The Rise of Low Carbon Development in Rwanda


By Ashvin Ramasamy

Rwanda has been consistently addressing climate change for almost a decade, and the nation has mainstreamed climate mitigation and adaptation in its national development agenda. As it is known, low carbon development (LCD), is a planning tool designed to combat a rapidly changing climate underpinned by green growth tenets aimed at reducing carbon emissions (i.e., the mitigation side) as well as climate management programmes intended for communities to overcome the undesirable effects of climate change (i.e., adaptation). Beyond the financial incentives offered by intergovernmental banks, the commitments to the UNFCCC and pressure from the international community, Rwanda has developed a strategic framework for climate change as part of development planning. This has enabled a better policy environment to achieve climate goals with cross-cutting support, more political will and sustained financial arrangement. This paper first reviews the recent history of the Rwandan agenda on low carbon development and gives a high-level overview of policy impact stemming from implementation. The following section analyses the national green fund in terms of supporting climate change projects and in its capacity to offer unique, innovative financing solutions. Lastly, a case is made for the efficacy of government intervention to redress local development planning to align with national green growth policy in Rwanda.

Background

Rwanda has been dealt a big blow from the predictive effects of a globally changing climate. Overall rainfall has been on the decline for 10 years and the country has recorded higher temperature change than the global average since 1970, approximately 1.4 C. Major flood events continue to occur more frequently with back to back occurrences in 2006, 2007, 2008 and 2009. Consequences included loss of life, displacements, infrastructure and building damage as well as significant crop failure. Rampant poverty, low electricity coverage and lacking infrastructure translate into a grim picture for expected negative impacts of climate change. As a least developed country (LDC) Rwanda is vulnerable to increased flood risk predicted for the decades ahead as well as viability of one of its largest industries, rainfed agriculture. Changing rainfall patterns would also negatively impact hydroelectric structures that supply about 50% of all electric production in the country. However, a significant amount of these disasters can be avoided. That is through poverty reduction, economic development and climate change resilience planning.

Rwanda LCD Agenda

When decision-makers took on the challenge of an ever changing climate, the priority revolved on how to mainstream climate resilience and low carbon development into national development. That is, how to turn one of the most vulnerable countries to climate change into one that is capable of not only coping with the potentially destructive consequences but thriving in the face of long term challenges using a multisectoral approach. In 2011, the Green Growth and Climate Resilience Strategy (GGCRS) took effect with overarching aim to make Rwanda a developed nation driven by a climate-resilient, low-carbon economy by 2050. The government also took swift action to put in place a financial arm to the GGCRS; this led to the creation of the Environment and Climate Change Fund (FONERWA). One clear result of FONERWA can be seen in green growth in 2016, after roughly five years of progress. Environmental sustainability has repeatedly been touted as priority measure in renewed sectoral policies; sound governance removed any chance of duplication of activities between those created by FONERWA and in yearly development plans. In addition, Rwanda streamlined efforts for poverty reduction within LCD by enhancing policy coherence in multiple policy areas. This was also guided by dedicated efforts to help the country grow by green growth principles. The second Economic Development and Poverty Reduction Strategy (EDPRS2) benefited from integration of LCD, which in turn demonstrated benefit in small-scale green energy structures in rural areas as well as implementation of low-carbon urban systems. While some other African nations, especially LDCs, have opted to tackle climate change action from the perspective of a single, “in-silo” course of action. Rwanda has shown that holistic approach to climate change decision-making integrated horizontally demonstrates positive benefits, as will be expounded upon in subsequent sections. A significant portion of the positive outcome began with a broad view of Rwandan stakeholders calling for low-carbon development as part of a broader developmental and sustainable policy agenda. Moreover, horizontally integrated policies succeeded due in large part to widespread training programmes and capacity building as well as genuine political will at all levels of government.

Climate Finance for LCD

Rwanda has succeeded in successfully managing funding for climate change thanks to dedicated measures implemented specifically for that purpose. Rwanda established a green fund, FONERWA, the largest of its kind in Africa, as the main “financial arm” of the 2050 low-carbon economy vision as well as other environmental funding needs. Projects approved under the auspices of the fund must undergo a rigorous financial risk assessment to determine the economic viability but also positive overall impact on sustainability and climate goals. FONERWA operates with a blend of domestic and international funding resources, and it caters to projects that reflect national priorities and sectoral investment plans. Moreover, multiple advantages come with the mix of financial instruments available. As such, the fund has garnered much attention from foreign interest. It comprises four “windows” for financing specific areas of environmental needs: conservation, energy research, environment & climate change mainstreaming and environmental impact assessment. By largely conflating these interrelated dimensions of environmental protection, the fund essentially provides blanket protection in the country’s march towards its transformation towards environmental sustainability, with over $100 million mobilised to date. Moreover, the unrestrictive nature of the fund has allowed government agencies, departments, ministries, academia, civil society organisations as well as the private sector to finance programmes of action, mandates and/or projects. This supports the government aim to address and finance climate change initiatives across multiple policy areas and vertically within all levels of government, that is national, sub-national and local administrations. Applicants have benefitted from the flexibility of the available financial instruments. For example, NGOs and CSOs have had the option to choose from in-kind development assistance or traditional grant applications for projects that meet short term criteria. This is particularly relevant to the burgeoning and thriving small and medium enterprises of Rwanda; one of the most prevalent types of commercial entities in the country. Many in the startup phase can benefit from in-kind assistance through services and/or commodities to support existing or new efforts in generating critical revenue. On the flip side, many small firms require seed money to capitalise on business opportunities, such as renewable energy providers seeking to expand their service offering in costly geothermal power delivery. Businesses studying projects over the medium-term benefit from the attractive low-interest loans equipped with financial advantages over the medium term. Also, availability of loan guarantees benefit fund seekers typically lacking creditworthiness, which is a symptom of the financial system disparaging many Rwandan businesses. In addition, 20% of all financial resources harnessed by FONERWA must be injected in private projects. Since 2012, private sector involvement in sustainability-related projects has grown and thus increased interest in FONERWA funds. Recent pulse-taking shows that the private sector has a commanding hold of 37% of all FONERWA-financed initiatives. This statistic shows once more that policy targets for the private sector have been steadily progressing. Set out in the GGCRS, the Rwandan government wished for a leadership role of the private sector in spearheading climate change and related sustainability projects. With regards to renewable energy and consumer finance in rural areas, a domain that the country has been struggling, has been entrusted to private development. One notable result has been the engagement of the government with the Private Sector Federation of Rwanda to develop a clean energy production centre. Rural electrification projects were born out of the initiative. Considering that only 13% of the population has access and rural residents with the least access, proportionally, this partnership has stood out as exemplary push in the right direction.

