Rwanda to set up green bank to finance climate investments

The 8.5MW solar power plant in Rwamagana District is an example of climate investments promoting green economy. Photo: Emmanuel Kwizera.

Government is set to facilitate the creation of a financial institution in Rwanda that will be solely dedicated to funding projects that promote climate change resilience.

The development was first announced during the 25th Conference of Parties to the United Nations Framework on Climate Change which was held in Spain recently.

 

Speaking to The New Times on Monday, Doreen Nakure, a communication specialist at Rwanda Green Fund (FONERWA), said that the Fund has already contracted experts who will come up with a clear picture of how the bank will look like.

 

According to Nakure, FONERWA has contracted the Coalition for Green Capital (CGC), which provides lead expertise on green bank design internationally, to provide an outlay of the bank.

 

She said the bank will be called the Rwanda Catalytic Green Investment Bank (RCGIB), adding that other details, like the initial capital, will be determined by the CGC study currently underway.

The Coalition for Green Capital is a non-profit organization focused on accelerating the growth of clean energy markets through the creation of Green Banks.

It offers a unique and proven capacity as the leading creator, advocate, and expert on Green Banks since 2009 and works directly to support the formation of Green Banks with governmental and civil society partners, and provide on-going consulting and guidance to operating Green Banks.

The Rwanda Green Bank proposal follows one South Africa, which has set up the same bank that also finances green projects undertaken in the country with initial balance sheet of over $100 million.

“This initiative aims at promoting green investments in Rwanda, with a unique and specific focus on financing, unlocking and expanding private investment like debt and equity in the local green sectors,” Nakure said.

The initiative, she said,  is being designed with a set of guiding principles particularly independent investment decision-making, ability to raise financing from Development Financial Institutions as well as the private sector based on best practices from international Green Banks and facilities, as well as strategic input from FONERWA and other market participants.

Asked whether it will be state-owned or a private-owned bank, she said it was not clear at the moment.

“Since it’s a project under study, we cannot tell with certainly and it will depend on a lot of issues under discussion but it might be a privately-owned initiative. It will all depend on the outcomes of the consultations currently underway.”

She said that once set up, the Green Bank will finance both public and private green projects as long as they meet the set criteria.

She clarified that while FONERWA is a government fund that invests in financing green projects, the other will operate more like a financial institution.

Over 138,000 green jobs have been created by FONERWA since its inception in 2013.

The Fund has enabled protection of over 21.1 million hectares of land against erosion.

At least 41,116 hectares were covered with forestry and agroforestry while 26.3 million hectares of watersheds and water bodies were protected.

The green fund says 65,340 households have since got access to clean energy as 65 million tonnes of global warming gases (carbon emissions) were avoided.

Gabiro said that 108,038 people were supported to cope with climate change effects.

Rwanda has set up the ambition to be a developed, climate-resilient and low carbon economy by 2050.

editor@newtimesrwanda.com

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