By Insight Post Uganda
Mukono-Uganda
aBi Finance Limited, a key player in providing sustainable finance for agriculture in the country, has started organising training sessions on green finance for staff members of partner financial institutions.
Green finance refers to financial products, services, and investments that are specifically aimed at supporting environmentally sustainable projects and initiatives. The main objective of green finance is to channel funds towards activities that have positive impacts on the environment, contribute to climate change mitigation and adaptation, and promote sustainable development.
Working together with the Uganda Institute of Banking and Financial Services-UIBFS, aBi Finance has equipped bankers with essential knowledge on green finance, which is crucial in addressing the challenges posed by climate change to agribusiness and the financial sector.
Moses Bwire, the Investments Manager for Green Growth and Business Development Services at aBi Finance, believes that this training, focused on climate change adaptation, mitigation, and biodiversity conservation, will contribute to achieving sustainable development.
“We are empowering them to share this green financing information with their colleagues and agribusiness loan clients across branches nationwide,” Bwire remarked.
In addition to staff training, aBi Finance will collaborate closely with partner financial institutions to develop green finance information and educational materials.
They will also enhance environmental, social, and governance policies, green loan products, and banking systems to better incorporate and report on green finance.
Recently, aBi Finance introduced the Green Finance Fund and Green Taxonomy, valued at UGX 120 billion, to further encourage sustainable investments in the sector.
Green Taxonomy is a system that classifies activities based on how environmentally friendly and sustainable they are. It helps identify investments and projects that have positive impacts on the environment and support efforts to combat climate change.
Noah Owomugisha, the Head of Investments – Green Growth and Business Development Services at aBi Finance, highlights that Green Finance has already shown positive outcomes in various countries where it has been implemented.
“When financial institutions adopt green policies, green loan products, and modern banking systems, they position themselves to offer loans to smallholder farmers and other value chain actors for environmentally friendly agribusiness investments. These not only yield optimal financial returns but also provide significant environmental and social benefits,” he explains.
Beyond supporting financial institutions, aBi Finance is also forming partnerships with like-minded organizations in agricultural value chains to train and enhance the capacity of agribusiness SMEs and smallholder farmers in climate-smart and socially inclusive investing.
Through comprehensive training and support, aBi Finance aims to ensure that financial institutions are well-prepared to offer sustainable financing solutions.
According to Pastori Turyagumanawe Kamoga, the internal auditor for Development Micro Finance, they were previously engaged in green financing but on a small scale. However, with aBi Finance’s support, they can diversify their efforts.
“In case a borrower fails to repay the loan with justifiable reasons, aBi Finance is ready to cover 70 percent of the losses so that partnering banks don’t bear the entire risk,” Kamoga explains.
Primary Goal
Green finance involves various financial instruments and strategies, including the Green Bonds which are issued by governments, municipalities, or corporations to raise funds for projects with environmental benefits, such as renewable energy projects, energy efficiency initiatives, or sustainable infrastructure development.
In addition, it provides loans similar to green bonds. Green loans are provided to finance projects and activities that meet predefined environmental criteria, ensuring that the borrowed funds are used for environmentally beneficial purposes.
Still, there are green Investment funds that focus on allocating capital to companies or projects with strong environmental performance, encouraging the growth of green industries.
Another one is sustainable banking where financial institutions may adopt green policies and incorporate environmental considerations into their lending and investment decisions. This can include offering preferential terms for environmentally friendly projects or penalising activities with significant negative environmental impacts.
There are also Carbon Markets whereby these markets enable the buying and selling of carbon credits, allowing entities to offset their greenhouse gas emissions by investing in projects that reduce or remove emissions elsewhere.
Environmental, Social, and Governance (ESG) Investing: This approach considers environmental, social, and governance factors when making investment decisions, encouraging investments in companies with strong sustainability practices.
END
English 