Rwanda Climate Finance Partnership Powers Innovative Climate Action

December 3, 2023

The Rwanda Climate Finance Partnership, which was launched at the Paris
Summit for a New Global Financing Pact, will further power innovative
climate action thanks to additional contributions from the Government of
Rwanda. The partnership is supported by Agence Française de Développement
(AFD), the European Union and Team Europe, the European Investment Bank
(EIB), the International Finance Corporation (IFC), German Cooperation via
KfW Development Bank, and the Italian Cooperation system with the support
of Cassa Depositi e Prestiti (CDP); and it complements existing
partnerships, including the Rwandan-German Climate and Development
Partnership and ongoing initiatives with the World Bank. The formal
announcement was made on the sidelines of the COP28 UN Climate Change
Conference in Dubai, UAE.

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. It is expected that the IMF will
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 commitment to its
RSF-supported climate agenda, the Government of Rwanda also announced two
additional reform measures supported by the RSF, related to: (i) enhanced
risk analysis of State-Owned Enterprises and Public-Private Partnerships
that are vulnerable to climate change, and (ii) adopting a green taxonomy
adapted to Rwanda’s NDC climate action plan.

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 programme, supporting the NDC Partnership and backed by the
International Climate Initiative Fund and 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-business 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 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 Bank of Kigali, whereby they agree to strengthen their
cooperation in the area of climate finance and working 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 to 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 to 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 on how to facilitate access to public finance and to 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 mobilisation for climate resilience, with a value of USD 250
million over two years. Germany through 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, and 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 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.

The Rwanda Climate Finance Partnership, Rwandan-German Climate and
Development Partnership, and ongoing initiatives with the World Bank and
other partners, such as the United Kingdom, Denmark, and Sweden,
demonstrate 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.

Media Enquiries

· Sam Ruburika, Communication Specialist, Ministry of Finance and
Economic Planning, at

sam.ruburika@minecofin.gov.rw

.