Financial institutions asked to embrace Green Financing

Kampala, Uganda | THE INDEPENDENT | Financial institutions in West Nile have been tasked to embrace green financing in order to tackle the significant effects of climate change in the region.

Green financing, also known as sustainable finance refers to services and products that support ecologically-friendly businesses and projects. It broadens access to environmentally-friendly goods and services for individuals and enterprises, equalizing the transition to a low-carbon society and resulting in more socially inclusive growth.

Under the initiative, financial institutions are required to assess and manage environmental risks associated with their lending and investment activities. This involves evaluating the environmental impacts of projects and business, considering climate–related risks and ensuring compliance with environmental regulations.

The West Nile region is experiencing significant effects of climate change, which among others include extreme weather events like prolonged dry spells that have destroyed crops and affected the livelihoods of the locals. The region is also dealing with a high rate of deforestation especially in the refugee hosting districts due to high natural resource use by the refugee community.

Moses Bwire, the investment manager, of Green Growth and Business Development Services at Agricultural Business Initiative (aBi) Financing Limited explains that climate change risks are increasingly becoming eminent which requires financial institutions to support climate change adaptation investments of their clients.

Bwire further notes that they have disbursed close to 30 billion Shillings to financial institutions as a credit to support environmentally friendly businesses and projects since last year.

Bob Alinda, a trainer at the Uganda Institute of Banking and financial services observes a need for deliberate efforts to popularize environmentally responsible investing among clients of financial institutions.

Meanwhile, Stonewilly Arinyihayo, the head of the loans department at Nile Microfinance Limited in Arua believes that if successfully implemented, the green financing initiative will widen their market.

Irene Achan Padwar, a personal banker at Post Bank Uganda Limited Pakwach branch is also optimistic that green financing will offer more financing to agribusiness and smallholder farmers in the region, facilitating a shift from subsistence to commercial agriculture.

In 2022, a Bi-finance launched a green finance fund for banks, financial institutions and SACCOS in Uganda, worth 124 billion Shillings in a bid to support environmentally friendly businesses and projects.

According to a report by the Food and Agriculture Organization (FAO) of the United Nations, at least 14 per cent of woody biomass had been lost within 5 kilometres of the refugee settlement boundaries, and an additional loss and degradation in an extended 15 kilometres buffer in West Nile between 2014 and 2018.

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