The African Development Bank Group on 4 December 2023 held discussions with the Rwandan financial sector policymakers on the capitalization of the Rwanda Green Investment Bank (IREME) with funding from the Green Climate Fund, Agence Française de Developpement, European Investment Bank, DANIDA and others.
The meeting was held on the sidelines of the 2023 United Nations Climate Change Conference (COP28) in Dubai, United Arab Emirates.
IREME is Africa's latest example of a Green Bank and represents a milestone in the African Development Bank's efforts to create more such institutions on the continent.
The Bank Group launched the African Green Banks initiative at COP27 in November last year to support the implementation of African countries' Nationally Determined Contributions (NDCs).
Green Banks are financial institutions designed to blend finance and lend at concessional rates to green, Paris-aligned projects that contribute to low-carbon, climate-resilient and just development at national and sub-national levels. These can be facilities within existing institutions or new stand-alone facilities.
Green Banks can raise and lend capital in hard and local currencies, overcoming foreign exchange risks, which is a major challenge of lending funds to African borrowers.
The Bank has raised funds to build capacity for green finance facilities in La Caisse des Dépôts et Consignations du Bénin (CDC Benin), the Ivorian National Investment Bank (BNI) and two North African Banks in Morocco and Egypt that will be announced in 2024.
Grant funding will be used to set up the blended vehicle, build capacity and deal pipeline in the recipient organization. Once these activities are complete, the Bank will work to mobilize finance from a range of partners to capitalize these institutions.
African countries still face significant challenges in financing their climate transition. While investment needs resulting from NDCs are estimated at $2.8 trillion by 2030, funds invested on the continent still represent a limited share of global green finance flows, and the share covered by the private sector remains limited.
The African Green Bank initiative was conceived as part of measures to increase Africa's access to global climate finance from 3% to 10% annually by 2030.
The Initiative followed a study by the African Development Bank and the Climate Investment Funds of the potential for green banks in six African countries: Benin, Ghana, Mozambique, Tunisia, Uganda, and Zambia.
