How Rwanda plans to raise $11bn for climate ambitions

In a virtual climate ambition summit two weeks ago, Rwanda unveiled a $11 billion (Rwf10.2 trillion) plan to combat climate change and build adaptation to its effects in the next 10 years. Convened by the United Nations, United Kingdom and France, in partnership with Chile and Italy – Rwanda used the summit to make the case for the estimate – saying around $5.7 billion will be spent on climate mitigation measures while over $5.3 billion will be invested in climate adaptation priorities. Known as Nationality Determined Contribution under the Paris Agreement, the climate plan seeks to reduce greenhouse gas emission by 38 per cent equivalent to 4.6 million tonnes of carbon dioxide by 2030 in Rwanda. As a party to the United Nations Framework Convention on Climate Change (UNFCCC), this could limit temperature rise to 2oC with efforts to reach 1.5oC agreed under the Paris Agreement. In order to get resources to implement a climate action plan, Teddy Mugabo Mpinganzima, the CEO of Rwanda Green Fund (FONERWA) told The New Times that a resource mobilization strategy was developed. Since its creation, Rwanda Green Fund has so far mobilized close to $200 million. “We will continue to play a vital role in the country’s resource mobilisation efforts in collaboration with government counterparts,” she says. The resource mobilisation strategy, she explained, will mainly focus on areas that have potential to attract domestic and foreign investments. She said the Fund and partners such as the Development Bank of Rwanda are working on diversifying financial instruments for incremental resources mobilization. “This includes the ongoing creation of the Rwanda Green Investment facility (RGIF) among others,” she disclosed. “The Green Investment facility is being designed using the “green bank” model to address local market gaps in private finance using financial tools,” Mpinganzima said. “It also aims to strengthen Rwanda’s ownership of climate finance by empowering the country to better access international finance (non-grant) resources.” The “green bank” model, she added, will work in partnership with the local banks to build their green finance capacity through innovation, risk transfer and deal arrangement. $60 million capital for the Green Investment facility FONERWA says that it is seeking to capitalize this Green Investment facility with $60 million. “The Green Investment facility mandate is to catalyse private investments in Rwanda, with a unique and specific focus on blended finance by providing financial instruments such as debt, credit enhancements to projects that are commercially viable – but not yet bankable – in the green sector,” she added. The credit enhancements include for example sub-debt, tenor extension and collateral support, she explained. The Fund is deploying investment and resources across several key sectors namely biomass replacement, climate-smart agriculture, renewable energy, green cities, sustainable transport, waste, water and others. Biomass replacement, for instance requires $240 million of investment between 2018 and 2024 with demand growing by 52% to $365m between 2024 and 2030. For example, a nationwide program to increase access to cooking gas ( LPG) to reduce dependence on biomass needs $49m in grant co-financing delivering benefits to over 1.1 million households. Rwanda seeks to reduce dependency on woody biomass for energy to 42% by 2024. Sustainable transport needs over $2.2 billion to upgrade elements of the road network to be more climate resilient and improve connectivity. Over $1 billion is needed to convert 20 per cent of personal motor vehicles to electric vehicles, $150 million to convert 20 per cent of buses into electric vehicles by 2030, the fund shows. The waste management sector is forecast to require $204m of investment between 2018 and 2024 with an increase of 47 per cent to $300m between 2024 and 2030. One of the projects in need of funding include an innovative solution to produce 5,000 tonnes of organic manure requiring financing of up to $20m to establish a large facility. Other projects include green urbanization for sustainable development in Kigali and major secondary cities over the next 5 years that need over $250 million. Rwanda recently announced the Green City model Pilot site in Gasabo district. The pilot project Phase on 16 hectares seeks approx. $ 86 million for the construction of 1,680 housing units.

News

How Rwanda plans to raise $11bn for climate ambitions