- The Facility is a Special Purpose Vehicle with a unique and specific focus on finance to unlock and catalyze private sector investment in enterprises that drive green impact and financial inclusion.
04th April 2023 – Kampala, Uganda: Uganda Development Bank (UDB), the country’s key strategic partner in delivering socio-economic transformation through sustainable financial interventions, has today launched the UDB Climate Finance Facility (CFF), a strategic Fund that will make available affordable finance that aims to promote climate-smart agriculture, ensure climate resilient infrastructure and low carbon industries.
Addressing guests at the launch, the Managing Director UDB Ms. Patricia Ojangole said; “The increasing threat of climate change and environmental degradation has the potential to present high socio-economic risks to the economy. As the impacts continue to manifest through floods, drought, landslides, animal and crop epidemics among other signs in different parts of the country, they are more deleterious to the poor and marginalized who depend largely on natural resources for their livelihoods.”
Over 70% of Ugandans depend heavily on micro, small, and medium enterprises (MSMEs) for employment, and these generally have less capacity to withstand financial shocks.
“The vulnerability of Uganda’s population requires the urgent need to adapt and maintain future economic growth opportunities by transitioning to a low carbon (green) economy. This will require massive investment in green technologies. Green finance will be central to providing the flows of capital required. This is primarily driven by the fact that most green technologies are characterized by high capital intensity and consequently high upfront financing requirements,” Ms. Ojangole explained while at the high-level launch held at Mestil Hotel In Kampala.
As a financial intermediary, the Bank will stimulate green economic growth by coordinating green financing options, mobilizing and increasing access to green finance by structuring and providing tailored products to address market gaps including risk mitigation products, and providing the right products to address investment demand in the green sector.
“I would like to thank UDB for this intervention. Without appropriate funding, we cannot build the capacity to adapt to these impacts, to mitigate these impacts, or even build resilience. Am delighted that financial institutions are starting to realize their role in the climate change agenda and strategically getting involved,” Mr. Ramadhan Ggoobi, Permanent Secretary/Secretary to the Treasury said at the launch.
The initiative will foster climate-conscious change in investments with a clear objective of building climate resilience among the businesses supported. The intention is to build climate-proof businesses as this is a better strategy for building long-term viable enterprises that are adaptive to climate impacts and seek a low-carbon development pathway.
The move to create a Climate Finance Facility builds on the Bank’s successful initiatives to foster innovation, engender holistic sustainability, and increase interest in green technologies. In line with the Bank’s priority sectors, the facility shall target investments in Climate Smart Agriculture, Low Carbon Industries, Climate Resilient Infrastructure, and cross-cutting projects like sustainable waste management, clean energy – renewable energy and energy efficient projects, sustainable water resources management, eco-tourism, and related investments.
“There have been commendable efforts by the Government in establishing structures and policies to advance climate action. Progress is ongoing in scaling up local community solutions to manage climate impacts. However, it is now time for financial institutions and private sector players to get involved. That’s why we are committing UGX 50 billion towards the capitalization of this facility.This is expected to grow with support from various partners over time,” Ms. Ojangole concluded.
The beneficiaries will also be exposed to the Bank’s Green Investment Advisory as well as the Project Preparation Support to make them bankable but more importantly, grow them to become viable green businesses.
The facility will target climate change mitigation and adaptation initiatives that are aligned with the Bank’s priority sectors. The facility will provide opportunities along value chains and supply chains that target to combat climate change impacts through evidence-based and innovative climate-smart technologies. Target initiatives will include:
- Climate Smart Agriculture and Agribusiness
- Low carbon industry
- Climate Resilient infrastructure
- Clean energy
- Sustainable waste management
About the Green Fund
- Green impact – the facility will target investments that demonstrate how they reduce current and/or future vulnerabilities to climate change impacts, and the efforts to reduce or limit greenhouse gas (GHG) emissions or enhance GHG sequestration both in the short and long run. Investments shall demonstrate compliance to environmental sustainability and climate action.
- Other requirements – In addition to the green impact, the applicants will submit other requirements. Requirements for access to funding through the mainstream lending channels can be found at https://www.udbl.co.ug/products-services/
The Fund will have non-financial benefits
- Green Investment Advisory – the Bank will provide technical readiness support to facilitate green enterprises start and/or scale up their businesses through innovation labs/hubs. Prospective clients will get customized training in leadership and governance, financial literacy, business development and climate risk assessment, among other pertinent skills.
- Project Preparation and financial structuring – this service will fill the void of inadequate stock of bankable projects that are required to propel development. The Bank will support investments with innovative ideas to conceptualise designs, undertake pre-feasibility and feasibility studies, and financial structuring that guides commercial operations.