How City Climate Finance Gap Fund in partnership with ICLEI ​– Local Governments for Sustainability ​empower resilient cities 

Partnership​s​​ ​driving change

Cities are at the forefront of climate change but often lack capacities and knowledge critical for developing investment-ready climate projects. The Gap Fund Step-Up Project (SUP), in partnership with ICLEI​, ​contributes to bridging this gap.

While the rate of urbanization increases – exceeding 50% of the total world population (United Nations Population Division, 2025), – so are climate change risks and impacts. According to the Independent High-Level Expert Group on Climate Finance (IHLEG), by 2030 alone​ USD​ 2.4 trillion ​ ​are needed in emerging and developing economics to respond to this challenge (I4CE​,​ 2025). Meanwhile, identifying financing mechanisms and pathways to implement urban sustainable infrastructure remains a major challenge for cities.

To overcome this hurdle, the European Investment Bank (EIB), the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and ICLEI – Local Governments for Sustainability joined forces under the City Climate Finance Gap Fund “Step-Up Project” (Gap Fund SUP). Through interactive learning sessions and city “pairing-and-sharing,” the SUP supported cities in strengthening their capacities for informed decision taking on climate-smart infrastructure, and a better understanding of relevant financing mechanisms. It further encouraged a vibrant community of practice with peers who are similarly advancing knowledge and capacity to prepare investment-ready projects.

In a collaborative effort, EIB, GIZ, and ICLEI selected cities ​i​n Sub-Saharan Africa, North Africa and South America from the Gap Fund portfolio based on criteria such as strong city commitment, potential for regional collaboration, common language, and a sectoral and geographically even distribution. This careful selection enabled practical exchanges and collaborative problem-solving during City Pair meetings and regional activities, addressing common challenges and needs effectively.

Mutual exchange and peer-to-peer learning: The backbone of Gap Fund SUP’s activities

Participants from​ the cities of​ Palmas​, Brazil,​ and Cuenca​, Ecuador,​ break​ ​the ice during “Project Bingo​,​”​ ​sparking conversations about their​ sustainable infrastructure​ projects during the SUP International Event in Cairo​, Egypt​.

Building on the technical assistance in project preparation provided by the Gap Fund Technical Secretariat to the individual cities, the Gap Fund SUP ​utilized​​ ​an innovative approach to enhance the ​cities’ ​capacities​ ​to advance selected sustainable infrastructure projects towards investment readiness. Gap Fund SUP tailored support ​​for​​ each city’s unique challenges, while offering room to learn how to deal with common themes such as engaging private investors, Public-Private Partnerships (PPPs), and unlocking local climate finance.

The backbone of the initiative was a set of peer-to-peer learning activities:

• During City Pair Activities, cities with similar projects and challenges met ​​virtually​​​ ​to collaborate on solutions and share best-practices.

The Brazilian City Pair group, consisting of Palmas, Rio de Janeiro, and Campinas, focused on developing alternative financing models for urban nature-based solutions projects. They explored various revenue generation methods, PPPs​​​ ​with cross-subsidization, mini-concessions, and stakeholder engagement for implementing and maintaining linear parks and macro-drainage projects. During their discussions, PPPs with cross-subsidies were identified as the most suitable financing model, emphasizing the importance of blending different financing sources.​​​​​​

• Regional Communities of Practice (RCoMPs) ​​connected and featured experts to exchange knowledge and collaborate on the development of sustainable infrastructure projects during virtual sessions.

The RCoMP in Africa brought together cities and​ ​​Small and Medium ​Enterprises (​​SMEs​)​ to discuss innovative ​​circular economy​​​ ​ solutions. ​The cities of ​Cape Town​, South Af​rica,​​ and Kisumu​, Kenya,​ were particularly interested in exploring further the biogas project experience, presented by Elikplim Asileyi, the General Manager of the Ghanaian energy company Safisana. This fruitful exchange highlighted the critical role of local governments and private sector partnerships in advancing such initiatives.

• In-person regional and international events​ ​ brought together cities, SMEs, and finance experts to share experiences, explore innovative solutions, and strengthen networks.

In South America, cities joined events of partnering project preparation facilities like the C40 Cities Finance Facility (CFF) and ICLEI’s Transformative Actions Programme (TAP) to learn how to align local climate projects with national agendas and secure funding, turning ideas into actionable plans.

