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FP098 CLIMATE FINANCE FACILITY (CFF)
A debt facility to catalyse private capital to support private sector projects that are low
emissions and climate resilient
THE CLIMATE FINANCE FACILITY – OVERVIEW
2
▪ It is a structured finance platform that will have initial committed debt funding of R2 billion.
▪ It aims to support projects that mitigate or adapt to climate change.
▪ Co-funded by Development Bank of southern Africa and Green Climate Fund.
What is the
CFF?
▪ Its intention is to “crowd in” or catalyse private sector funding by co-funding alongside developmental and private
sector financial institutions to try and achieve a 1:5 leverage.
▪ It is a ZAR facility targeted and available to co-fund private sector projects in South Africa, eSwatini, Lesotho
and Namibia – countries in the common monetary union.
▪ It does so by offering credit enhancement products in the form of a first loss or subordinated funding and tenor
extension (up to 15 years).
▪ By taking a blended finance approach with highly concessional funding that is being provided by the Green
Climate Fund, the CFF can offer long term competitively priced funding.
How will
it do this?
EVOLUTION OF THE CFF
The CFF is modelled on
the “Green Bank” concept
and is the first of its kind
on the African continent,
and arguably in the
developing world.
The CFF supports the
DBSA’s commitment to
support and promote the
UN SDGs, as well as
countries’ nationally
determined contributions
NDCs committed to under
the Paris Accord.
3
Programming
the R1.1bn
Green Fund
allocation from
DEA
April 2012
Development of
DBSA and third
party pipeline to
access GEF
funding
October 2014 –
ongoing
DBSA
accreditation to
Green Climate
Fund (GCF)
Development of
DBSA and third
party pipeline to
access GCF
funding
May 2016
Continued
implementation of
board approved
“Green Bank”
within DBSA
Internal approval
of CFF
Board approval of
DBSA CFF
capitalisation
October 2018
CFF STRUCTURE
4
1) Multiple capital sources
2) Housed under the DBSA
3) Catalysing private
investment
Facility
Co-Funding
DBSA capital
R650m
Green Climate Fund
(Trust Account)
R650m
Pari Passu
Debt
Climate Finance Facility
• Management and operational
responsibility based on DBSA’s
existing resources
• Falls within the product
innovation unit
• Adopts the DBSA’s internal credit
processes
Debt funding and deal flow
Deal origination and
co-funding
• Commercial Banks
• Asset Managers
• DFIs
• DBSA Coverage and
• Project Preparation
Divisions
Developer/investor equity
Project co-investment and credit enhancement
Climate projects
DEAL FLOW CHANNELS AND ADDED VALUE
For commercial banks and asset managers:
▪ Serves as a “first mover” and taking early stage risk
▪ Addresses risk associated with “first application” of
technologies, and difficulties underwriting multiple revenue
streams
▪ Offers tenor extension to mitigate Basle III requirements
For the DFIs, the CFF:
▪ Can provide additional co-funding for developmental
finance using credit enhancement products
5
CFF
RFP
Process
DBSA
Coverage
Team
DBSA
Project
Preparation
Unit
Climate Lab
Commercial
Banks and
Asset
Managers
DFI Project
Referrals
The CFF will support deal flow from a number of sources
and will always co-fund alongside private and
developmental financial institutions.
DEAL FLOW CHANNELS AND ADDED VALUE
For the DBSA, the CFF:
▪ Supports its mandate by catalysing third party funding
alongside its frontline divisions
▪ Supports the DBSA’s green and ESG commitments
For the Climate Lab, the CFF:
▪ Supports the regional implementation of financial
instruments developed by the Lab
6
The CFF will support deal flow from a number of sources
and will always co-fund alongside private and
developmental financial institutions.
