Rwanda is aiming to raise $6.2 billion in climate finance between 2024 and 2030, as part of its newly adopted Climate and Nature Finance Strategy. The announcement came during the 29th United Nations Climate Change Conference (COP29) in Baku, Azerbaijan, on November 14, 2024, where the country showcased its comprehensive strategy to tackle climate change and biodiversity loss.
The strategy, which focuses on innovative climate finance mechanisms and private sector investments, seeks to bridge a significant funding gap. The total cost of Rwanda’s Nationally Determined Contributions (NDCs), its climate action plans, since 2020 is estimated at $11 billion, with over $6 billion still needed to fully fund these efforts.
Rwanda’s Green Fund CEO, Teddy Mugabo, highlighted that the country’s strategy would focus on operationalizing green taxonomy, strengthening capacity building, adopting new financial tools, and applying financial de-risking strategies to attract private sector investments.
“By 2030, we aim to secure $6.2 billion for climate and biodiversity projects across Rwanda,” Mugabo stated, noting the urgency of addressing the impacts of climate change, which has already caused an annual loss of more than $300 million in 2022 and 2023.
Rwanda has set ambitious goals to achieve carbon neutrality by 2050, alongside promoting biodiversity and sustainable economic development. The new strategy is seen as essential in mobilizing the financial resources necessary to meet these targets.
Key to the strategy is enhancing resource mobilization and establishing a sustainable finance hub to diversify funding sources. According to the Ministry of Finance and Economic Planning (MINECOFIN), Rwanda intends to draw on a mix of public, private, and international funding to combat climate change and unlock economic opportunities tied to these efforts.
The strategy includes several financial instruments such as green bonds, carbon markets, and blended finance, each tailored to foster long-term climate and nature investments.
Green Bonds and Carbon Markets
Green bonds, debt instruments issued by both public and private entities, are designed to raise funds exclusively for environmental projects, such as renewable energy initiatives and sustainable infrastructure. Alongside green bonds, Rwanda is leveraging carbon markets to generate finance through carbon credits. At COP29, a major breakthrough occurred with the establishment of a UN-managed global carbon market, expected to set a global emissions trading standard and unlock billions of dollars for climate mitigation projects in developing countries.
Biodiversity Credits and Blended Finance
Rwanda is also exploring biodiversity credits, an innovative financial mechanism that enables private companies to fund conservation activities that yield positive biodiversity outcomes. In addition, the country is deploying blended finance—an approach that combines debt with risk-reducing mechanisms such as subordinated debt, collateral support, and extended loan terms. Blended finance helps lower the risks associated with projects in fragile states and is seen as a critical tool for attracting private investment in green sectors.
Rwanda’s Ireme Invest initiative, launched at COP27, serves as an example of blended finance. The initiative has successfully raised $260 million, with a portion of the funds already deployed.
Public-Private Partnerships and Nature-Based Solutions
Rwanda’s private sector is expected to play a key role in meeting the targets set out in the strategy through public-private partnerships (PPPs). The strategy emphasizes the importance of nature-based solutions, such as ecosystem restoration and sustainable land management, to reduce emissions while enhancing biodiversity, water security, and disaster resilience.
Strengthening Climate Finance Coordination
To ensure effective implementation, the strategy includes the establishment of a Climate Finance and Green Economy Department within Rwanda’s Ministry of Finance. This department will coordinate efforts to mobilize resources and fund climate projects, while the Ministry of Finance oversees the entire strategy.
Hortense Mudenge, Chief Strategy Officer at Rwanda Finance Ltd, stressed the importance of creating a conducive environment for attracting regional and international investments. She pointed to the Kigali International Finance Centre, established to foster investment, as a key component in unlocking Rwanda’s climate finance potential. “We need investors and the private sector to take advantage of the incentives provided through the Kigali International Finance Centre,” Mudenge stated.
Rwanda’s strategy marks a significant step toward securing the financial resources necessary to meet its climate goals and strengthen its position as a leader in sustainable development across Africa.
