By Bojana Vlajcic
Selected from a global pool of submissions coming from over 100 countries, North Macedonia’s joint programme for establishing a Green Financing Facility (GFF) was among a total of 10 programmes considered by the Joint SDG Fund to be the most impactful and investment-ready and to have the greatest co-financing leverage.
With financial support from the Joint SDG Fund, this programme will set up a new financial vehicle, which will provide access to affordable green financing for small and medium-sized enterprises (SMEs) and individuals and households (including marketable but underserved individuals and households) for investments in renewable energy and energy efficiency solutions. With these investments, the GFF will directly contribute to the reduction of greenhouse gas emissions and air pollution, and strengthen the local ecosystem for green finance.
The US$ 7.9 million from the Joint SDG Fund will help the establishment of the programme, worth a combined US$ 46.5 million, including the anticipated co-funding coming from partners (pending approval). To help the country combat air pollution and climate change, in addition to the United Nations (UN) organisations involved (the United Nations Development Programme, the United Nations Economic Commission for Europe and the International Organisation for Migration) and the government (represented by the Deputy Prime Minister of Economic Affairs, as well as the Ministry of Finance, the Ministry of Economy and the Ministry of Environment and Physical Planning), the programme will also bring together the European Bank for Reconstruction and Development (EBRD) and most of the country’s private banks.
A major strategic objective of the government is the transition to a more sustainable energy mix through the increased production of renewable energy (particularly solar) and energy-efficient retrofitting of buildings and homes.
Deputy Prime Minister of North Macedonia, Fatmir Bytiqy says: “The GFF is the future of finance and economic growth in achieving the green transition from a modest to a modern, resource-efficient and competitive economy. Our government is already taking steps towards opening new alternatives for the economy where both citizens and businesses have opportunities to achieve a green and sustainable way of living and doing business. We are dedicated to this goal and open for cooperation with other progressive partners in achieving this goal. This is one of the key aspects of the great success behind the GFF, especially as a driver in the wider region of south-eastern Europe.”
By developing and putting into operation access to GFF finance for SMEs and households, investments in renewable energy and energy efficiency will be significantly enhanced. This will reduce greenhouse gas emissions and air pollution. The programme is aligned to and supports the achievement of the Sustainable Development Goals (SDGs) and the UN Sustainable Development Cooperation Framework (SDCF) targets. It will result in 70,068 MWh of annual energy savings, avoid 80,510 tonnes of CO2 equivalent emissions, and create 10.7 MW of new renewable energy capacity. Furthermore, enabling access to affordable financing for renewable energy and energy efficiency solutions will contribute to advancements towards SDGs 7 and 13.
UN Resident Coordinator in North Macedonia, Rossana Dudziak says: “Many countries are working on financial models to blend and leverage government and private-sector funding. The UN is therefore very proud to contribute US$ 7.9 million to the GFF, which will bring together financing and expertise from the government, the banking sector in the country, the EBRD (one of the most experienced international financial institutions in this field) and the United Nations to promote renewable energy and energy efficiency.”
Accelerating the energy (green) transition in each country requires significant financial investment, which can only be supplied if government, private and international financing sources are put together, so that businesses and households can have access to affordable finance for these types of investments.
EBRD Head of North Macedonia, Andi Aranitasi says: “Supporting the green transition is one of the top priorities for the EBRD in North Macedonia. In recent years we have stepped up our support by promoting investments in energy efficiency and renewables, and by facilitating the decarbonisation of the country’s energy sector both directly and through our partner financial institutions. Over the last five years, we have provided more than €70 million(US$79.2million) of green financing to SMEs and households through the local banking system and with strong support from donors. These instruments have been very successful and have created a strong demand for green products. We are very glad that the UN and the Joint SDG Fund, through their grant support, will further enhance the infrastructure we have created on the market for the quick deployment of such attractive products. This will be the first-ever cooperation of this nature between the EBRD and the UN system and it is a great honour for us that North Macedonia will be the pilot country for this cooperation. We are confident that this project will be successful and will lead to extended cooperation with the UN and the Joint SDG Fund. The EBRD looks forward to working together with the UN and the government on extending additional affordable financing for investments in green technologies to an even bigger number of SMEs in North Macedonia.”
The new GFF will be launched in the summer of 2022 and is expected to become fully operational by the end of the year.
The UN Joint SDG Fund is a multi-partner trust fund established by the UN General Assembly. The fund supports UN member states by de-risking investments that drive financing solutions to accelerate achievement of the SDGs. The goal of this fund is to disburse US$ 1 billion in grants annually in the race to 2030. All programmes share one critical element: their ability to leverage multimillion-dollar grants from the Joint SDG Fund into billions for sustainable development.
In 2021 the EBRD invested €134 million in North Macedonia. Since cooperation began in 1993, the Bank has committed more than €2.2 billion to 154 projects in the country, with substantial grant funding mobilised to date. In line with the EBRD’s target to increase its green financing, 61 per cent of EBRD investment in North Macedonia in 2021 was in green projects.