Green Banks in Developing Countries

Mobilizing funds at an international scale.

CGC partners with national governments, national and multilateral development banks, climate funds, aid agencies and others to form green banks in developing and emerging economies.

As nations work to meet their climate goals under the Paris climate agreement, there is a growing need for blended, flexible capital. That capital needs to be managed and invested under local ownership. At the same time, existing sources of development capital recognize the need to make their dollars go farther, particularly when it comes to climate. New climate targets, local ownership, and private sector leverage all point to the Green Bank model as the solution.

Real-world examples of this work include:

Rwanda Catalytic Green Investment Bank

CGC is working with the Rwanda Green Fund (FONERWA), the Government of Rwanda, the UNDP, African Development Bank and other key development partners to create the Rwanda Catalytic Green Investment Bank (RCGIB). The RCGIB is being designed using the Green Bank model with three main objectives: i) to address local market gaps and crowd in private finance using financial tools, ii) strengthen Rwanda’s ownership of climate finance by empowering the country to better access international finance (non-grant) resources alongside FONERWA, iii) work in partnership with the local banks to build their green finance capacity through innovation, risk mitigation and deal arrangement.

The RCGIB’s mandate is to catalyze private investments in Rwanda, with a unique and specific focus on blended finance by providing financial instruments (debt, credit enhancements e.g. sub-debt, guarantees) to projects that are commercially viable – but not yet bankable – in the green sector.

Southern Africa Climate Finance Facility

CGC partnered with the Development Bank of Southern Africa (DBSA) and Convergence Finance of Canada to design, capitalize and launch a new Climate Finance Facility based on the Green Bank model. The Development Bank of Southern Africa’s (DBSA) Climate Finance Facility (CFF) is a specialized lending facility designed to increase private investment in climate-related infrastructure projects in the Southern African Development Community (SADC) region, which faces significant climate mitigation and adaptation challenges. The CFF is the first time the Green Bank model has been applied to an emerging market. This landmark facility offers significant proof-of-concept value to middle- and low-income countries seeking to scale up the private investment required to meet commitments laid out under the Paris Agreement. The CFF also marks a first-of-its-kind-loan from the Green Climate Fund (GCF) of $56 million capitalize the Climate Finance Facility.

African Development Bank Scoping on the Creation of National Climate Change Funds and Green Banks in Africa

CGC is working with the African Development Bank, with support from the Climate Investment Funds (CIF), to develop a Knowledge Product on National Climate Change Funds (NCCFs) and Green Banks in Africa. CGC will identify and work with six African countries to explore early-stage feasibility for appropriate green financing vehicles. CGC’s approach to this NCCF and Green Bank scoping project reflect this country-driven approach to learning and design. It is based upon substantial Green Bank and catalytic climate finance experience in Africa, other emerging markets, and around the world. The six project countries include: Ghana, Mozambique, Zambia, Tunisia, Uganda and Benin.

Uganda Green Bank Scoping

CGC is working on an initial scoping project with the UNEP-DTU, to provide an initial view of the potential for a Uganda Catalytic Climate Finance Facility on the Green Bank model. The focus of this initial scope of work is to explore the basis for creation of a Green Bank type catalytic climate finance facility to support NDC implementation in Uganda through increasing and mobilizing private investment in low-carbon sectors. The objective for this project is to characterize the status of existing climate finance initiatives in Uganda, provide a high-level overview of which low-carbon sectors present the best near-term investment opportunities, and implications for what types of innovative finance approaches can benefit Uganda’s NDC implementation.

Philippines Investments in Island Electrification

CGC has recently partnered with the ADB on a scoping and investment program design in the Philippines, focused on investments in island electrification. CGC is working with the Asian Development Bank (ADB) and a number of key stakeholders, including Government Financial Institutions, to analyze the potential for a finance program focused on mobilizing investment into smaller-scale RE projects in remote island settings. In the Philippines, small islands and isolated grids often struggle to access affordable finance for electrification projects. This has resulted in millions of people across the Philippines lacking accessing to electricity, and many more relying on expensive diesel generation, subject to high prices and volatility as subsidies decline. This project is focused on methods to mobilize new investment in the off-grid renewable energy sector, with a focus on blended finance, and investment tools that lower risk and enable access to affordable finance for those that need it most.