Blended Finance Makes More Low-Carbon Investments Possible
IFC helped structure more than $131 million in approved concessional funds in FY12 to be used alongside $630 million in IFC co-financing for climate change investments. The investments totaled $3 billion.
"Blending concessional funds alongside IFC's own allows us to increase our reach and achieve more development impact than would otherwise be possible," said Nena Stoiljkovic, Vice President, Business Advisory Services. "IFC has a strong track record for doing this in the area of climate change, and we're excited to be expanding the approach in FY13 into other strategic areas of food security and SME finance."
The concessional funds from donor partners went toward 13 investments ranging from projects with banks to develop sustainable energy finance portfolios to constructing solar plants to developing biomass as a renewable energy source, several of which are located in IDA countries such as Kenya and Honduras. The approved concessional funds, triple the previous year's amount, were leveraged more than 21 times.
In FY13, IFC will continue to make investments in higher-risk climate-related projects as well as provide support to new facilities such as the Global SME Facility and the Global Agriculture and Food Security Program, which deploy concessional funds for SME financing and food security and agribusiness, respectively.
"Impacts from changes in climate affect every one of our clients. IFC helps to catalyze additional low-carbon investments promoting the green growth agenda in our client countries," said Stephanie Miller, Director, Climate Business Group.
IFC blends concessional funds from donor partners in order to catalyze investments that wouldn’t otherwise happen because of barriers preventing such investment. "It’s extremely important that we work towards scaling up investments in low-carbon technologies and the green economy,” said Stacy Swann, Head, Blended Finance Unit. “These funds help catalyze those investments at a critical period when impacts from changes in climate affect everyday life in our client countries, from access to energy issues to food security."
IFC also contributed $5.8 million in donor partner funds to 12 advisory projects for a total project size of $18.3 million. The unit worked with all four business lines, including its first project with the Investment Climate business line to improve forestry management practices in the Brazilian Amazon. IFC currently draws funds from three donor partners: the Global Environment Facility, Climate Investment Funds, and IFC-Canada Climate Change Program.
An important achievement in FY12 was the approval of two concentrated solar power plants in South Africa, representing IFC’s first investments in this technology at utility scale. Both the Abengoa Ka Xu and Khi projects will be financed by ZAR1.37 billion, or $171 million, from IFC and $41.5 million in concessional funds, pending commitment. The total project cost for both plants is $1.4 billion.
Seven projects deploying concessional funds went beyond the approval process to being committed in FY12: Atlantida Loan in Honduras, Sasfin in South Africa, BMUL and Solar Power Corporation in Thailand, HSBC in Armenia, BancoSEF in Colombia, and BPI in the Philippines.
Since 2009, IFC has approved nearly $200 million in concessional funds for investment and advisory projects, leveraging a total of $3.3 billion.