Green Financing: Why emphasis has been put on West Nile financial institutions

Green financing, also known as sustainable finance refers to services and products that support eco-friendly businesses and projects. It broadens access to environmentally-friendly goods and services for individuals and enterprises, equalizing the transition to a low-carbon society and resulting in more socially inclusive growth.

Under the green financing initiative, financial institutions are required to assess and manage environmental risks associated with their lending and investment activities. This involves evaluating the environmental impacts of projects and business, considering climate-related risks and ensuring compliance with environmental regulations.

West Nile climate/environment crisis

The West Nile region is experiencing significant effects of climate change including extreme weather events like prolonged dry spells that have affected the livelihoods of the locals. The region is also dealing with a high rate of deforestation especially in the refugee hosting districts due to high natural resource use by the refugee community.

According to a report by the Food and Agriculture Organization (FAO) of the United Nations, at least 14 per cent of woody biomass had been lost within five kilometres of the refugee settlement boundaries, and an additional loss and degradation in an extended 15 kilometres buffer in West Nile between 2014 and 2018.

Moses Bwire, the investment manager, of Green Growth and Business Development Services at Agricultural Business Initiative (aBi) Financing Limited explains that climate change risks are increasingly becoming eminent which requires financial institutions to support climate change adaptation investments of their clients.

Moses Bwire, the investment manager, of Green Growth and Business Development Services at Agricultural Business Initiative (aBi) Financing Limited/COURTESY Pulse

Bwire further notes that they have disbursed close to Shs30 billion to financial institutions as a credit to support environmentally friendly businesses and projects since last year.

Financiers react to the initiative

Bob Alinda, a trainer at the Uganda Institute of Banking and financial services observes a need for deliberate efforts to popularize environmentally responsible investing among clients of financial institutions.

Meanwhile, Stonewilly Arinyihayo, the head of the loans department at Nile Microfinance Limited in Arua believes that if successfully implemented, the green financing initiative will widen their market.

In 2022, a Bi-finance launched a green finance fund for banks, financial institutions and SACCOS in Uganda, worth Shs124 billion in a bid to support environmentally friendly businesses and projects.