Investments in renewable energy have increased tenfold in Rwanda in recent years. According to the European Union (EU) GET.invest programme, these investments have been made more with international capital and foreign currency. “Local currency financing is one of the missing links to increase investment flows into renewable energy,” says GET.invest.
The programme is supported by donors including the European Union, Germany, Sweden, the Netherlands and Austria. It will be part of an initiative to encourage local currency financing for renewable energy, with the Financial Systems Development Cluster implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).
The programme implemented by the German development agency was set up by the German Federal Ministry for Economic Cooperation and Development (BMZ) with the aim of encouraging financial sector reforms. For its part, the GET.invest programme aims to support investments by private companies in renewable energy. Both programmes are led by GIZ. The German institution is involving Rwandan banks in these programmes to increase investment in decentralised renewable energy in Rwandan francs.
Collaboration with two local banks
The GET.invest and GIZ Financial Systems Development Cluster initiative will help financial institutions in Rwanda to develop and offer financial products to increase the share of financing for renewable energy. The two programmes have already started working with Bank of Africa Rwanda (BOA Rwanda), the subsidiary of the pan-African Bank of Africa (BOA) group based in Bamako, Mali. GIZ is also working with the Compagnie Générale de la Banque (Cogebanque), a financial institution based in Rwanda.
« This partnership will enable us to offer specific financial services to actors and stakeholders in the renewable energy sector in Rwanda. We are pleased to partner with this important facilitator to help Cogebanque increase its outreach to small and medium enterprises (SMEs) involved in renewable energy projects, » says the bank led by Guillaume Ngamije Habarugira.
Collaboration with the Rwandan Bankers Association
At Cogebanque and BOA Rwanda, the two programmes will provide advice, including on due diligence processes and the development of specific financial products for renewable energy projects and companies. The Rwandan Bankers Association (RBA) will also play an important role in encouraging renewable energy financing in local currency (Rwandan Franc), through the organisation of a series of virtual events to better understand potential clients in the renewable energy sector and to facilitate dialogue between financiers and companies and projects.
The association of 17 banks has already contributed to the roundtable that led to the launch of the GIZ-led initiative in June 2021. The collaboration is expected to last until the end of 2021. According to GET.invest, the experiment could be repeated to the delight of off-grid providers. These companies have become major players in the process of electrifying rural areas in Rwanda. The East African country has an electricity access rate of 65.4%, of which 47.6% of households are connected to the national grid and 17.8% have access to electricity through off-grid systems (mainly solar), according to the Rwanda Energy Group (REG). The Rwandan government aims to achieve universal access to electricity by 2024.
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