much needed private sector investment.
Challenges
- Limited availability of grant funding, especially for municipalities with big needs.
- Should be used for transition, but often is continued beyond the need, so the grants cannot be used elsewhere.
Use Cases
The Gap Fund
The City Climate Finance Gap Fund, or the Gap Fund, provides early-stage technical assistance to cities for low-carbon, climate-resilient urban development plans and projects. The Fund has €105 million in capital that could unlock a potential €4 billion in investment.
The Gap Fund provides support at the very early stages of city planning or project preparation and covers a wide range of sectors, including energy efficiency, green buildings, sustainable cooling, nature-based solutions, local renewable energy, sustainable mobility, the circular economy and water and wastewater management. The Gap Fund does not fund the implementation and construction of projects directly. Rather, it complements cities’ knowhow, technical expertise and capability to implement projects — in other words, the critical foundations required for projects to succeed.
For example, in Dakar, Senegal, the Gap Fund is providing technical assistance to include low-carbon and climate-resilient parameters in the planning, development and construction of affordable and green housing in the Greater Dakar region. The support includes piloting a green certification programme to incentivise developers. A first for Senegal, the programme is helping to establish a national policy on green, affordable development and is providing a blueprint for other cities in the country and beyond.
When to use it
At early stages to design, and prepare projects—especially when city capacity is limited or before seeking major investment.
References
[1] The Role of Technical Assistance in Mobilizing Climate Finance – Insights From GIZ Programs - CPI
[2] https://www.eib.org/attachments/lucalli/20230040-the-city-climate-finance-en.pdf
[3] Technical assistance grants | Net Zero Buildings
[4] https://citiesclimatefinance.org/financial-instruments/instruments/technical_assistance_grants
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