Kigali International Financial Centre (KIFC) has launched its Sustainable Finance Roadmap that will guide Rwanda to implement and pool investments in green and sustainable growth.
The road map, developed in partnership with the United Nations Development Programme (UNDP) and the government of Rwanda, was unveiled this October 26, 2022, in Kigali at an event officiated by the Minister of State in Charge of National Treasury, Richard Tusabe.
The roadmap (2022-2029), is aiming at unlocking green finance and promoting Rwanda as a financial center and hub for distance in Africa and it is in two key facets: ‘scaling sustainable finance’ and ‘making finance sustainable.’
The KIFC CEO, Nick Barigye said that sustainability is very key in the roadmap and will enable Rwanda’s ambition to become a sustainable finance hub, attracting international capital to finance local and regional green and sustainable finance activities/projects.
The roadmap has three Key Strategic Objectives (KSO) of sustainable finance which include: requiring the KIFC to have financial instruments to support its ambition to be a sustainable finance hub; to develop the necessary financial sector infrastructure to support sustainable finance instruments and cultivate the first-class human capital needed to build and underpin this sustainable finance infrastructure.
These Key Strategic Objectives translate into eight actionable Key Strategic Activities (KSI) which include: Attracting Sustainable Venture Capital/ Private Equity, building a Sustainable Stock Market, transitioning to Sustainable Lending, Developing Sustainable Debt Capital Markets, and Expanding the Sustainable Insurance Sector.
it also seeks to Enhancing Rwanda’s Financial Sector Environmental, Social, and Governance (ESG) Risk Management, Improving Rwanda’s Corporate ESG Disclosure and Reporting, and Capacity Building in Sustainable Finance.
It is clear that global capital is increasingly being allocated toward sustainable financial strategies. At the close of 2020, sustainable equity Assets Under Management (AUM) were estimated to be close to $60 trillion, classified by a range of ESG investment strategies.
Currently, very few Rwandan companies would qualify for investment under any of these strategies, let alone the challenges presented by the relatively small size and low liquidity of the Rwanda Stock Exchange.
However, Barigye said that Rwanda has already good leadership and a political will to make this happen but every investment decision made in projects, should consider important issues to do with environmental, social, and governance.
Barigye showed that sustainability in financing has been mainly focusing on men and leaving out women in the process thus a need to refocus on the notion of sustainability.
For instance, he showed that 84 percent of funding for African startups (close to $9.8billion since 2019) has gone to male-founded businesses and only one percent is allocated to female-founded businesses, which equates to around $146 million.
The UNDP Deputy Resident Representative, Varsha Redkar Palepu said that roadmap is a cornerstone of building a financial ecosystem that will unlock sustainable Finance in Rwanda and its Vision. 2050 that sets an ambitious path towards the transformation of the nation to an upper-middle income status by 2035.
“The roadmap is also timely in that it is addressing the concerns of millions of Youth on the continent whose overarching concern is access to sustainable finance, particularly as small youth-led businesses,” Palepu said.
Participants agreed on collaboration and coordination in implementing the roadmap (especially capacity building and policy needs) but specifically in the green growth agenda, the Global Green Growth Institute (GGGI) called for consorted efforts to raise the $ 11 billion needed by 2030 to implement green growth agenda.
Investors like Dalberg Advisors represented by CJ Fonzi revealed that they are already in the country to invest in carbon credits, an initiative that will contribute to the green growth agenda and create incomes.
Every December, the KIFC will convene stakeholders to access the progress made in the short term and long term.