CFF
RFP
Process
DBSA
Coverage
Team
DBSA
Project
Preparation
Unit
Climate Lab
Commercial
Banks and
Asset
Managers
DFI Project
Referrals
CLIMATE FINANCE FACILITY FOCUS AREAS
7
MITIGATION
(reduce or prevent emission of
greenhouse gases)
• Renewable energy generation
• Energy efficiency in industry and
buildings
• Sustainable and low emission transport
• Waste to Energy
ADAPTATION
(respond to the impacts of climate
change)
• Water supply management including
water efficiency and treatment
• Climate-resilient water infrastructure
THANK YOU

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Muhammed Sayed, DBSA - Climate Finance Facility

  • 1. FP098 CLIMATE FINANCE FACILITY (CFF) A debt facility to catalyse private capital to support private sector projects that are low emissions and climate resilient
  • 2. THE CLIMATE FINANCE FACILITY – OVERVIEW 2 ▪ It is a structured finance platform that will have initial committed debt funding of R2 billion. ▪ It aims to support projects that mitigate or adapt to climate change. ▪ Co-funded by Development Bank of southern Africa and Green Climate Fund. What is the CFF? ▪ Its intention is to “crowd in” or catalyse private sector funding by co-funding alongside developmental and private sector financial institutions to try and achieve a 1:5 leverage. ▪ It is a ZAR facility targeted and available to co-fund private sector projects in South Africa, eSwatini, Lesotho and Namibia – countries in the common monetary union. ▪ It does so by offering credit enhancement products in the form of a first loss or subordinated funding and tenor extension (up to 15 years). ▪ By taking a blended finance approach with highly concessional funding that is being provided by the Green Climate Fund, the CFF can offer long term competitively priced funding. How will it do this?
  • 3. EVOLUTION OF THE CFF The CFF is modelled on the “Green Bank” concept and is the first of its kind on the African continent, and arguably in the developing world. The CFF supports the DBSA’s commitment to support and promote the UN SDGs, as well as countries’ nationally determined contributions NDCs committed to under the Paris Accord. 3 Programming the R1.1bn Green Fund allocation from DEA April 2012 Development of DBSA and third party pipeline to access GEF funding October 2014 – ongoing DBSA accreditation to Green Climate Fund (GCF) Development of DBSA and third party pipeline to access GCF funding May 2016 Continued implementation of board approved “Green Bank” within DBSA Internal approval of CFF Board approval of DBSA CFF capitalisation October 2018
  • 4. CFF STRUCTURE 4 1) Multiple capital sources 2) Housed under the DBSA 3) Catalysing private investment Facility Co-Funding DBSA capital R650m Green Climate Fund (Trust Account) R650m Pari Passu Debt Climate Finance Facility • Management and operational responsibility based on DBSA’s existing resources • Falls within the product innovation unit • Adopts the DBSA’s internal credit processes Debt funding and deal flow Deal origination and co-funding • Commercial Banks • Asset Managers • DFIs • DBSA Coverage and • Project Preparation Divisions Developer/investor equity Project co-investment and credit enhancement Climate projects
  • 5. DEAL FLOW CHANNELS AND ADDED VALUE For commercial banks and asset managers: ▪ Serves as a “first mover” and taking early stage risk ▪ Addresses risk associated with “first application” of technologies, and difficulties underwriting multiple revenue streams ▪ Offers tenor extension to mitigate Basle III requirements For the DFIs, the CFF: ▪ Can provide additional co-funding for developmental finance using credit enhancement products 5 CFF RFP Process DBSA Coverage Team DBSA Project Preparation Unit Climate Lab Commercial Banks and Asset Managers DFI Project Referrals The CFF will support deal flow from a number of sources and will always co-fund alongside private and developmental financial institutions.
  • 6. DEAL FLOW CHANNELS AND ADDED VALUE For the DBSA, the CFF: ▪ Supports its mandate by catalysing third party funding alongside its frontline divisions ▪ Supports the DBSA’s green and ESG commitments For the Climate Lab, the CFF: ▪ Supports the regional implementation of financial instruments developed by the Lab 6 The CFF will support deal flow from a number of sources and will always co-fund alongside private and developmental financial institutions. CFF RFP Process DBSA Coverage Team DBSA Project Preparation Unit Climate Lab Commercial Banks and Asset Managers DFI Project Referrals
  • 7. CLIMATE FINANCE FACILITY FOCUS AREAS 7 MITIGATION (reduce or prevent emission of greenhouse gases) • Renewable energy generation • Energy efficiency in industry and buildings • Sustainable and low emission transport • Waste to Energy ADAPTATION (respond to the impacts of climate change) • Water supply management including water efficiency and treatment • Climate-resilient water infrastructure