AfDB Annual Meetings: Funding the Rwandan private sector

The African Development Bank (AfDB) has over $200 million available for private sector funding in Rwanda, but these funds have been sitting idly in the bank's coffers for many years. Aissa Toure, the AfDB Country Manager for Rwanda, emphasized the importance of boosting infrastructure in Rwanda, particularly in key sectors like water sanitation, infrastructure, energy, and transport. Currently, the bank has a portfolio of $1.5 billion in Rwanda, with 87% of that allocated to the aforementioned sectors. These investments are crucial for addressing climate change and ensuring sustainability. Toure highlighted Rwanda's commitment to mainstreaming climate change considerations in all infrastructure financing. To support this initiative, the bank is considering establishing a climate finance window to incorporate climate considerations into infrastructure projects. Rwanda's proactive approach to climate mainstreaming sets it apart as a leader in sustainable development. Toure emphasized the significance of prioritizing adaptation over mitigation in climate finance. While both are essential, adaptation is crucial for Africa due to the continent's vulnerability to climate change impacts. Rwanda's green climate strategy reflects this focus on adaptation, aligning with the bank's approach to climate financing. Despite the potential challenges in mobilizing private capital for climate investments, Toure expressed optimism about the private sector's interest in green economies. While smaller sustainable projects have gained traction in Rwanda, larger impactful investments are still in the nascent stage. However, positive steps have been taken, such as the AfDB funding a $100 million E-mobility project and a $20 million public-private partnership in the water sector. Toure emphasized the need to raise awareness among the private sector about the bank's available funds and investment opportunities. He acknowledged the misconception that the AfDB primarily focuses on public financing and highlighted the need to educate the private sector about the diverse financing options offered by the bank. Despite the African continent's large pool of available private sector funding being primarily directed to countries like South Africa, Nigeria, Egypt, Morocco, and Kenya, Rwanda has received substantial funding from the AfDB. In 2023 alone, the bank provided Rwanda with $242 million for private sector projects, underlining the opportunities available for Rwandan businesses. Toure emphasized the importance of enhancing outreach efforts to inform the private sector about the AfDB's offerings and engage them in potential investments. Addressing the perception of high risks associated with climate and green mobility finance, Toure stressed the importance of risk management. He highlighted the need to understand and manage risks effectively to provide the necessary comfort to private sector investors. Toure noted that while accessing finance, particularly for climate-related projects, can be challenging, it is essential to engage with the specific needs and segments of the private sector to tailor solutions effectively. Collaboration and partnerships play a critical role in overcoming development challenges related to climate financing. The AfDB is actively seeking partnerships with institutions like the IMF and the World Bank to leverage resources and expertise in sustainability initiatives. By working together with development partners and engaging with the government, the bank aims to amplify its impact and address climate finance challenges more effectively through collective action.