EDPRS2 has also provided robust guidance in the pursuit of economic transformation towards a more inclusive, “green economy.” Of particular importance, it is largely responsible for guiding investment in LCD. It has had much influence in driving sustainability investment and green energy innovation in the private sector as well as gaining traction as a succeeding policy intervention. The government believed in mainstreaming climate change objectives into the EDPRS1 & EDPRS2 from their respective starts. With EDPRS2 launched in 2013 and ended in 2018, ideas also took root in collective thinking that denial of climate change and unsustainable development will encroach upon economic development and environmental degradation will ensue. Pivotal to EDPRS2, much like GGCRS, has been its multisectoral approach to fighting poverty on the basis of climate change effects. Programmes of action focus on energy-intensive sectors to fight climate change across the board. Agriculture, energy, natural resource extraction and infrastructure stand as the leading emitters of greenhouse gases. Through the implementation of Sector Strategic Plans and Sub-Sector Strategic Plans, the government has been able to leverage the EDPRS2 by putting in practice the priorities across national, sub-national and local administrations as part of those Plans. More so, a system of interdependence strengthens the relationship between the two development schemes. That is, any given Strategic Plan is developed to either inform or learn from the priorities of the EDPRS2. Thus, new iterations of the measures form a natural feedback loop with each other and have also been feeding critical knowledge in the formulation of National Action Plans for Adaptation (NAPAs), the Second National Communication (SNC) as well as other mandatory reporting tools for submission to the United Nations Framework Convention for Climate Change (UNFCCC). With the EDPRS2 just ended, evaluation will likely be released in the months ahead. Although the results will have to be assessed in a separate paper, let’s not forget that the first iteration (EDPRS1) demonstrated that mainstreaming poverty alleviation and multisectoral engagement lifted over one million Rwandans out of poverty, no matter how inexperienced a government may be.

The GDDP Project

As a recurring theme of this paper, mainstreaming has been the leading factor of low carbon development in Rwanda. Of noteworthiness are long term opportunities for mitigation and adaptation projects. To reiterate, Rwanda integrates both mitigation and adaptation into national development planning and as such derive co-benefits. In policy parlance, co-benefits represent areas of mutual benefit between separate agendas and national development strategies, among other forms. The Greening District Development Plans (GDDP) project, supported by FONERWA sought to put green development back on track in 2014– after the district development plans missed climate resilience targets in the preceding two years. It served as a preliminary fact check of climate resilience as mandated through the EDPRS2. The GDDP concept enabled practitioners in development to address previously unmet needs and correct issues preventing local development from succeeding, particularly mitigation and adaptation objectives. The project brought together national and international experts to guide decision-makers at the district level to improve the methodology of past district development, as those failed to produce desirable outcomes in line with climate goals, namely those of the GGCRS. Many key practitioners, including planners, engineers and infrastructure experts, underwent focussed training to fill the gaps identified in “green projects.” Due diligence was also implemented, requiring authorities to respect environmental impact assessments wherever applicable in large and mega infrastructure projects. Furthermore, the GDDPs now reflect ambitious plans for afforestation, green technologies and sustainable agriculture — all of which correspond to commitments of the Sustainable Development Goals (UN SDGs). In addition to the above, economic development has been put back on track with green growth at the national level as a result transforming all 30 district plans into effective mechanisms of green development. The results have begun to indicate that Rwanda is becoming more capable on relying on itself rather than depending heavily on external aid. At the district and local levels GDDPs have thus had a sizeable impact as agent of transformative change and enabled the remediation of underperforming targets part of EDPRS2, GGCRS and FONERWA.

Conclusion

The Rwandan government has made important changes to the means by which it envisioned development planning and climate change protection. That is, in recent years the emphasis has been on development planning while experts guided strategies for a low-carbon climate resilient future. Political and stakeholder engagement has brought about much of the success the country has enjoyed up until now. One would be remiss to forego the synergy established among policymaking, financial support and institutional design and support. Together these three parts have repeatedly worked collaboratively and supported each other in the complex implementation of the EDPRS2 and GGCRS for climate change mitigation and adaptation. As Rwanda heads to 2020 and beyond, authorities must heed to broader stakeholder engagement as part of planning LCD. Due to the lack of information and remoteness of many vulnerable communities, actors need to play a greater role in building consensus prior to policy implementation. Access to information will determine whether enhanced cohesion can be achieved in Rwanda’s goal for continued multi sectoral integration of climate change objectives. Data on climate change continues to be short or otherwise fraught. To make informed decisions however sophisticated the policy may be rests on solid data. Rwanda and by extension FONERWA has to continue making forays in statistical capacity development and data collection protocols to ensure climate change scenarios, vulnerability evaluations, greenhouse gas emission forecasts do not remain a scarce commodity.