Project

Rwanda (FONERWA)

At a Glance

Start Date Q1 2012
Funding Source Core
Approved Budget 0
Status Complete
Thematic Area
  • Cross Cutting

Project Rationale

Established in 2012, FONERWA aims to mobilize domestic and international climate finance, and secure sustainable financing to support projects toward the implementation of the GGCRS. As a cross-sectoral national financing mechanism, FONERWA is the vehicle through which environment and climate financing is channeled, programmed, disbursed, and monitored.

FONERWA has been successful in its objective of mobilizing climate finance for Rwanda with total direct capitalization of approximately $89 million19 from DFID, the German Development Bank (KfW), the Government of Rwanda (GoR), and the Least Developed Countries Fund (LDCF) of the AfDB.

The key priority of the Fund’s operations is to ensure a sustained and effective delivery that continues to incrementally commission projects, build capacity of potential applicants to access funding, commit finance and quality assure implementation of funded projects. Additionally, operations aim to enhance FONERWA’s role in addressing wider national strategic needs related to the environment and climate change. This will necessitate technical support to the GoR to adequately resource the Fund, build capacity and execute its mandate.

Building on 2015-2016 work

This project will build on GGGI’s work in 2016 that conceptualized the establishment of a Technical Support Facility to provide technical and operational support to the Secretariat, as well as direct support to the GoR in mobilizing and channeling funds for climate change and environment projects beyond the Fund.

GGGI supported development of a business plan in 2016 that underscores the strategic role of the Technical Support Facility in delivering on the Fund’s mandate to mobilize resources for further Fund capitalization, facilitate access to international climate finance, and strengthen the staff capacity of the Secretariat for Fund management. The business plan reinforces GGGI’s operational support to the FONERWA Secretariat in consultation with other partners.

Strategic recommendations of the draft FONERWA Business Plan that will be considered for possible uptake during the remaining period of 2016 include:

  • The need for the Fund to upscale to larger programmatic activities through earmarked (targeted) calls while maintaining the current, demand-led Fund;
  • Replenish the Fund’s capitalization and carry out further resource mobilization through bilateral funds, Climate Investment Funds, as well as the Green Climate Fund, among others;
  • Increase the Fund’s management fee to 10%, in line with the standards of similar challenge funds internationally;
  • Support the implementation of the full range of recommendations in the private sector strategy, including the diversification of the financial instrument, which will include Viability Gap Funding (VGF), to increase private sector engagement and leverage; and
  • Explore restructuring of the Secretariat to respond to emerging needs and ensure it is “fit for purpose” in terms of administrative and management support to scale up FONERWA.

Planned Results

GGGI has provided ongoing support to FONERWA. It has finalised the 2017 – 2020 business plan. This led to the change of law in June 2017 giving more independence to FONERWA and setting up the hybrid fund.
Business Plan implementation is now underway which includes:

  • Resource mobilization with GGGI seeking funding from SIDA and the NAMA facility;
  • Set up a new financing facility to fund mini-grid projects (with NAMA funding) where GGGI has provided technical support to choose the financial instruments and will support the setting-up of the facility and the full program designing;
  • Support of the Green City Project (where GGGI has been instrumental to enable this project to start and gain momentum towards establishment of the green city pilot, see the Green City Pilot teaser);
  • Support to proposal Design from the Project Preparation Facility (1.5 Million) and funding proposal (that is scheduled for B19 for about $35 Million);
  • Coordinated the development of Strategic Program for Climate Resilience (SPCR) and presented to the Climate Investment Fund (CIF) council;
  • Projects funding (with GGGI looking for new bankable projects opportunities for FONERWA);
  • And recommendations to the Board of Director from GGGI on FONERWA’s governance.

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