Climate finance support for Rwanda Development Bank

Densely populated Rwanda, with low GDP and GDP per capita, boasts a low-carbon energy mix. However, the country is particularly vulnerable to the effects of climate change.

Rwanda is proactive on climate issues: the first developing country to submit a revised National Determined Contribution (NDC) in 2020, it is aiming for carbon neutrality by 2050. The cost of the NDC is estimated at 11 billion USD by 2030 (equivalent to the country's GDP in 2021).

The government's budgetary leeway is limited, given the scale of the financing requirements. With this in mind, the catalytic role of the national financial system is crucial.

The Banque Rwandaise de Développement (BRD) has positioned itself as the key player in supporting Rwanda's development policy. It thus has an important role to play in densifying and redirecting financial flows in favor of green and climate-friendly investments.

The aim of the project is to support Rwanda in its ambition to increase the volume of green finance dedicated to low-carbon and climate-resilient projects, in order to achieve the ambitious climate and development goals the country has set itself.

It consists of technical and financial support to BRD for the implementation of an ambitious initiative, "IREME Invest", launched by the President of the Republic of Rwanda at COP27 and aimed at fostering the financing of green and climate-resilient projects.

The Rwanda Green Fund (FONERWA) and BRD have joined forces to offer, in an autonomous but concerted manner, a range of financial tools to overcome existing obstacles in the development of climate project pipelines. FONERWA will manage a Project Preparation Facility (PPF). BRD, for its part, will manage a Credit Facility (CF), which AFD proposes to support within the framework of this project.

The project is expected to:

•  Contribute to strengthening the local financial system by providing accessible and affordable financing for low-carbon or resilient green projects;
• Strengthen BRD's role as a pivotal player in the greening of the Rwandan financial system, enabling it to act to redirect available financial flows towards the financing of a low-carbon and resilient economy.

Overall, through the "IREME Invest" label, BRD and FONERWA aim to support USD 367 million in private-sector investment, the creation of 367,000 green jobs and 1.32 MtCO2 avoided, representing a leverage effect of 18.35.