Sharing Rwanda’s commitment and Journey on Financing its Climate Action Plan
The Government of Rwanda has placed environment and climate change at the center of the country’s policies, strategies and plans. The Country’s efforts to limit its contribution to climate change and adapt to the consequences of a warming planet over the next decade has been estimated at US $11 billion, made up of 5.7 billion dollars for mitigation and 5.3 billion dollars for adaptation.
In May 2020, Rwanda was the first African Country to submit its updated NDCs to the UNFCCC Secretariat as its commitment to contribute to building a more sustainable world. Under the Country’s Vision 2050, Rwanda has a bold vision to become a carbon-neutral and climate resilient economy by the middle of the century and the Country has an ambitious target to reduce 38% reduction of greenhouse gas emissions by 2030 compared to business as usual, equivalent to an estimated mitigation of up to 4.6 million tonnes of carbon dioxide equivalent (tCO2e).
To ensure Rwanda remains strategic and well-coordinated in regards to financing its green growth journey, in 2012 the Government created the Rwanda Green Fund, locally known as FONERWA, as a financing vehicle to implement its climate action plan. The Fund was designed as a cross-sectoral financing mechanism to mobilize financial and technical resources to achieve national goals and enable the Country to meet its international obligations.
Since its inception, the Fund has played a central role in helping the Country move towards achieving its vision of a green economy by facilitating direct access to international environment and climate finance as well as to streamline and rationalize external aid and domestic finance.
To date, the Fund has mobilized USD 217 Million for green investments, and supported 46 green projects across the country which contributed to the creation of more than 176,000 green jobs as well as building the community’s adaptive capacities to cope with the effects of climate change.
As a result of the Fund’s green investments, 120,000 people were supported to cope with the effects of climate change, 126,000 tonnes of carbon dioxide equivalent emissions were avoided, while 88,000 households were supported with improved access to off-grid clean energy whereas 46,900 hectares were covered with forest and agroforest.
The Fund works closely with different partners, both national and international, with the aim of attracting more funding for green investments. This has been at the heart of the Fund’s strategies to support Rwanda’s journey of becoming a low carbon economy by 2050.
The Fund is ambitiously scaling up its global mobilization of climate finance to support sustainable initiatives in Rwanda by investing across several key sector priorities including climate-smart agriculture, green cities, biomass replacement, renewable energy, sustainable transport and waste.
Setting up a Green Investment Facility
To keep playing a greater catalytic role to the national’s green agenda, the Rwanda Green Fund, in collaboration with other stakeholders, is in the process of diversifying financial instruments by establishing a Green Investment Facility to catalyze private investments in the Country.
The Facility is being designed using the ‘green bank’ model with the main objective of addressing local market gaps and crowd in private finance using financial tools; strengthening Rwanda’s ownership of climate finance by empowering the country to better access international finance (non-grant) resources as well as working in partnership with the local banks to build their green finance capacity through innovation, risk transfer and deal arrangement.
The establishment of the Green Investment Facility will no doubt offer opportunities to invest in sectors, programmes and specific transactions across the public-private spectrum through a number of bespoke instruments, mechanisms, and platforms.