AFI launches inclusive green finance resource database

Inclusive green finance (IGF) policies from 25 countries across the AFI network are now available through AFI’s latest resource database.

Designed to facilitate peer learning through knowledge sharing of existing policies and regulation, with an easy search and navigation, the accessible and convenient database was launched on 20 July 2020 during an IGF virtual member training.

“IGF policies are already in place by many AFI member institutions and their countries and can serve as case studies for policy development,” AFI Head of IGF Johanna Nyman explained.

The database is structured in two distinct sections: national level financial sector strategies, including national financial inclusion strategies (NFIS) with explicit green elements, and other related financial sector strategies are part of the first section of the database.

Strategies, policies and regulations by AFI member countries catalogued by the 4Ps of inclusive green finance: promotion, provision, protection and prevention, are included in the second section.

“I am happy to see that the 4P’s of IGFWG has become the base of our knowledge and a pillar in our daily work while we establish or implement IGF policies,” said Walid Ali, co-chair of IGF Working Group (IGFWG) from the Central Bank of Egypt as he welcomed AFI members to the technical training where the data base was presented.

Latu Sera Kaukilakeba, an analyst from the Reserve Bank of Fiji’s (RBF) Financial Systems Development Unit, shared green finance and climate change elements in Fiji’s current NFIS (2016-2020), featured in the database.

The database also showcases how Fiji established a Natural Disaster Rehabilitation Facility, a climate resilience and adaptation program that replaces damaged inventory, covers loss of sales, repairs damaged plants, and restores damaged buildings for businesses and homes affected by natural disasters.

“In response to the COVID-19 outbreak, the disaster facility has been expanded to support businesses in the aftermath of natural disasters and health epidemics or pandemics,” said RBF’s Domestic Markets Manager, Apenisa Tucakau.

AFI member institution can also refer to the database to learn how Fiji had issued the Agriculture and Renewable Energy Loans Ratio (RELR). According to Tuicakau, through the RELR, commercial banks are required to hold two percent of deposits and similar liabilitis for renewable energy loans.

Considered as part of sustainability, financial inclusion is one of the pillars of Sri Lanka’s Roadmap for Sustainable Finance (2019) featured in the database. The roadmap proposes the development of accessible and effective products  tailored specifically to low income households and micro-, small- and medium- enterprises (MSMEs) that offer protection against climate change and natural disasters, explained Dr. Anil Perera, Additional Director of the Domestic Operations Department from the Central Bank of Sri Lanka during the training.

“The roadmap assigns responsibilities mainly to regulators, banks, and finance and insurance companies in areas such as disaster insurance,” said Dr. Perera.

The Promotion component of the 4Ps, includes policies and initiatives from Bhutan, Cambodia, Morocco, Philippines and Thailand, as well as a link to Bangladesh Bank’s Quarterly Report on Green Banking Activities of Banks and Financial Institutions and Green Refinance Activities. Bangladesh Bank has been collecting and sharing data on green finance through this report since 2013.

As part of the Provision section of the database are the Central Bank of Egypt’s policies that require banks to allocate 20 percent of their total credit portfolio to MSMEs, which listed include renewable energy and climate-resilient irrigation sectors. Initiatives from Argentina, Armenia, Eswatini, Jordan, Seychelles and Vanuatu are among other countries featured in the Provision segment.

Within the database Protection section is the  Bank of Ghana’s support for the development and initial implementation of the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending (GIRSAL) that increases the total amount of credit available to agriculture and agribusiness sectors in the country. The Protection segment also features initiatives by Nigeria, the Philippines, Peru and others.

Among the Prevention polices available  Banco Central del Paraguay shows how its Flexible Guide for the Management of Environmental and Social Risks encourages the inclusion of non-financial risks in credit decisions. Initiatives from Brazil, Nepal, Pakistan are also included as part of the Prevention framework.

“The new IGF Resource Database supports the development of policies and identifies   members in the network you want to learn from,” Nyman told the participants of the Virtual Member Training on IGF where the database was first announced.

Nyman congratulated AFI members on taking first steps “towards policies that focus on enabling small-scale mitigation and building resilience to climate change amongst those at the base of the economic pyramid.”

AFI is currently holding an IGF three-day Virtual Member Training, from 20 – 22 July for 124 participants representing 47 AFI member institutions. To cut across time zones and reach AFI membership across the globe, the training is set to run twice on each day.

AFI’s IGF workstream is part of the International Climate Initiative (IKI), which is supported by the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety (BMU) based on a decision of the German Bundestag.