COVID-19 crisis is opportunity for GGF to promote sustainable growth

COVID-19 crisis is opportunity for GGF to promote sustainable growth interview Green for Growth Fund GGF Olaf Zymelka

Photo: GGF


June 17, 2021






June 17, 2021





The Green for Growth Fund – GGF has an important role to play in encouraging and financing financial institutions which share its vision of building back better, Chairperson Olaf Zymelka said in an interview. If governments implement structural reforms, it may spur green investments in the private sector, he told Balkan Green Energy News.

The GGF is one of the first specialized vehicles to invest in renewable energy, energy efficiency, and resource efficiency measures in its target regions using a blended finance approach that leverages public capital to mobilize private investments. Zymelka warned greenhouse gas emissions are growing again, on top of economic challenges and social inequality being exacerbated by the COVID-19 pandemic.

“Green recovery” has become a buzzword lately. What is it and why is it so important?

The coronavirus has hit the world economy hard. And as governments look to rebuild again, to create jobs, spark growth, repair the damage done, it needs to be accomplished in a sustainable manner – which, essentially, is what a “green recovery” entails.

Despite the hardships, the crisis provides us with an opportunity to promote sustainable economic growth for the future. This could be done in various ways, but perhaps the most obvious is by governments implementing key structural reforms and activities. When governments send the right market signals, this can hopefully spur green investments by the private sector.

This is where we feel that the GGF has an important role to play in encouraging and financing financial institutions which share our vision of “building back better.”

COVID-19 opportunity GGF
Photo: KEPO, pellet boiler manufacturer from Serbia (GGF)

This isn’t the first time in recent years that the world has been left reeling in the wake of a crisis. In the aftermath of the 2008 global financial crisis, the focus was almost exclusively on investing for economic growth, with less attention paid to climate change meaning that the world missed a significant opportunity.

We cannot let this happen again and, yet, by the end of 2020, global GHG emissions had already surpassed their 2019 levels despite the crisis shuttering societies and economies. So, on top of economic challenges and social inequality being exacerbated by the pandemic – emissions are growing again.

That’s what makes a green recovery vital. If new investments are green, not only can they achieve tangible macroeconomic and employment impact, but they will also be aligned with favorable future climate outcomes.

As the GGF works alongside partner financial institutions to find innovative ways to deliver green finance to businesses and households, it will go a long way in boosting economic growth while simultaneously delivering important climate benefits. With over a decade of experience and as a leading regional source of green finance, I believe we are in an ideal position to promote a green recovery.

So, what exactly is the GGF doing to promote a green recovery?

In April 2020, we could already see the strain our partners were facing as economies ground to a halt and borrowers began facing difficulties as a result of lockdown measures to contain the coronavirus. Numerous central banks in the Balkans, as well as in our other regions, announced different types of moratoria on loan repayment requirements.

So, we knew that we had to take swift action to support the financial sector to overcome crisis-related challenges and, by doing so, enable it to continue providing dedicated financing to support the countries’ economies – which is exactly what is needed for a green recovery to ensue.

We could see that we had to immediately adapt our business-as-usual approach and give our partners the necessary tools to help their clients whether the crisis by being flexible to finance eligible green investments and support the resilience of essential sectors. To date, we have approved over EUR 200 million in loans directly related to this green recovery strategy.

COVID-19 crisis opportunity GGF promote sustainable growth interview Green for Growth Fund Olaf Zymelka
Photo: Vegetable greenhouse in Shabran in Azerbaijan (GGF)

Alongside these expanded offerings, the GGF Technical Assistance Facility, which operates in coordination with the fund, established the Crisis Response Program (CRP) to assist our partners. The aim of the CRP is to protect our partners’ green lending activities by providing support for activities such as loan restructuring, credit risk management, and revision of business strategies. The program also supports the management of partner institutions in steering their organization to confront the pressures from the economic fallout of the COVID-19 pandemic.

The Green Innovation Support Initiative was also launched by the Technical Assistance Facility to assist green entrepreneurs, who were particularly vulnerable to the economic downturn. By providing direct financial support, these entrepreneurs were able to continue their operations during the pandemic and adapt to new market conditions.

