Teddy Mugabo Mpinganzima, the CEO of Rwanda Green Fund (FONERWA), has disclosed that the government, "aims to have a minimum of 30 percent of total fund commitments target the private sector.”
She was speaking on Friday, November 5, at Green Rwanda event at the 26th UN climate change conference (COP26) in Glasgow where Rwanda is presenting its ambitious climate action plan and green investment opportunities.
She added that Rwanda Green Fund has mobilized $216 million aimed to fund public and private projects.
The fund has already financed 45 investments, since 2012, which have reduced 127,000 tonnes of carbon emissions and created 162,000 green jobs.
The fund is a government tool to help mobilize climate finance to implement the country’s $11 billion climate plan from 2021 to 2030.
She said 40 percent of the estimated funding will be domestically financed while 60 percent is external financing in order to reduce emissions by 30 percent in 2030.
The Rwanda Green Fund, she said, focuses on projects in areas of biomass replacement, climate smart agriculture, renewable energy, green cities, sustainable transport, water and waste management.
"The key component of the fund’s mandate is to promote and support private sector climate mitigation and adaptation projects in line with national green growth and recently updated climate plans," Mugabo said.
Subsidized loans
To address the challenges faced by the private sector, she said, the fund is partnering with different financial institutions including Development Bank of Rwanda to develop a number of bespoke instruments, mechanisms and platforms under a new financing facility dubbed "Rwanda Green Investment Facility” which is being modelled on the "green bank” idea.
The facility is expected to be capitalized with $100 million.
She said it will be offering subsidized loans, equity, green guarantees, green leasing, green boand and incubation and Accelerator.
"We need to be creative in a way to mobilize financing. We need to partner with different institutions in the country to tap into financing,” she noted.
Kampeta Pitchette Sayinzoga, the Chief Executive Officer (CEO) of the Development Bank of Rwanda (BRD) made a case for green bond, a fixed-income instrument designed specifically to support specific climate-related or environmental projects.
"We are supposed to know the commercial interest of the private sector. It is not the first time. We have done it under the support of the World Bank in the renewable energy fund as money is channeled through the Development Bank of Rwanda,” she said.
She explained that for the private to be part of the climate agenda, it requires many things.
"One is to bring liquidity through a concessional and affordable credit line. The second thing is it must have a de-risking component for the entrepreneurs. We have to look at access to liquidity, quality liquidity in terms of pricing, de-risking instruments and using grants to create a market that is obvious,” she said.
Jeanne D’arc Mujawamariya, The Minister for Environment in Rwanda is said that Rwanda is a destination for green investments.
"Rwanda is facing the impact of climate change and despite our vulnerability and minimal contribution to the problem, we are committed to be part of the solution,” she said.
Rwanda is also among five pioneer countries that have been selected to trial and find new approaches for vulnerable countries to easily access climate finance.
The United Kingdom has committed £100 million to the newly established taskforce, which will provide capital grants to climate vulnerable countries to support delivery of national climate plans.