African Development Bank and United Kingdom (UK) select Tunisian cereals project as prime climate finance transaction under landmark Room to Run Sovereign Programme
The African Development Bank (www.AfDB.org) and the United Kingdom have announced the selection of the Inclusive and Sustainable Development of the Cereal Sector Project in Tunisia, as a standard-setting project under the Room to Run Sovereign transaction (R2RS) (https://apo-opa.co/3U3D0CP).
Approved in July 2023, this cereal sector project in Tunisia will strengthen the resilience of the cereals sector to external shocks and climate change. The project will benefit up to 250,000 cereal farmers in the country, boosting their food security and self-sufficiency. It is estimated that up to $35 million of the $87 million Bank financing corresponding to the climate adaptation component of the loan, has been unlocked by the UK Government guarantee, which increased the Bank’s overall lending capacity.
Room to Run Sovereign, announced at COP26 in November 2021, is an innovative and highly scalable balance sheet optimization transaction that is helping the African Development Bank lend more funding for critical climate change projects. Under R2RS, a $2 billion guarantee is provided by the UK Government ($1.6 billion in cover) and City of London insurers ($400 million). By assuming a portion of the credit exposure on a part of the African Development Bank’s sovereign portfolio, R2RS enables the Bank to provide up to an additional $2 billion of climate finance to Africa by 2027, split between adaptation and mitigation.
In May last year, the UK and the Bank announced the first two projects that were enabled by R2RS – an €80 million Egyptian wastewater project and a €37 million water sanitation project in Senegal. Both focus on water supply and sanitation and will benefit millions in their respective countries. This project in Tunisia is the third project to be selected by the UK, demonstrating that the unlocked lending capacity provided by R2RS since the agreement was signed in 2022 is accelerating delivery of very strong climate finance transactions across the continent. This announcement accompanies three other R2RS enabled transactions in Benin, Kenya and Mauritius, bringing the total climate finance unlocked by the R2RS to over $400 million.
African Development Bank Vice-President for Power, Energy, Climate and Green Growth, Kevin Kariuki said,
“This transaction is one of several projects constituting its lending programme through which the African Development Bank fulfils the call by stakeholders at COP27 for MDBs to innovate and scale up climate finance through the Multilateral Development Banks. The African Development Bank is proud to partner with the UK in this initiative and to be at the forefront of such developments.”
FCDO’s Minister for International Development and Africa, Andrew Mitchell said, “This project will make a huge difference in the sustainability of food production for millions in the country as it grapples with the harmful effects of prolonged drought.”
Thanking the UK for its support, Malinne Blomberg, Deputy Director General for North Africa and Country Manager for Tunisia said, “In the face of increased water stress in North Africa affecting domestic agriculture production and the global crisis in grain prices affecting imports, we appreciate the inclusion of the climate resilient PADIFIC cereal project in Tunisia in the R2RS portfolio as it allows the Bank to further scale up its support to similar essential climate-related interventions. The project is part of the national efforts for strengthening food security resilience and intervenes throughout the cereal value chain, including storage and transport systems, with the aim to increase both production volumes and productivity.”
Distributed by APO Group on behalf of African Development Bank Group (AfDB).
Download image: https://apo-opa.co/3HshGPU
Contact:
Amba Mpoke-Bigg
Communication and External Relations Department
Email: [email protected]
