Baku salutes Uganda’s progressive green financing policy environment

November 19, 2024 in Energy, Finance, Financial Services, Investment, Land & Agriculture, Policy, Trade & Industry by Editor

UDB Managing-Director-Patricia-Ojangole-in-white-speaks-during-a-panel-discussion-on-the-sidelines-of-COP29-in-Baku-Azerbaijan November 15

Uganda’s pioneering and visionary green financing initiatives have earned recognition for their potential impact on slowing the progression of climate change.

The country’s progressive policy environment and government’s efforts in extending patient capital to private enterprises in areas of low carbon industrialization, green manufacturing and climate resilient infrastructure, were the highlight of a high-level panel discussion convened by Uganda Development Bank (UDB) on the sidelines of the ongoing COP 29 in Baku, Azerbaijan on November 15.

In his keynote address, Ibrahima Cheikh Diong, the newly elected Executive Director of the Fund for Responding to Loss and Damage said it was important today more than ever, for financial institutions to mainstream climate financing.

“And the fact that the bank has put together a climate finance facility, it shows leadership, a vision, but more importantly, trying to mainstream something that all the institutions have to be relevant. And I think this is something to be saluted, but more importantly, we need to take it to the next level, to make sure that going forward, whatever the bank does, it has to be climate relevant. And I think that is the intention behind the climate finance facility.”

UDB’s Managing Director Patricia Ojangole, emphasized that while developing nations such as Uganda were on the frontlines of climate change, they also showed innovation and are contributing valuable solutions to the climate crisis.

She gave UDB’s Climate Finance Facility as one of the responses designed to respond to the challenges posed by climate change. Since the facility’s inception in 2019, the bank has approved projects worth USD85 million in low carbon industrialization, green manufacturing and climate resilient infrastructure among others. Green manufacturing constituted 82pc of the projects UDB structured and approved this year.

“The Bank established the Climate Finance Facility to coordinate green financing initiatives, provide technical support in structuring green interventions, provide guidance regarding the green financing options, identify and assess low carbon and climate resilient investments, and propose suitable adaptation and mitigation strategies for projects. The idea is to deliberately finance interventions that target reducing emissions and building the resilience of Ugandans to the impacts of climate change,” Ojangole said.

Joseph Nganga, Vice President for Africa Global Energy Alliance for People and Planet (GEAPP) said Uganda was showing tremendous leadership and had “one of the best policies for renewable energy,” and is “one of the few if not the only country on the continent that has an e-cooking tariff that encourages cooking with electricity thus reducing emissions.

The country set up a hybrid funding system to encourage connections to the poorer parts of the country to ensure everyone has access to electricity.” 

Marco Serena, Group Chief Sustainable Impact Officer at The Private Infrastructure Development Group said; “We have developed about 250 projects across Sub Saharan Africa and South and South East Asia, 20 of those were in Uganda which is quite a big chunk of our 40 countries. And some of the reasons are, we took advantage of the scheme on mini hydro and the regulatory environment there and the opportunities that exist.”

This year’s COPs hinges on limiting global warming to 1.5°C, emphasizing the urgent need for investment in climate action. World leaders, the private sector and environmental campaigners have made appeals for boosting ambition through national plans and transparency while driving action with effective financing to reduce emissions and address climate impacts.

Africa in particular has spoken in unison, highlighting that the cost of inaction is far greater than the investment required to build a resilient and prosperous future for the 1.3 billion population continent, whose economies lose up to 5pc of GDP, on average, annually due to climate-related disruptions. The continent has experienced a 30pc reduction in agricultural productivity since 1961 due to climate change, a figure higher than any other region in the world.

In Uganda, effects of climate change have turned rainy seasons around with the country experiencing shorter or longer rains and harsher droughts – especially in the eastern and north-eastern Uganda. The country’s high and rapidly growing population is putting pressure on the environment, and accordingly, wetland and forest cover are reducing. Forest cover decreased from 24pcn 1990 to 12.4pc in 2021, while wetland coverage dropped from 13pc to 8.9pc over the same period. The World Economic Forum’s 2020 report identifies these trends as significant global risks.