How do we encourage resilience of businesses in Europe, and in particular the Balkans, post-COVID-19?

The crisis has revealed the underlying complexities and vulnerabilities of global supply chains. In the EU there is a growing shift to adopt laws which would enforce corporates to prove that goods or service being provided in the EU do not harm people or the environment. The EU Green Deal, for example, is just one policy highlighting Europe’s commitment to the transformation of global value chains by promoting new standards for sustainable growth.

The European Green Deal and other European Union’s efforts create huge opportunities for small and medium enterprises in the Balkans to offer more resilient solutions

This creates huge opportunities for small and medium enterprises (SMEs) in the Balkans to offer more resilient solutions, whether it be in terms of services or products, as the EU looks to nearshore from the region to mitigate future supply chain disruptions.

Due to the openness of the EU trade regime, nearshoring from the region is possible as the EU is the world’s largest trader of agricultural and manufactured goods and services. But for this to occur, products have to meet improved environmental standards for export. This is where the GGF steps in and can be an asset to SMEs by financing investments that improve their environmental performance but also energy costs and competitiveness.

COVID-19 crisis opportunity for GGF sustainable growth interview Green for Growth Fund Olaf Zymelka
Photo: Construction of wind power plant Alibunar in Serbia (GGF)

In your opinion, how does a country balance economic growth while still combatting climate change?

There needs to be effective, context-specific programs as there is no “one size fits all” approach when it comes to rebooting economies while prioritizing green measures. But that doesn’t mean that industries or countries cannot learn from each other or should work independently. A great example of regional cooperation was seen a couple of months ago when the Western Balkan countries signed the Sofia Declaration on the Green Agenda.

Their commitment to reform energy and transport sectors to become carbon-neutral by 2050, as set out by the EU Green Deal, through a strict climate policy is the kind of determination needed to truly become climate resilient.

This makes the work the GGF does, together with our partner institutions, so impactful. The fund leverages on its ability to attract both private and public funding to contribute to sustainable economic growth and thus mobilize additional money for climate finance from private investors, which otherwise would not have had investments in the Balkans on their map.

I truly believe that it is only by collectively and diligently planting the seeds for a sustainable future that real change can arise, ensuring economies and societies are recovering healthier and stronger and in a greener manner.

Do you think that the climate change discussion should be put on the back burner while the Western Balkans and the world grapple with the COVID-19 crisis?

This is a very important question, as people often think that tackling the climate crisis amidst a pandemic is not possible. But what the pandemic has made abundantly clear, is that the socio-economic impacts of COVID-19 will require a holistic approach to recovery planning and policymaking.

One of the goals of a green recovery should be to replace energy produced by fossil fuels with renewable sources

Take coal, which currently is the primary power for electricity in the region and accounts for approximately 70% of electricity produced. One of the goals of a green recovery should be to reduce this number significantly and to replace energy produced by fossil fuels with energy from renewable sources. It helps that key technologies are now more mature, affordable, and scalable than they were ten years ago, making it more affordable to adopt a greener approach going forward.

Another goal of the green recovery should focus on supporting SMEs as they have been hit hardest financially by the pandemic. Since SMEs make up the majority of firms in the Balkans and are one of the main drivers of the region’s economy, it is vital to promote a sustainable recovery with these businesses.

The more we invest in a green economy now, the more we benefit later, whether it be our environment or improvement of livelihoods

In order to help SMEs and boost sustainable economic growth and create jobs, the EU, one of GGF’s longstanding partners, has adopted a comprehensive Economic and Investment Plan for the Western Balkans. The goal of the plan is to invest up to EUR 9 billion in the areas of transport, energy, green and digital transition, to boost a green recovery post-COVID-19.

This will accelerate the region’s convergence with the EU, which is pursuing its Green Deal as part of its recovery strategy.

We now have the opportunity to unleash innovation, restructure key sectors while making sure that sustainability is at the forefront of our actions. Ultimately, the more we invest in a green economy now, the more we benefit later, whether it be our environment or improvement of livelihoods.

This is at the heart of the mission for the GGF. We strongly believe that our targeted offering is effective in delivering green investments and transformational benefits for partners and local stakeholders.

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