Rwanda targets COP27 forum to launch ‘Green Bonds’ to lure private sector

CAIRO, Egypt - The COP 27 forum is set to take place from November 8th -18th of November in Egypt.

The forum will bring together world leaders, heads of state, and policymakers to deliberate on finding solutions to addressing Climate Change.

Rwanda’s government plans to use the forum to launch its new fund dubbed “Green Bond Facility” which is solely dedicated to financing private investors’ green projects in the country.

According Teddy Mugabo, the CEO of Rwanda Green Fund known as FONERWA did reveal that the new financing facility for only private-sector green projects will be managed in partnership with the Development Bank of Rwanda (BRD).

The facility will operate under the “Green Bank” model and is seeking $100 million to start operations.

“Green ventures are always seen as high risk. Commercial banks do not want to go that route because when we talk about green projects, there is a lot of innovation, there is a need to rethink technologies, and the moment you start thinking about these, perceptions of risk increase. So that is the role of the facility to de-risk. We had to rethink about instruments we need to put in place to attract private capital. This is how the Green Investment facility came about. Its first objective is to leverage private investments and the second objective is to provide tailored financial products to attract the private sector,” she said.

She said that the fund aims to make green finance affordable.”Mugabo said.

“This will provide grants to support early-stage businesses. Here I mean we might have an entrepreneur who is in waste recycling who might have an idea that needs to be tested. So through the project preparation facility, we want to support entrepreneurs by giving them business development support or they might need the grant to test their products like a proof of concept,” she explained.

She also highlighted that this window will finance feasibility studies for projects such as renewable energy projects.

“If they have to conduct feasibility studies, we will provide grants or reimbursable grants to them. We want to de-risk through grants where we can help projects move from ideation to bankability,” she said.

Handling the issue of lacking bankable green projects, She said that the decision to provide grants to de-risk projects was triggered by a lack of bankable projects.

“This is because one of the biggest challenges looking at the bank’s side is that they might be willing to invest in green projects but there is a lack of a pipeline of bankable projects,” she noted.

She said the fund will offer products that go all the way from ideation of business development support to proof of concept.

“It will help to build projects which when they are ready to scale can then move to a credit facility that will be managed by the Development Bank of Rwanda (BRD) which can provide debt financing. We are looking to provide concessional and affordable financing. If in commercial banks, interest rates are at 18 percent we will try to reduce to lower interest rates,” she said.

Nick Barigye, CEO of Rwanda Finance Ltd said that it is also in the drive to attract sustainable green investments.

“Sustainable finance means environmental, social, and governance factors for any economic activity that you are doing. And giving examples, if you're talking about the environment, are you considering how you pollute? have you put into consideration how you are going to handle pollution, how you are going to deal with waste management?” he explained.

Rwanda plans to reduce carbon emissions by 38 percent by 2030 and this will require Rwanda to mobilize $11 billion by 2030.

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