WASHINGTON, December 8, 2023 — A new Development Policy Operation (DPO) for Rwanda will support the establishment of a robust climate finance architecture to direct more private sector financing toward projects related to climate adaptation.
The $125 million DPO, which falls under the Boosting Green Finance, Investment and Trade Project (GreenFit) in Rwanda, is the first in a programmatic series under IDA20. It will support Rwanda's commitment to reducing greenhouse gas emissions by 38% by 2030 and is aligned with Rwanda’s National Strategy for Transformation (NST1) and its objective to become a lower-middle-income country by 2035.
The DPO will strengthen Rwanda's carbon market framework and streamline legislation, such as laws governing national parks and nature reserves, to facilitate green growth and encourage private sector participation in the management of natural assets. Additionally, the operation aims to facilitate fair competition, trade in services and access to digital financial services (particularly for women). Other key reforms will focus on improving insolvency processes and dispute prevention mechanisms, aimed at enhancing investor confidence.
“Rwanda has shown remarkable progress in its development journey. Yet, in the face of climate challenges, the path to an inclusive and sustainable economy requires strategic reforms to catalyze private sector investment, particularly in green areas of the economy,” said Sahr Kpundeh, World Bank Country Manager for Rwanda. “This financing will support the Government of Rwanda in its efforts to strengthen economic resilience by increasing private sector involvement.”
This initiative is the result of a concerted effort by the Government of Rwanda and the World Bank. The project's beneficiaries will span across the private sector (with a particular emphasis on women-owned firms) but also support the rationalization of public investment.
"This DPO is a testament to the World Bank’s commitment to support Rwanda’s long-term development goals. It is a strategic step towards fostering an environment conducive to sustainable growth and increased private sector investment,” added Albert Solé, World Bank Senior Private Sector Specialist.
Rwanda has made remarkable progress in its development trajectory, as seen by the sevenfold increase in GDP per capita between 1994 and 2022. Despite this growth, the country faces many challenges, including significant levels of poverty, a heavy reliance on agriculture, and a lack of high-productivity jobs. Furthermore, as seen by the significant economic and infrastructure devastation brought on by the 2018 floods, Rwanda is struggling with the effects of climate change, which threaten its developmental aspirations. These factors underscore the urgency for transformative action.
