More than €300 million will be mobilized forclimate resilience in Rwanda through a new initiative announced at the Paris Summit for a New Global Financing Pact on Thursday June 22.
The funding will be mobilized througha cooperative approach by International Monetary Fund, the Government of Rwanda, together with the Agence Française de Développement (AFD), European Investment Bank (EIB), Cassa Depositi e Prestiti (CDP), and the International Finance Corporation (IFC).
The resource mobilization approach aims to facilitate public-private partnership, scale-up climate finance and crowd in private climate investment.
The new support complements and builds on the $319 million in financing accessed by the Government of Rwanda through the Resilience and Sustainability Facility (RSF) arrangement with the International Monetary Fund (IMF).
The ground-breaking partnership is part of ongoing efforts by the international community to reshape the global climate finance architecture, including by moving beyond small-scale projects to significant long-term investments that leverage existing mechanisms to facilitate public-private partnerships and attract private sector investments.
This collaborative support will bolster Rwanda’s efforts to address the impact of climate change on vulnerable communities and attract additional budget support from partners, and scale up Ireme Invest – Rwanda’s unique and innovative investment facility dedicated to private sector green investment.
Ireme Invest was launched by President Paul Kagame in November 2022 at the UN Climate Change Conference (COP27) in Egypt.
“The partnership we have announced today represents a transformational shift in the provision of climate finance and is a vote of confidence in Rwanda’s long-term climate action strategy. This is an important milestone in our journey to achieve our Nationally Determined Contributions that are estimated at USD 11 billion by 2030. We thank all the partners that have joined this initiative and we will be working together to make it a reality,” said Prime Minister of Rwanda, Dr. Edouard Ngirente.
As part of the collaborative approach, partners have committed to consolidate and mobilise the climate finance resources for Rwanda:
AFD is providing 50 million Euros support accompanied by 3 million Euros technical assistance grant, with an initial disbursement expected in 2023.
The technical assistance will also support the implementation of Rwanda’s sustainable finance roadmap with a view to increase private sector mobilisation in support of climate action.
The International Finance Corporation, in partnership with the Government of Rwanda through the Rwanda Green Fund (FONERWA), will jointly develop long-term investment plans for climate smart agriculture and sustainable urbanisation to increase the role of the private sector in greening Rwanda’s economy.
Green finance for the private sector
Scaling up Ireme Invest for private sector investment is also expected.
Launched at COP27, Ireme Invest is a green investment facility powered by the Rwanda Green Fund (FONERWA) and the Development Bank of Rwanda (BRD), and developed through technical assistance from the World Bank.
BRD is currently finalising the identification of a pipeline of private sector projects estimated at 400 million Euros based on a common set of eligibility criteria, governance, and reporting mechanism with its financing contributors for Ireme Invest.
The Government of Rwanda will support scaling up of access to green finance for the private sector to further enable BRD to grow its lending portfolio for the private sector at affordable interest rates.
The European Investment Bank is expected to provide 100 million Euros supported by the European Union.
Cassa Depositi e Prestiti – the Italian Development Finance Institution – is discussing with the Government of Rwanda and BRD joint actions to scale up climate finance bridging public and private investments.
To further underpin the creation of private green assets in Rwanda, Ireme Invest private stakeholders will also directly contribute 130 million Euros equivalent in own private equity.
The creation of new green private assets also opens the door for future issuances of innovative debt instruments on the local and international markets which will further crowd in private investment.
The coordinated initiative to scale up climate financing will allow Rwanda to better withstand economic shocks and adapt to a changing climate.
This unique collaboration between the Government of Rwanda and international partners exemplifies the power of partnerships in tackling pressing global challenges.
It sets a precedent for other nations and financial institutions to explore innovative financing mechanisms and join forces in the pursuit of a sustainable and climate-resilient world.
“Today’s announcement is a testament of Rwanda’s commitment to sustainability, which has been widely recognised and applauded on the global stage. It also shows how close collaboration among international and domestic partners in the context of strong climate reforms can amplify climate financing, providing a model for accelerating investment to deliver a greener and more prosperous future around the world,” noted Kristalina Georgieva, Managing Director of the International Monetary Fund.
Jutta Urpilainen, European Commissioner for International Partnerships said: “Our ambition is a green transition that is fair to the most vulnerable.”
Werner Hoyer, President of the European Investment Bank said that the initiative represents theEuropean Investment Bank’s strong commitment to combating climate change and supporting sustainable development in Rwanda and beyond.
“With its innovative lens, this partnership will maximise limited public finance to channel private capital into climate-related projects. IFC will work with the government of Rwanda to develop an investment pipeline to build a resilient, low-carbon economy among the most vulnerable communities, with a focus on sustainable cities and climate-smart agriculture,” Makhtar Diop, IFC Managing Director.
Remy Rioux, Director General Agence Française de Développement, AFD and actors of the Rwandan financial ecosystem have engaged in a solid cooperation on climate finance on the country’s vision to align its public and private investment flows with its ambitious climate change strategy.
