IN a collaborative effort to foster public-private partnerships, scale up climate finance, and attract private climate investment, 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), has announced a joint initiative that will mobilise an additional EUR 300 million to bolster climate resilience in Rwanda. This cooperative approach builds on the Resilience and Sustainability Facility (RSF) arrangement with the International Monetary Fund (IMF), further advancing Rwanda’s climate action agenda.
Unveiled at the Paris Summit for a New Global Financing Pact, this groundbreaking partnership reflects the ongoing efforts of the international community to reshape the global climate finance architecture. It aims to move beyond small-scale projects and focus on significant long-term investments that leverage existing mechanisms to facilitate public-private partnerships and attract private sector investments.
The collaboration will significantly contribute to addressing the impact of climate change on vulnerable communities in Rwanda. It will also enhance the catalytic effect of the IMF’s RSF arrangement by mobilising additional budget support from partners, initiating a programmatic approach for climate investments, and scaling up Ireme Invest, a unique investment facility dedicated to private sector green investment, which was launched by President Paul Kagame in November 2022 at the UN Climate Change Conference (COP27) in Egypt.
The initiative will be executed through a three-pronged approach:
- Policy Reforms: Policy reforms will be implemented to tackle challenges triggered by climate change. This includes integrating climate risks into fiscal planning, strengthening climate-related risk management for financial institutions, fortifying disaster risk reduction and management, and improving the sensitivity of public investment management to climate-related issues.
- Capacity Development: International partners will support Rwanda’s capacity development initiatives to enhance climate-related capabilities and attract further climate capital.
- Financing Arrangements: Various financing arrangements will be consolidated and mobilised to support Rwanda’s climate resilience efforts:
- AFD will provide EUR 50 million programmatic budget support accompanied by a EUR 3 million technical assistance grant, with an initial disbursement expected in 2023. This contribution will complement the RSF-supported programme’s matrix of reforms, the greening of public investments and procurement, and the strengthening of Rwanda’s Measurement, Reporting, and Verification (MRV) framework.
- The IFC, in partnership with the Government of Rwanda through the Rwanda Green Fund (FONERWA), will develop long-term investment plans for climate smart agriculture and sustainable urbanisation, with the aim of increasing private sector involvement in greening Rwanda’s economy.
- Ireme Invest, the green investment facility powered by FONERWA and the Development Bank of Rwanda (BRD), will be scaled up. BRD is currently identifying a pipeline of private sector projects estimated at EUR 400 million, adhering to a common set of eligibility criteria, governance, and reporting mechanisms.
- The European Investment Bank, supported by the European Union, is expected to provide EUR 100 million under the Global Gateway strategy, which aims to deliver sustainable and resilient connections with partner countries.
- Cassa Depositi e Prestiti, the Italian Development Finance Institution, is discussing joint actions with the Government of Rwanda and BRD to scale up climate finance and bridge public and private investments.
The coordinated effort to scale up climate financing, combined with the policy reforms under the IMF’s RSF arrangement and capacity development support, will enhance Rwanda’s ability to withstand economic shocks and adapt to a changing climate. This collaboration between the Government of Rwanda and international partners sets a precedent for innovative financing mechanisms and exemplifies the power of partnerships in addressing global challenges.
Commenting on the initiative, Rwandan Prime Minister Edouard Ngirente said, ‘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 $11bn by 2030. We thank all the partners that have joined this initiative, and we will be working together to make it a reality.’
IMF Managing Director Kristalina Georgieva added: ‘Today’s announcement is a testament to 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.’
Jutta Urpilainen, European Commissioner for International Partnerships also said that, ‘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.’
‘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, added.
