Banks express readiness to support green finance projects

KAMPALA – Commercial banks in Uganda are gearing up to go green by expanding their selection of environmentally friendly products and services on offer.

These include everything from campaigns to raise funds for environmental conservation, advancing sustainable agriculture, energy efficiency, renewable energy, drip irrigation, and clean transportation among others.

Ms. Virginia Semakula, the Manager for Energy, Environment, and Climate Change at Equity Bank Uganda says the bank is working on building the capacity of its staff to be able to deal with clients who are moving in the same direction.

“As you are aware, banks’ main business is to give financial assistance and with this training, we shall be able to identify the investments that are not harming the environment and we are able to categorise them as such, and if there are those that are harming the environment, they will create an opportunity for the bank to create more financial services to mitigate effects of climate change,” Ms Semakula explained during one of the green finance capacity-building training sessions hosted by aBi Finance Ltd.

Ms. Semakula believes that the Green Finance initiative is scalable once all actors understand the dynamics around it.

“Financial institutions have been doing this but haven’t been recording it as it is supposed to be reported. With this training, we will be able to do the scaling better. Once people understand what green technology is, they shall be able to report about it. What are those businesses that we refer to as green, that are not harming the environment, we should be able to show in our portfolios as financial institutions,” she says.

She says that there is goodwill from the respective stakeholders including the Central Bank to move towards green financing.

“I appreciate that we have so many of our credit officers out here to understand that language that we are talking about under green, and with that, they will be able to identify and give the loans appropriately.”

Pastori Kamoga, an Internal Auditor for Development Microfinance headquartered in Ssonde Mukono, says that they are glad to be equipped with the knowledge which they intend to implement.

Kamoga says that while Environment and Social Governance (ESG) is still optional in Uganda, there is a need for all lenders to have policies at all levels of investment decisions. 

“We have been doing green financing but on a small scale however, with aBi Finance coming on board, with a very big boost to see that we can fully diversify into green financing by helping us overcome the risks associated with the initiative like taking up 70% of a loss and leaving 30% of the loss the institution which is fair compared to leaving it entirely to the Institution as it has always been,” he says.

With the training, Kamoga said investors will also be able to make informed decisions that align with their values and contribute to sustainable development.

aBi Finance Ltd, a leading player in promoting access to sustainable agribusiness finance in Uganda, in partnership with the Uganda Institute of Banking and Financial Services (UIBFS) is conducting upto 20 green finance capacity-building activations (training sessions) for Staff of Partner Financial Institutions.

“We believe that by training staff of financial institutions on green finance for investing in climate change adaptation, mitigation, and biodiversity conservation to attain sustainable development, we are equipping them to disseminate the same green financing information to fellow staff as well as their agribusiness loan clients across various branches country-wide,” said Mr. Moses Bwire, Investments Manager – Green Growth and Business Development Services at aBi Finance.

In addition to training staff, aBi Finance will work closely with partner financial institutions to develop green finance Information, Education, and Communication (IEC) materials, enhance the Environmental, Social, and Governance (ESG) policies, green loan products and banking systems to better capture and report on green finance.

Noah Owomugisha, the Head of Investments – Green Growth and Business Development Services at aBi Finance, emphasised the importance of Green Finance in driving positive outcomes.

“When financial institutions put in place green policies, green loan products, and up-to-date banking systems they position themselves to offer loans to smallholder farmers and other value chain actors for green agribusiness investments that deliver optimal financial returns, but also offer good environmental and social benefits” he stated.

In addition to supporting financial institutions to offer green finance, aBi Finance is also pursuing partnerships with like-minded institutions working in agricultural value chains to train and build the capacity of agribusiness SMEs and smallholder farmers in climate-smart and socially inclusive investing. By providing comprehensive training and support, aBi Finance strives to ensure that financial institutions are well-equipped to offer environmentally sustainable financing solutions.

aBi Finance remains at the forefront of promoting sustainable growth and resilience in the agriculture sector. Recently, the organisation unveiled the Green Finance Fund and Green Taxonomy, valued at UGX 120 billion, to further promote sustainable investment in the sector.