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Green Climate Fund
Over USD 750 million to increase climate financing of local financial institutions in 17 countries.

The Agence française de développement (AFD) Group is launching a major program entitled "Transforming financial systems for climate", in partnership with the Green Climate Fund (GCF). This program worth more than US$750 million represents AFD Group's pioneering ambition to implement the Paris Agreement by accelerating the local reorientation of investment flows towards low-emission development which is also resilient to climate change.

 

An ambitious partnership for the climate

In line with the strategic objectives of the two institutions in terms of climate and support for local financial systems, AFD Group and the GCF are launching an unprecedented large-scale program. This program aims at supporting the transformation of local financial systems to combat climate change by making the concessional resources of the GCF available to countries and by capitalizing on AFD Group's longstanding experience in climate finance in developing countries.

The GCF approved a contribution of US$280 million to this program worth a total amount of more than US$750 million. This is one of the largest financial contributions of the GCF since its operationalization in 2015.

Transforming local financing practices in favor of the climate

The primary objective of this program is to encourage local financial institutions to change their financing practices in favor of the fight against climate change. A total of 17 developing and emerging countries will benefit from this support, with a strong focus on Africa[1].

The program, implemented during 6 years, takes a flexible approach by providing financial resources and technical assistance tailored to the needs of financial institutions and their beneficiaries. This support will be earmarked to local public and private banks and microfinance institutions, in order for them to finance projects generating strong climate benefits. The projects will be run by companies, agricultural cooperatives or households. The program also attaches great importance to climate adaptation projects, since 40% of the funding will be dedicated to them.

Dual course of action: climate and sustainable development

By promoting the redirection of financial flows towards low-carbon and resilient investments, the program will have impacts in terms of combating climate change but also poverty and inequality. The implementation of both the Paris Agreement and the Sustainable Development Goals are central to the approach.

The partner financial institutions will invest in sectors as diverse as renewable energies, energy efficiency, sustainable management of natural resources, or climate-smart agriculture to ensure a sustainable and in-depth transformation of local actors' practices, consistent with a low-carbon and resilient development.

“Local financial actors are part of the solution”, stated Rémy Rioux, Chief Executive Officer of the Agence française de développement. “The Paris Agreement calls for financial actors to redirect investments towards low-carbon and resilient pathways. AFD and its objective to be ‘100% Paris Agreement’, has consequently come up with an initiative which is unprecedented in terms of scale and objective: over US$750 million to support the transformation of local financial systems in 17 countries, with a focus on Africa, to ensure that both climate change mitigation and adaptation projects access financing and that countries are able to implement the commitments made at COP21. By devoting US$280 million to this program, the Green Climate Fund is sending a strong signal, as it is one of its largest contributions since it has been set up. It reaffirms its crucial role in the implementation of the Paris Agreement”.

 

[1] Benin, Burkina Faso, Cameroon, Côte d'Ivoire, Ecuador, Egypt, Kenya, Madagascar, Mauritius, Morocco, Namibia, Nigeria, Senegal, South Africa, Tanzania, Togo and Uganda