Earlier this week, the Green Climate Fund and the French Development Agency (AFD) signed the agreement which will kick-off the implementation of the “Transforming Financial Systems for Climate” programme.
The programme, targeting 17 countries in Africa and Latin America and the Caribbean, seeks to strengthen local financial institutions in the region and boost the private sector’s investments into renewable energy, energy efficiency, and climate resilience projects.
Climate mitigation and adaptation projects in the region are often perceived as high risk by private investors, mainly due to uncertainty about the returns and the highly limited capacity of local financial institutions. To overcome these barriers, the programme will provide loans and technical assistance to local partner financial institutions. Overall, USD 728 million will be invested in the programme, of which USD 270 million will be provided by GCF.
GCF Executive Director Yannick Glemarec said: “The launch of this programme with AFD marks an important milestone for the Green Climate Fund. It demonstrates the immense role the private sector can play in supporting climate action and energy transition. By working with local financial institutions, this programme will help create self-sustaining markets which will enable financial flows from the private sector to transformative and ambitious climate action.”
Rémy Rioux, CEO of AFD added: “I am delighted that we have been able to take together this decisive step. It will allow us to provide, very soon, available funds for our partners and beneficiaries who are committed, in the field, in the fight against climate change”
The Programme should help avoid more than 36 million of tonnes CO2eq during its lifespan, while over 880 medium and small companies in Africa will benefit from low carbon and resilient investments.