Growth in Green Finance Brings Opportunities
Responsible investors ranging from major international financial institutions to smaller funds and banks today increasingly see green finance as an important way forward – not least due to widespread global concern about issues such as climate change. “There’s an ongoing shift in the finance industry towards greener operations, and rapidly expanding global green finance represents a huge opportunity for economies and businesses in low-income countries,” says NDF’s Managing Director Pasi Hellman.
Hellman believes that this trend helps NDF to build productive partnerships with co-financiers. “All NDF projects can clearly be classified as green finance, because every initiative we support must have demonstrable impacts in terms of mitigating or adapting to climate change,” he explains.
NDF has recently diversified its forms of financing, adding concessional loans and equity to traditional co-financing grants. “We feel our role is to use public funds flexibly to support innovative projects in ways that can catalyse action and leverage additional financing, especially from the private sector,” says Hellman.
“All NDF projects can clearly be classified as green finance.”
NDF seeks out initiatives that can be upscalable, replicable and soon self-sustaining. “One stumbling block is that investors and banks sometimes see green projects in low-income countries as risky – so we strive to use public funds to de-risk such operations and demonstrate that they can be good commercial opportunities,” says Hellman.
Hellman cites several ongoing initiatives illustrating the increasing diversity of green finance provided by NDF, including the Green Guarantee Facility for African SMEs, launched under the auspices of the African Guarantee Fund in 2016, and the
PROADAPT
programme, managed by the
Inter-American Development Bank (IDB)
, which aims to build climate resilience into micro, small and medium-sized enterprises and local communities in Latin America.
NDF’s new involvement in the revamped Energy and Environment Partnership Programme of Southern and East Africa will add a further complementary dimension to this support. During 2017 NDF sponsored three high level conferences on green finance in Africa together with the African Guarantee Fund and the International Trade Centre. A similar meeting is planned for Abidjan in March 2018.
“Development finance organisations like NDF can help on the demand side of green finance as well as the supply side – by supporting capacity development, training, awareness-raising, early stage financing and project development for businesses targeting climate-resilient growth, clean energy and climate adaptation; while also offering diverse financial products on the supply side,” he adds.