The European Investment Bank (EIB Global) and the Bank of Kigali on Thursday signed a €100 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 €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 COP 28 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 signature ceremony the European Investment Bank and the 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 the 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.
CEO of Bank of Kigali, Dr. Diane Karusisi, stated, “This partnership represents a major step forward in enhancing Rwanda’s agricultural sustainability and underscores Bank of Kigali’s dedication to building economic resilience against climate change. Through this collaboration, we are driving transformative change to ensure a climate-resilient future for Rwanda and beyond. It’s a pledge that goes beyond mere financial support, highlighting our focus on green growth.”
EIB Vice President, Thomas Ostros, said, “The agreement we have signed here today will help to further increase the impact of climate related investment by developing a green taxonomy for the financial sector that supports scaling up green investment aligned with the goals of the 2015 Paris Climate Agreement.”
“It will serve to mobilise climate finance by tackling barriers that hold back engagement by commercial banks and enable them better embrace climate finance best practice across all activities, catalyse new funding for green projects, and better assess, monitor, and report on the climate related risks,” he added.
He went on to highlight how the €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,” he added.
“This new partnership between the European Investment Bank and Bank of Kigali, backed by the European Union, demonstrates how committed financial partners can close a gap by supporting private sector development in the agriculture sector, one of the drivers of the country’s economy, and facilitate access to markets and finance for agri-food SMEs and smallholder producers, while also focusing on tackling the impact of the climate emergency and support vulnerable communities threatened by climate change,” said Ambassador of the Delegation of European Union to Rwanda, Belen Calvo Uyarra.
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.
Over the last decade, the European Investment Bank, which is the world’s leading climate financier, has helped to strengthen climate finance technical skills of more than 40,000 African financial professionals. Additionally, it has provided more than €225 million over the last decade for private sector investment across Rwanda in partnership with Rwandan businesses, banks, financial partners and microfinance institutions.
