Rwanda: EIB Global partners with Bank of Kigali to unlock climate finance

This will be the second technical assistance project to be implemented in Africa under the European Investment Bank’s Greening Financial Systems Programme, financed by the International Climate Initiative. 

The European Investment Bank (EIB Global) and Bank of Kigali signed a EUR100 million sustainable agriculture financing initiative that will support farmers and agricultural businesses across Rwanda to better withstand the economic, social and business impacts of climate change. This initiative is part of the European Union’s Global Gateway partnership and complements the Team Europe initiative Investing in Sustainable and Inclusive Agricultural Transformation in Rwanda, bringing total European support to the sector to EUR 384 million.

The investment represents the largest ever European Investment Bank support for the private sector in Rwanda. The scheme will provide a substantial boost to smallholders, businesses, and enterprises dependent on climate-vulnerable agriculture across Rwanda.

The initiative aims to tackle the long-standing credit constraints holding back private sector agriculture investment by facilitating access to dedicated, long-term loans and will be implemented in close collaboration with the European Union, which is supporting agriculture programmes in Rwanda including value chain development – notably in horticulture and aquaculture. It is aligned with the COP28 Action Agenda, which brings food and agriculture systems to the forefront of climate action.

Enhancing capacity to finance green projects by local financial institutions

At the signing ceremony the European Investment Bank and Bank of Kigali also announced plans to make available technical assistance as part of the EIB’s broader support to the greening of Rwanda’s financial system. The EIB will leverage its expertise as the EU climate bank in collaborating with Bank of Kigali, to enhance its approach to climate risk management and the financing of green projects.

This will be the second technical assistance project to be implemented in Africa under the European Investment Bank’s Greening Financial Systems Programme, financed by Germany through the EIB’s International Climate Initiative Fund. The first one was operationalised in Kenya between the EIB and the Central Bank of Kenya.

EIB Vice-President Thomas Östros highlighted how the EUR 100 million investment partnership with Bank of Kigali is a good example of how agriculture financing directly helps in the achievement of Sustainable Development Goals. “The EIB is working with partners to expand the agri-value chain lending pipeline in Rwanda to provide greater food security, better incomes for farmers, women empowerment, and sustainable job creation. This is in line with the EIB’s commitment to finance innovative and impactful solutions for a greener, more efficient, climate-resilient and sustainable agriculture system in sub-Saharan Africa.”

As outlined in the EIB’s Finance in Africa Report 2023, the increasing prevalence of climate risks on balance sheets has made climate an important part of the risk appraisal process for both new loans and existing portfolios.

The latest EIB survey found that 59% of banks in Africa have a climate change strategy and a further 22% plan to introduce one. Banks across Africa are now stepping up their efforts to offer an expanded range of green finance products rather than just mitigating risk.

This article is based on a press release by the European Investment Bank. Click her for the full version.