Strengthening national public and private MFIs to finance activities addressing climate change

13 April 2016
Accra, Ghana

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Strengthening MFIs to finance climate change activities in Ghana

Background

To implement UNEP’s Green Climate Fund Readiness Programme in Ghana the FS-UNEP Centre collaborated with the financial sector, especially microfinance institutions (MFIs), to work out financing possibilities for climate smart products (e.g. clean energy solutions, irrigation technology). The first activity undertaken in the framework of this project was the establishment of a detailed market analysis which showed that Ghana has a well-developed financial sector with more than 400 MFIs, but only a few provide financing for climate smart products. After a kick-off meeting in June, Carola Menzel and Andrea Bode, Senior Project Managers at the Centre, held a workshop for MFIs in October in Accra on “Strengthening national public and private MFIs to finance activities addressing climate change” and provided information on risks and opportunities of climate change adaptation, the potential for clean energy in rural areas as well as financial needs for adaptation and mitigation measures in Ghana. Suitable solutions (e.g. solar home systems, treadle pumps) were presented and the MFIs’ experiences in these fields were discussed. During their Ghana mission Ms. Bode and Ms. Menzel also conducted individual meetings with representatives of MFIs, the Ghanaian Microfinance Association (GHAMFIN) and technology providers. An outcome of the mission was that the Ghanaian MFIs are well aware of climate change in their country, how this affects their clients and themselves and the need of adapting their financial products to climate change. However, a lack of knowledge about the market and its technology providers as well as on how to initialize climate smart financing, hinder them to take prompt action. To address these issues the team decided to further promote climate smart financing and to establish connections between MFIs and technology providers. 

 

The Workshop

Thus, on April 13, 2016, a second climate smart financing workshop for MFIs (and other SME financiers) was organized by the FS-UNEP Centre Team with support from GHAMFIN and GCF National Coordinator for Ghana. This was held at the National Banking College in Accra. Technology providers of solar home systems, small scale biogas technologies and sustainable irrigation pumps were invited to present their product portfolio. Four of them joined the workshop to demonstrate their products and provide information on prices as well as case studies on how financing of their systems could work and how they would have positive impacts on the MFI’s client’s income. The aim of this activity was to familiarize the participating MFIs with the climate smart market, to bring together MFIs and technology providers and to give them the opportunity to discuss cooperation possibilities. With about 75 participants from MFIs, (and Savings and Loans institutions) and positive feedback from their side the workshop’s outcome can be judged as successful. To further support small scale climate mitigation and adaptation measures the next step of the GCF Readiness Programme is to help MFIs and other SME financiers in developing climate smart financing products through technical assistance. As not all of these institutions can be supported in the framework of the programme two to three institutions will be chosen through an idea competition which was presented at the end of the workshop. The team is currently waiting in eager anticipation for submissions from the institutions.