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Catalyzing Private Sector Investment in Climate-smart agriculture Katalin Solymosi

Catalyzing Private Sector Investment in Climate-smart agriculture Katalin Solymosi Structured and Corporate Finance Department katalins@iadb.org. Catalyzing investment with public funds. Layers of the cake - steps to using donor finance to bring in private capital.

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Catalyzing Private Sector Investment in Climate-smart agriculture Katalin Solymosi

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  1. Catalyzing Private Sector Investment in Climate-smart agriculture Katalin Solymosi Structured and Corporate Finance Department katalins@iadb.org

  2. Catalyzing investment with public funds Layers of the cake - steps to using donor finance to bring in private capital 5. Actively market and deliver private sector investment 4. Provide long-term market rate finance 3. Provide donor concessional finance to overcome cost and risk barriers 2. Provide detailed engineering analysis to demonstrate financial viability and/or investment grants for pilot projects 1. Work with governments to establish and identify investment environments with economically viable opportunities

  3. Private Sector Windows of IDB Non-Sovereign Guaranteed Operations Structured and Corporate Finance Department (SCF) Opportunities for the Majority Initiative (OMJ) Inter-American Investment Corporation (IIC) Multilateral Investment Fund (MIF)

  4. IDB Private Sector- Structured and Corporate Finance Department Our Clients • Corporations, financial institutions, and state-owned entities without a sovereign guarantee Our Products and Services • Loans • Project Finance and Public Private Partnerships • Guarantees • Climate change concessional finance • Market studies, climate risk assessments, feasibility analyses Our 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 intermediaries

  5. Project examples Adaptation 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

  6. Tools for catalyzing climate investment Barriers we are seeking to address How we do it: • 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 • 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

  7. Our deal is with the future. katalins@iadb.org

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