The Rwanda Climate Finance Partnership aims to facilitate public-private partnerships to scale up climate finance and has been made possible by the country’s Resilience and Sustainability Facility (RSF) arrangement with the International Monetary Fund
DUBAI: Rwanda has launched the Rwanda Climate Finance Partnership to facilitate public-private partnerships and scale up climate finance. The partnership was launched at the Paris Summit for a New Global Financing Pact and is supported by various organizations, including the European Investment Bank (EIB), the International Finance Corporation (IFC), and the Agence Francaise de Developpement (AFD).
The partnership aims to power innovative climate action and is a key pillar of Rwanda’s efforts to fund its ambitious NDC Climate Action Plan. It complements existing partnerships, including the Rwandan-German Climate and Development Partnership and ongoing initiatives with the World Bank.
The partnership is made possible by the country’s Resilience and Sustainability Facility (RSF) arrangement with the International Monetary Fund (IMF). The IMF is expected to disburse an additional USD 48.5 million in budget support following the approval of Rwanda’s second review of the RSF arrangement by the IMF Executive Board in mid-December.
To further demonstrate its commitment to its RSF-supported climate agenda, the Government of Rwanda has announced two additional reform measures supported by the RSF. These measures include enhanced risk analysis of State-Owned Enterprises and Public-Private Partnerships that are vulnerable to climate change and adopting a green taxonomy adapted to Rwanda’s NDC climate action plan.
The partnership milestones include the Government of Rwanda contributing USD 40 million to support Ireme Invest, the country’s private sector green investment facility. The EIB and the Development Bank of Rwanda have signed a EUR 20 million loan and a technical assistance agreement to support Rwanda’s green transition through Ireme Invest. AFD and Rwanda Development Bank have signed a EUR 20 million credit facility and a EUR 1 million technical assistance grant to scale up Ireme Invest.
The partnership also includes the Danish International Development Agency and the Rwanda Green Fund signing a grant agreement of USD 5.27 million to support the Project Preparation Facility of Ireme Invest. CDP, Italy’s Financial Institution for International Development Cooperation, is advancing its partnership with the Government of Rwanda to provide financial support for green transition in the country.
The Rwanda Climate Finance Partnership demonstrates the power of collaboration 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.
The following partnership milestones were also shared at the COP28 side event today: The Government of Rwanda, through the Ministry of Finance and Economic Planning, will contribute USD 40 million to support Ireme Invest, the country’s private sector green investment facility.
- The EIB and the Development Bank of Rwanda have signed a EUR 20 million loan and a technical assistance agreement to support Rwanda’s green transition through Ireme Invest. The loan is the first tranche of an expected EUR 100 million financing package announced at the Paris Summit. The technical assistance will be provided under the EIB Greening Financial Systems program, supporting the NDC Partnership and backed by the International Climate Initiative Fund and the German Federal Ministry of Economic Affairs and Climate Action. At COP28 the EIB is also outlining a new EUR 100 million agricultural climate finance partnership with Bank of Kigali to support smallholders and agri-businesses across Rwanda impacted by climate change.
- AFD and Rwanda Development Bank have signed a EUR 20 million credit facility and a EUR 1 million technical assistance grant to scale up Ireme Invest. The first investments under the facility have already been undertaken in several sectors: green buildings and renewable energy. AFD has also signed a budget support of EUR 50 million and a EUR 3 million technical assistance grant, announced at the Paris Summit, to advance green public financial management in Rwanda. AFD signed a memorandum of understanding with the Bank of Kigali, whereby they agreed to strengthen their cooperation in the area of climate finance and work on a climate line of credit of EUR 20 million with a technical assistance grant of EUR 1 million.
- The Danish International Development Agency and the Rwanda Green Fund have signed a grant agreement of USD 5.27 million to support the Project Preparation Facility of Ireme Invest, which is powered by the Rwanda Green Fund.
- CDP, Italy’s Financial Institution for International Development Cooperation, is advancing its partnership with the Government of Rwanda to provide financial support for green transition in the country, in the context of an overall strategy to scale up financial flows towards sustainable development and to counter climate change in Africa.
The Rwanda Climate Finance Partnership is a key pillar of Rwanda’s efforts to fund its ambitious NDC Climate Action Plan, and complements a number of existing public and private sector-focused initiatives to enable Rwanda to respond to climate change:
- Programmatic approach for Rwanda’s NDC investments: Three programmatic investment plans on (i) Climate-Smart Agriculture (CSA), (ii) Sustainable Urbanization, with lead support of German Technical Cooperation (GIZ), and (iii) Sustainable Landscape Management (SLM), with the support from the World Bank, are currently under preparation. Additionally, the IFC will support the Government of Rwanda through the Rwanda Green Fund, to develop long-term investment plans for climate-smart agriculture and sustainable urbanization, specifically focusing on increasing the role of the private sector in greening Rwanda’s economy.
- Green Taxonomy: The Government of Rwanda announced the first phase of its green taxonomy to help catalyze private financing of green projects. Once finalized, the taxonomy will provide clear signals on which projects and activities are aligned with Rwanda’s climate goals. It will help direct private financial flows to the financing of those activities. The initiative is supported by Germany through GIZ, and it is strongly interlinked with Ireme Invest and the Boosting Green Finance, Investment and Trade (GreenFIT) partnership with the World Bank.
- Rwanda’s NDC Facility, known as Intego, has developed a rich and promising pipeline of public climate adaptation and mitigation projects since its launch at COP27. The facility was capitalized by Germany through KfW with seed funding of EUR 46 million as part of the EUR 222 million Rwandan-German Climate and Development Partnership. The first call for proposals shows that financing needs and availability of project concepts go far beyond the seed funding and the Government of Rwanda is inviting development partners to join the initiative. Intego shall become a best practice example of how to facilitate access to public finance and pool funding from various sources for climate projects.
- Boosting Green Finance, Investment, and Trade (GreenFIT): The World Bank has also partnered with the Government of Rwanda in the design of a new development policy operation (DPO) that encompasses a set of reforms to increase private sector participation in the Rwandan economy and improve resource mobilization for climate resilience, with a value of USD 250 million over two years. Germany through the KfW Development Bank has joined this effort and contributed not only to the provision of hands-on Technical Assistance for the design and implementation of the DPO’s actions but is considering a financial contribution to the overall funding of the operation for the second year of the DPO.
- The EU, as part of the Global Gateway initiative, is also providing budget support for an overall amount of EUR 59 million in grants, including EUR 6.5 million in technical assistance, in support of Rwanda’s NDC targets with a specific focus on adaptation in agriculture, in addition to backing the EUR 20 million EIB financing to the Rwanda Development Bank and the Bank of Kigali EIB loan.
- Finally, the Development Bank of Rwanda recently closed a RWF 30 billion (USD 24.8 million) sustainability-linked bond issuance, which was partially credit-enhanced via a World Bank lending operation, representing the first such issuance by a national development bank in the world.
