Rwanda’s path to a just and sustainable future: mobilising finance for climate action
Rwanda aspires to become a middle-income country by 2035 and a high-income country by 2050. Even with this vision associated with accelerated economic growth, Rwanda still recognises and has showcased its commitment to climate action through ambitious targets and its revised Green Growth and Climate Resilience Strategy. The revised strategy has four thematic areas that consolidate eight programmes of action including one on climate resilient energy networks, green industry and private sector participation.
The country’s updated nationally determined contribution, submitted in 2020, underscores this dedication, with a target of cutting greenhouse gas emissions by 38% by 2030 compared with a business-as-usual scenario. Rwanda’s climate strategy includes both unconditional measures, accounting for 16% of the reduction, and conditional measures, which depend on external financing and make up the remaining 22%.
Achieving these ambitio sustainable development pathways requires significant financial resources, however. Securing the necessary climate finance remains a key challenge, as finance is often seen as the engine driving progress. Yet not all financing leads to sustainable outcomes. That is why financing a just transition as a tool has come at the right moment
to support the greening of the economy in a way that is fair and inclusive. Rwanda is prioritising the creation of decent work opportunities, ensuring that no one is left behind in this green transformation.
The financial needs of Rwanda’s updated NDC
Rwanda’s updated NDC has a projected cost of $11 billion through 2030. Of this total, 40% is expected to be mobilised internally, and the remaining 60% will require external support. The projected costs are calculated based on sectoral emissions from the greenhouse gas inventory, focusing on the sectors that emit the most and those that require greater focus on climate resilience.
The total budget is divided between mitigation and adaptation measures. Mitigation accounts for $5.7 billion, with 26% of this allocated to soil and water conservation efforts. Adaptation measures total $5.3 billion, with the agriculture sector receiving the largest share of 55%, as it plays a critical role in enhancing food security and resilience against climate shocks.
Building a strong climate finance network
To address the financing gap, Rwanda has taken significant steps to strengthen its climate finance framework by establishing the Rwanda Green Fund as a public institution responsible for mobilising and effectively utilising climate finance. A notable milestone is the establishment of IREME Invest, a green investment facility for Rwanda’s private sector to support green business growth in the areas of clean energy and smart mobility, among others.
Rwanda has mobilised a substantial amount of domestic and international resources. It has also secured partnerships with multilateral organisations and aligned its development priorities with sustainability objectives.
The government has worked closely with financial institutions on sustainability-linked bonds to ensure financial flows support the country’s climate goals. Through climate finance tracking mechanisms such as climate budget tagging, starting with 2024/ 2025, the Ministry of Finance and Economic Planning will be able to effectively track and report finance channelled to climate action. Rwanda also launched its ‘Green Taxonomy’ in 2023 to serve as a valuable framework for shaping and defining sustainable economic activities, establishing standards for green bonds and loans, and advancing the government’s climate budget tagging initiative.
Rwanda is committed to further enhancing its institutional capacity for climate finance and action. We look forward to sharing best practices and lessons learned on enhancing climate action and financing a just transition.
