Washington, DC – June 22, 2023: Building on the Resilience
and Sustainability Facility with the 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), are today announcing a
cooperative approach to facilitate public-private partnership, scale-up
climate finance and crowd in private climate investment that will mobilise
an additional EUR 300 million to build climate resilience in Rwanda.
The new support complements and builds on the USD 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, which was unveiled at the Paris Summit for
a New Global Financing Pact, 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.
Importantly, this collaborative support will bolster Rwanda's efforts to
address the impact of climate change on vulnerable communities and
strengthen the catalysing effect of the IMF’s RSF arrangement by attracting
additional budget support from partners, initiate a programmatic approach
for climate investments, and scale up Ireme Invest – Rwanda’s unique and
innovative investment facility dedicated to private sector green investment
– that was launched by His Excellency President Paul Kagame in November
2022 at the UN Climate Change Conference (COP27) in Egypt.
A three-pronged approach
International partners will support Rwanda’s efforts to accelerate climate
investments through action across three pillars:
- Policy reforms to address challenges triggered by climate
change
- Capacity development initiatives, and
- Financing arrangements
Actions in these three areas are expected to strengthen and
institutionalise the monitoring and reporting of climate-related spending,
integrate climate risks into fiscal planning, improve the sensitivity of
public investment management to climate-related issues, strengthen
climate-related risk management for financial institutions, and fortify
disaster risk reduction and management.
Partners have also committed to support Rwanda’s capacity development
initiatives, and help attract and better manage further climate capital. As
part of the collaborative approach, partners have committed to consolidate
and mobilise the following climate finance resources for Rwanda:
Programmatic budget support for green public financial management
AFD is providing EUR 50 million programmatic budget support accompanied by
a EUR 3 million technical assistance grant, with an initial disbursement
expected in 2023. This financial contribution will be complementary and
additional to the RSF-supported programme’s matrix of reforms, the greening
of public investments and procurement as well as strengthening Rwanda’s
Measurement, Reporting, and Verification (MRV) framework. 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.
A new programmatic approach for Nationally Determined Contributions
(NDC) investment
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.
Scaling up Ireme Invest for private sector investment
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 EUR 400 million 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 EUR 100 million
supported by the European Union. This support is provided under the Global
Gateway strategy: the EU’s positive offer to deliver sustainable and
trusted connections with partner countries and build more resilient
societies for people and planet.
- 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 EUR 130 million
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, combined with the
policy reforms envisaged under the IMF’s RSF arrangement and capacity
development support from the IMF 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.
It also adds to the substantial financial and technical support provided by
the World Bank (IDA) to support Rwanda’s efforts to enhance its climate
resilience and secure its natural assets – especially in vulnerable
communities – unlock private investments and promote green finance and
trade, as well as financial contributions by the Governments of Germany,
the United Kingdom, Sweden and Denmark towards Rwanda’s NDC climate action
plan objectives.
Quotes
“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.” – The Right Honourable Prime Minister of Rwanda, Dr. Edouard
Ngirente.
“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 under the RST
can amplify climate financing, providing a model for accelerating investment
to deliver a greener and more prosperous future around the world.” –
Kristalina Georgieva, Managing Director of the International Monetary Fund.
“Today’s agreement with Rwanda illustrates how joining forces in
international partnerships is the only way forward in addressing the
climate crisis. The European Union and its Member States are the world’s
largest provider of public climate finance, and we remain committed to a
multilateral approach. Through Global Gateway and together with our allies,
we strive to bridge the investment gap and support partner countries, in
particular in Africa, to mitigate and adapt to climate change. Our ambition
is a green transition that is fair to the most vulnerable.” – Jutta
Urpilainen, European Commissioner for International Partnerships
"The close cooperation between the Government of Rwanda, IMF, international
financing partners and the EIB is harnessing he potential of Special
Drawing Rights to advance climate action. The strategic use of SDRs will
significantly amplify the impact of climate action investments in the
country, paving the way for a greener and more prosperous future. This
initiative represents the EIB’s strong commitment to combating climate
change and supporting sustainable development in Rwanda and beyond." –
Werner Hoyer, President of the European Investment Bank.
“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.
“In very few years, 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.” – Remy Rioux, Director General Agence Française de
Développement.