Spotlight on events – where ideas meet action

Artur Sampaio from Rio de Janeiro​, Brazil,​ exchanging on ideas with other participants during a workshop on financial planning in cooperation with UN Habitat and Ain Shams University, Cairo​.​

For Gap Fund SUP cities, participating in ​international ​events like the 2024 World Urban Forum in Cairo, Egypt​,​ ​​​​has been a chance to connect with peers, experts, and finance partners, and bring their climate projects one step closer to reality.

Such events create spaces to share experiences, explore new financing tools, and understand how to better engage the private sector and local communities in building more resilient cities.

During the Gap Fund SUP International event, Gap Fund SUP participants had the chance to connect with senior city officials, decision-makers, researchers and global leaders in sustainable development, learning from various experiences and climate resilience projects, as well as presenting their own work and efforts to a wider audience across a range of panels and sessions. Participants vividly discussed questions such as:

• What opportunities do cities have after the end of the early stage Gap Fund support?
• What innovative financing instruments are available to cities eager to advance towards project implementation?
• How to de-risk investments and attract private investors?

Reflecting on the event, Abderrahmane Darghali from the Cooperation and Environment Department at the city of Chefchaouen, Morocco, pointed out: ​​“​​​At the Gap Fund SUP International Event, we learned how to utilize resources for project structuring and mobilizing funds, while also connecting with other cities and experts.​​​”​​​ ​

This double opportunity of learning and exchange was echoed by Marcos Vinício Cardoso from the city of Palmas​, Brazil​:

“The Gap Fund SUP International Event provided us with valuable insights into how to access different PPF programs, which are essential to support and ensure the structured continuity of our project with the aim of attracting financing. The event also gave us the opportunity to connect and engage with strategic partners, such as those from the Gap Fund, EIB, GCoM, C40 CFF, and even the UN (during sessions at WUF12), who can significantly contribute to the development of new projects for the Municipality of Palmas.”

Marcos Vinício Cardoso, Head of Projects and Fundraising, City of Palmas

Key learnings and outcomes: Advancing urban project development

Group picture of the Gap Fund SUP Africa Regional Event, featuring the cities of La Marsa (Tunisia), Kisumu (Kenya), Kira, Makindye- Ssabagabo, Nansana (Uganda), ​and the ​ICLEI Africa Team

The ​Gap Fund ​SUP activities significantly strengthened cities’ ability to design and implement impactful ​​sustainable infrastructure​​ projects. Participants gained practical knowledge across all phases of project preparation, from concept development to ​​implementation, with a strong focus on improved project design and development, emphasizing stakeholder engagement and inclusive design. Cities improved internal coordination and institutional capacity, learned from successful examples, and explored innovative solutions like black soldier fly farming for organic waste management.

The program fostered systems-thinking and local adaptation, encouraging holistic, context-specific responses to challenges like waste management and nature-based solutions. Cities are also connected with key financing institutions, gaining insights into structuring investment-ready projects and accessing further support ​​programs​​​ ​ like the C40 City Finance Facility.

Peer-to-peer exchanges were central to the learning process, with cities sharing tools, methodologies, and success stories to accelerate project development. These activities have laid the foundation for ongoing collaboration and the creation of a multi-stakeholder community of practice to drive transformative urban action.

The publication “Empowering Cities and Financing Climate-Resilient Urban Futures”, published in July 2025, tells the story of how the Gap Fund bridges the toughest stage of city climate action: Turning bold ideas into real projects. With the support of global partners like GCoM and ICLEI, cities from Africa to South America are guided from vision to pre-feasibility, gaining the tools and networks to move closer to investment. It is about partnerships transforming ambition into tangible, resilient futures for communities worldwide. Read the full report here.

In addition, the Gap Fund SUP will soon release three new reports:

• Waste Management in African Cities,
• A Toolkit for Early-Stage Sustainable Infrastructure Project Development, and
• Structuring Bankable Urban Climate Projects in Brazil and Ecuador.

These forthcoming publications will delve deeper into the program’s learnings and provide practical tools for advancing sustainable urban investment.

References:

Granados Alcala, J., Monteiro, H., Kerim, M., Almeida da Vila, A., Abuassba, A., & Bilgen, N. (2023). Empowering cities and financing climate-resilient urban futures: Insights from the Gap Fund’s partnerships with GCoM and ICLEI. GCoM, ICLEI, & GIZ. https://www.globalcovenantofmayors.org/press/empowering-cities-transforming-futures/

Metayer, S., Arvis, B., & Postic, S. (2025). From headline trillions to actual millions: climate financing needs estimates in the age of implementation. From-trillions-back-to-millions_V1.pdf

Ritchie, H., Roser, M., & Rosado, P. (2025). Urbanization. Our World in Data. https://ourworldindata.org/urbanization