In order to manage climate change in Uganda, financial institution lenders have been urged to prioritise green financing in the country.
Green financing is a finance model aimed at ensuring that all money loaned out either to the government or to the private sector goes towards the protection of the environment or mitigation of the effects of climate change and biodiversity conservation.
The model was created in line with the growing campaign for lenders and investors to have in place Environment and Social Governance (ESG) at all levels of investment decisions.
Mr Musa Olwase, a trainer from the Uganda Institute of Bankers, says climate change has affected the entire world and as a nation, a lot should be done to ensure that the environment does not worsen.
He says the financial institution lenders need to get ahead of climate change before the situation aggravates.
Mr Olwase adds that the grant is intended to be given to banks that want to do green financing as failure to do so will affect other sectors like tourism which contribute to the nation’s economic growth.
“Financial institutions are key to green finance lending as they have direct access to different agro business customers. They can help to advise their customers to be more responsible with their actions as they do business, hence, we are promoting sustainability since the world is warming up,” he says.
The Manager Green Growth at aBi Finance, a financial institution that focusses on lending money to any agriculture projects with emphasis on environmental protection in all production processes says money lenders have to learn how to develop or improve their policies, design appropriate products and also improve the monitoring and reporting on the loan disbursements.
He notes that green financing will help loans officers to achieve a green tax economy in the country and the kinds of businesses that fall under green financing.
“There is what we call the green tax economy which helps financial institutions to differentiate out of these loans which are going to green financing and which ones are not. We also go ahead to divide those going to green financing are also divided into those going to climate change, climate mitigation and other conservation are helped.”
This was during a capacity building training by aBi Finance Ltd in partnership with Uganda Institute of Bankers.
In December 2022, aBi Finance Ltd launched a Shs120b financing initiative through the local financial industry towards green financing. Currently, Shs26b has been loaned out.