The SOARING programme, launched in June 2019, will design and implement a prototype approach to prepare, bundle and structure investments into small and medium-sized clean energy projects in Zambia, Tanzania and Namibia.
The goal is to support these countries and the Southern African region as they seek to mobilise and channel larger climate-linked and blended financing into their economies. Southern African countries face a considerable challenge to finance their climate change mitigation and adaptation plans. Nearly all Nationally Determined Contributions (NDCs) submitted under the Paris Agreement on Climate Change include targets conditional on receiving additional public and/or private finance. In Zambia and Namibia alone, around USD 83 billion of external finance is needed for NDC implementation. The agricultural sector still plays a major role in Southern African economies, representing up to 27% of GDP and 13% of export earnings. SMEs, meanwhile, form the backbone of Southern African economies, but report substantial challenges related to limited access to energy supply and to financing.
This project is part of the International Climate Initiative (IKI) of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU).
REEEP and its partners have identified an opportunity to simultaneously support SMEs providing clean energy solutions for agricultural value chains, advance the pilot countries’ NDC targets by displacing fossil fuels, and enhance the resilience of the agricultural sector through improved access to clean, reliable energy.
While the combined financing requirements of Southern African SMEs are huge, their individual asks are far too small for existing climate finance instruments, and for most investors. SOARING aims to develop and prototype a model methodology and strategic pathway for financial institutions to bundle SME-level investments appropriate for catalytic climate financing from the Green Climate Fund and other climate-linked investment funds.
Using innovative technology and data-driven approaches and financial incentives provided by the SOARING Fund, combined with peer-to-peer learning and capacity building for government, financiers and the private sector, SOARING aims to help the pilot countries build an improved financial ecosystem for large-scale blended private/climate investment into clean energy off-grid and/or agricultural sectors at SME level.
The learnings from this pilot will be packaged in a number of ‘SME Climate Finance Pathways’, which will facilitate replication of the project’s achievements in other sectors and in other countries.