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Catalyzing Private Sector Investment in Climate-smart agricultureKatalin Solymosi
Structured and Corporate Finance [email protected]
Layers of the cake - steps to using donor finance to bring in private capital
Catalyzing investment with public funds
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1. Work with governments to establish and identify investment environments with economically viable opportunities
2. Provide detailed engineering analysis to demonstrate financial viability and/or investment grants for pilot projects
3. Provide donor concessional finance to overcome cost and risk barriers
4. Provide long-term market rate finance
5. Actively market and deliver private sector investment
Private Sector Windows of IDB
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Non-Sovereign Guaranteed Operations
Structured and Corporate Finance Department (SCF)
Inter-American Investment Corporation (IIC)
Opportunities for the Majority Initiative (OMJ)
Multilateral Investment Fund (MIF)
IDB Private Sector- Structured and Corporate Finance DepartmentOur Clients Corporations, financial institutions, and state-
owned entities without a sovereign guaranteeOur Products and Services Loans Project Finance and Public Private Partnerships Guarantees Climate change concessional finance Market studies, climate risk assessments, feasibility
analysesOur investments Renewables and energy efficiency – solar, wind,
biomass, hydro, biofuels Climate-smart land use: adaptation and
mitigation Direct to corporations and “green lines” and SME
financing via financial intermediaries4
Project examplesAdaptation in the coffee sector Coffee trader in Central America acts as
financial intermediary to channel loans to producers
GEF-IDB climate-smart agriculture fund New fund to support smaller size operations Initial focus on 3 investment areas:
Carbon restoration on degraded lands Sustainable certification Water management
Currently originating eligible projects
Clean energy in agricultural value chains Energy efficiency Small scale self-supply clean energy
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Tools for catalyzing climate investment
Information barriers– Lack of knowledge/confidence in
savings and productivity predictions
– Projects require $20 to $200K in analysis to prove feasibility
Lack of finance– High collateral requirements from
banks – Long grace and repayment
periods regarded as risky High transaction costs
– Project finance is costly and risky– MRV requirements by donors
Resource risk
Barriers we are seeking to addressHow we do it:
• Concessional finance from the Canadian Climate Fund, GEF and others
• Grants for technical assistance: audits, feasibility studies, climate risk assessments
• Financial institution training to explore sustainable commodity markets
• Energy Efficiency Finance Facility for small ($500K - $5M) loans to ag processors and others