New financing mechanism will be introduced in Tajikistan to counter effects of climate change
The first country to benefit from this innovative approach is Tajikistan, one of the countries in which the EBRD invests that is most vulnerable to the impact of climate change.
If the Earth’s surface temperatures continue to increase, the glaciers will melt even faster, which means the levels of rain will change. Water and hydroelectricity supplies – already highly erratic in Tajikistan – will become even more unreliable. In addition, 90 per cent of Tajikistan is covered by mountains, making the issue of sustainable land use even more acute.
The new financing facility from the EBRD combines commercial and concessional funding to scale up financing for climate resilience through local banks and microfinance institutions, as well as providing advice for clients.
The first loan will be for the somoni equivalent of US$ 3 million to Bank Eskhata, a long-standing partner of the EBRD. Half of this loan was lent by the EBRD, and the other half was provided by the PPCR, a funding window of the multilateral Climate Investment Funds.
The funds will be on-lent in local currency to SME clients and households to help them adopt technologies and practices to reduce soil erosion and pressure on water and energy resources, both of which are key environmental threats in Tajikistan.
This climate resilience financing through Bank Eskhata will come with technical cooperation programmes, co-financed by the EBRD and the UK government through its Department for International Development (DFID).
Bank Eskhata is Tajikistan’s fifth largest bank by assets, part-owned by the EBRD, and with a particular focus on SME financing and support.
The EBRD, which works predominantly with the private sector, is already running successful credit lines for energy efficiency and small-scale renewable energy in most of its countries of operations. Ahead of the COP21 climate talks in Paris, the EBRD adopted new higher targets for climate financing and is aiming to invest 40 per cent of its annual volume into sustainable resource projects by 2020.