Catalyzing Private Sector Investment in Climate-smart agricultureKatalin Solymosi

Structured and Corporate Finance Departmentkatalins@iadb.org

Layers of the cake - steps to using donor finance to bring in private capital

Catalyzing investment with public funds

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1. Work with governments to establish and identify investment environments with economically viable opportunities

2. Provide detailed engineering analysis to demonstrate financial viability and/or investment grants for pilot projects

3. Provide donor concessional finance to overcome cost and risk barriers

4. Provide long-term market rate finance

5. Actively market and deliver private sector investment

Private Sector Windows of IDB

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Non-Sovereign Guaranteed Operations

Structured and Corporate Finance Department (SCF)

Inter-American Investment Corporation (IIC)

Opportunities for the Majority Initiative (OMJ)

Multilateral Investment Fund (MIF)

IDB Private Sector- Structured and Corporate Finance DepartmentOur Clients Corporations, financial institutions, and state-

owned entities without a sovereign guaranteeOur Products and Services Loans Project Finance and Public Private Partnerships Guarantees Climate change concessional finance Market studies, climate risk assessments, feasibility

analysesOur investments Renewables and energy efficiency – solar, wind,

biomass, hydro, biofuels Climate-smart land use: adaptation and

mitigation Direct to corporations and “green lines” and SME

financing via financial intermediaries4

Project examplesAdaptation in the coffee sector Coffee trader in Central America acts as

financial intermediary to channel loans to producers

GEF-IDB climate-smart agriculture fund New fund to support smaller size operations Initial focus on 3 investment areas:

Carbon restoration on degraded lands Sustainable certification Water management

Currently originating eligible projects

Clean energy in agricultural value chains Energy efficiency Small scale self-supply clean energy

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Tools for catalyzing climate investment

Information barriers– Lack of knowledge/confidence in

savings and productivity predictions

– Projects require $20 to $200K in analysis to prove feasibility

Lack of finance– High collateral requirements from

banks – Long grace and repayment

periods regarded as risky High transaction costs

– Project finance is costly and risky– MRV requirements by donors

Resource risk

Barriers we are seeking to addressHow we do it:

• Concessional finance from the Canadian Climate Fund, GEF and others

• Grants for technical assistance: audits, feasibility studies, climate risk assessments

• Financial institution training to explore sustainable commodity markets

• Energy Efficiency Finance Facility for small ($500K - $5M) loans to ag processors and others

Our deal is with the future.

katalins@iadb.org