The document discusses developing a green finance facility to catalyze private climate investments in emerging markets. It outlines key considerations for the structural design, governance framework, scope of activities, capitalization sources, and development process of a green finance facility. Specifically, it recommends a public-private partnership model to ensure ownership and participation from both the public and private sectors. The facility should focus on providing local currency financing, strengthening project preparation, and prioritizing projects with social, economic, and climate benefits.

1. Developing a Green Finance Facility to
Catalyse Private Investments
OECD Focus Group Discussion
October 27, 2020
Sidonie Gwet,
Africa Program Director
Coalition for Green Capital

2. CGC is expert on the Green Facility model, across its institutional design,
formation, capitalization, and administration
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Who we are and what we do
• CGC advances the Green Bank and
Green Finance Facility model,
partnering with governments,
national development banks,
development partners and investors
to form and support new programs.
Major supporters and collaboratorsWho we are
Partners
&
Funders
• CGC has helped design and create 8 Green Banks that have catalyzed
>$3B in climate investment:
Southern Africa, Connecticut (U.S.), Montgomery County (U.S.),
New York (U.S.), Rhode Island (U.S.), Washington DC (U.S.)
• CGC is leading efforts to launch a new $35 Billion National Climate
Bank in the US
• CGC is working with ADB on scoping new catalytic green finance
program in the Philippines
• CGC is working with partners in Rwanda on creation of new Rwanda
Green Investment Facility

3. Growing interest in Green Finance Facilities/Green Banks to Scale-Up Climate
Investment in Emerging Markets
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4. Example of key considerations in the structural design of green
finance facility in emerging markets
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Ability to implement a Public Private Partnership (PPP)
framework for both resource mobilization and product
offerings
Ability to provide both finance and grants where needed
Ability to develop project pipeline
Independent investment decision/governance
Ability to complement, integrate and leverage existing grants
and financing programs
Create as a standalone
new institution
Create within an
existing institution
Private Facility
Public/Private
Partnership
Example of structural design options

5. Key considerations in the design of the governance framework
• Public-Private Partnership Framework can often be the best option:
– To ensure sufficient ownership from the public sector while allowing private sector
participation both in the management and in the capitalization (and avoid political influence
on day-to-day operations)
– To provide a flexible governance structure that can work with or without sovereign debt
constraints
– Should be attractive enough to mobilize domestic private investors as well as international
funding
• Leverage existing key initiatives / existing local champions of climate finance
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6. Key considerations in the scope of a green finance facilities activities
• Mission & Objectives align with the national development growth ambitions as well with NDCs country targets
• Focus on access to finance in local currency: providing capital in local currency to green developers
• Strengthen project preparation to develop pipeline of bankable projects
• Focus on projects with great potential both social economic and climate impact
• Prioritize green home grown solutions with clear potential market demand
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Main market constraints in some markets we are operating:
₋ A financial sector with limited green investment capacity at commercial banks (green-market intelligence at local banks, etc)
₋ Limited access to affordable credit in general and for green developers in particular (high interest rates, short tenor, lack of equity,
currency risk, need for collateral - in most cases, at least 100% of the total value of the loan, etc.)
₋ Foreign Exchange risk

7. Capitalization for Green Finance Facilities can come from a variety of
sources: both domestic and international
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8. Funding sources: need to prioritize local domestic sources of funding
to capitalize the green financing facility
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• Finding ways to mobilize local domestic sources of funding
– Financing conditions & terms that will allow financial products to be effective and affordable
– Mobilize local financing solutions (including banks, credit cooperatives, microfinance, etc)
– Public funding from adequate taxation to support the capitalization of the green finance facility
– Most resource mobilization strategies focus on international finance
– Yet there is “mismatch” between international funds available and financing needs from the local project developers (amounts, FX,
terms & conditions, eligible criteria, etc)
– Additionally, the cost of foreign exchange and the country risk premium are most of the time very high in Africa for example
– This will ensure local markets development as well as the sustainability of resources mobilization especially during Covid-19

9. Other priority actions to consider to support the development of a
green finance facility
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• Develop project pipeline ready to be supported by the green finance facility
• Develop market-fit financial products
• Focus on sectors with clear and sound regulations (enabling environments) that facilitate private sector
development in green priority sectors
• Promote local banking policies and regulations to facilitate green investments from domestic financial institutions

10. Green Facility development typically follows a four stage process
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11. Thank you
Sidonie Gwet
Coalition for Green Capital
sidonie@coalitionforgreencapital.com
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