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World Bank Approves First Sustainability-Linked Bond for Rwanda to Boost Private Capital Mobilization

WASHINGTON, June 9, 2023 — The World Bank’s Board of Directors approved an additional credit of $100 million in International Development Association* (IDA) financing to support Rwanda in increasing access to finance and supporting businesses' recovery and resilience in the post-pandemic period. The additional finance will scale up investments under the Access to Finance for Recovery and Resilience project by providing financial relief, risk-sharing instruments, and long-term sources of funding to businesses.

The additional financing will support an innovative Sustainability-Linked Bond (SLB) instrument to be issued by the Development Bank of Rwanda (BRD) in local currencya first for a World Bank operation, facilitating the mobilization of private capital in an IDA country. This type of transaction is also a first for a development bank globally and provides a model that could be scaled up in Rwanda and elsewhere in the region. The bond issuance will be part of a programmatic SLB issuance program to support the Development Bank of Rwanda’s institutional strengthening by helping to diversify its funding sources via capital markets while nuturing its role and commitments to achieving key performance indicators aligned with Rwanda’s sustainable economic development.

“The additional financing will expand the pool of innovative blended finance instruments under the project which brings World Bank financing together with funding from the Asian Infrastructure Investment Bank and the Global Facility for Disaster Reduction and Recovery,” said Rolande Pryce, World Bank Country Manager for Rwanda. “Through this operation, Rwanda is setting an example for other countries in the region on how to enable private capital mobilization while promoting sustainable economic development at a time when the need for resources globally is acute.”

The BRD Sustainability Linked Bond program is expected to align closely with BRD’s broader strategic objectives of promoting sustainable economic development. The program will rely on a sound sustainability-linked financing framework, including specific measurable key performance indicators, which will enable the program to receive the ‘sustainability-linked’ label. The identified indicators will be relevant, measurable, and externally verifiable. They will also be closely aligned with BRD’s activities and the Government of Rwanda’s sustainable development objectives.

With this operation, the Government of Rwanda will play an enabling role in BRD’s foray into long-term institutional sustainability and sustainability-linked financing. The issuance is expected to act as an important signal for the wider use of debt markets, promote this form of financing among other potential issuers, contribute to domestic capital market development, and position Rwanda as a leader in sustainable finance regionally. The proposed transaction is also expected to position Rwanda favorably internationally and support broader private-sector capital flows to strategic sectors. In addition, the proposed issuance could provide a template for broader sustainability development in the financial sector.

*The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 74 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.3 billion people who live in IDA countries. Since 1960, IDA has provided $458 billion to 114 countries. Annual commitments have averaged about $29 billion over the last three years (FY19-FY21), with about 70 percent going to Africa. Learn more online: #IDAworks



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Rogers Kayihura
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Daniella van Leggelo-Padilla
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