During the first day of the Summit for a New Global Financial Pact, one country stood out for its multi-pronged action for the environment. Rwanda, a country active in the fight against climate change, used the event to announce an innovative partnership backed by the Resilience and Sustainability Facility (RSF) of the International Monetary Fund (IMF), in partnership with Agence Française de Développement (AFD), the European Investment Bank (EIB), Cassa Depositi e Prestiti (CDP) and the International Finance Corporation (IFC).
Climate finance in transition
This partnership, for an additional amount of €300 million, is currently being finalized. It aims to facilitate public-private alliances, scale up climate finance and mobilize private investment to strengthen the climate resilience of Rwanda. This renewed support will top up the $319 million of financing that the Government of Rwanda has already obtained through the IMF’s Resilience and Sustainability Facility.
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This innovative partnership marks the international community’s efforts to reorganize the climate finance model. By using existing mechanisms to promote public-private partnerships and attract more private investment, the mechanism aims to turn small-scale initiatives into major long-term investments.
“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,” said Rwanda’s Prime Minister, Édouard Ngirente, who was in Paris for the summit. “This is an important milestone in our journey to achieve our Nationally Determined Contributions that are estimated at $11 billion by 2030.”
Agence Française de Développement at the forefront
These increased resources will help Rwanda address the consequences of climate change among its vulnerable communities. It will also be able to develop Ireme Invest, an innovative platform for private investment in the green sector launched by President Paul Kagame at COP27 in late 2022, with AFD its first contributor.
In response to Rwanda’s desire to step up the mobilization of climate finance, AFD, whose CEO Rémy Rioux returned to the country in 2019, proposes a tried and tested systemic approach. This involves supporting the Development Bank of Rwanda and proposing a long-term strategic alliance in a partnership-based and multi-donor approach.
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“Rwanda is a driving force for climate finance,” said Marie-Hélène Loison, AFD’s Deputy Chief Executive Officer, who was with the Rwandan authorities at the OECD’s headquarters in Paris. Referring to the innovative aspect of the creation of Rwanda’s Green Climate Fund, she added: “Our philosophy is to work with all the stakeholders. And the private sector must work hand in hand with the public sector to achieve the climate targets.”
“In very few years,” said Rémy Rioux, “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.”
Under the arrangements still under discussion, AFD will provide €50 million of programmatic budget support, combined with a €3 million technical assistance grant. This financial support will be additional and complementary to the range of reforms supported by the RSF. This includes promoting green public investments, establishing green public procurement and strengthening Rwanda’s Measurement, Reporting and Verification (MRV) framework.
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The technical assistance will also support the implementation of Rwanda’s roadmap for sustainable finance, with the objective of promoting private sector participation in climate action.
Private sector investment in sustainable agriculture and urbanization
For its part, the International Finance Corporation, in partnership with the Rwandan Government through Rwanda’s Green Climate Fund, will jointly develop long-term investment plans for climate-smart agriculture and sustainable urbanization. The aim is to increase the private sector’s role in the ecological transition of Rwanda’s economy.
All these unique partnerships between the Rwandan Government and international partners demonstrate the power of partnerships in addressing urgent global challenges. These partnerships encourage other nations and financial institutions to explore innovative financing mechanisms and join hands to build a sustainable and climate-resilient world.