Green for Growth Fund launches partnership with Swedish International Development Cooperation Agency

An agreement between the Green for Growth Fund (GGF) and Swedish International Development Cooperation Agency (Sida) enabled the expansion of green lending in the Western Balkans and the European Union’s Eastern Neighborhood. With the new unfunded guarantee of EUR 60 million, GGF can provide EUR 120 million in loans through financial intermediaries and directly to companies.

The Green for Growth Fund established a new partnership, with the Swedish International Development Cooperation Agency. It facilitates GGF’s first risk-sharing, unfunded guarantee. The Luxembourg-based fund and Sweden’s development cooperation agency said they both support real economies and acceleration of the green transition in the Western Balkans and the countries of the EU’s Eastern Neighborhood.

The signed unfunded guarantee amounts to EUR 60 million. It enables GGF to provide EUR 120 million in loans to private businesses and households through financial intermediaries and directly to companies. The package is for urgently needed investments in the decarbonization of the economy – expanding renewable energy generation and improving energy efficiency.

With unfunded portfolio risk-sharing facilities, international financing institutions or similar lenders and agencies accept a share of risk in an investment instead of committing capital.

New funding approach is major milestone for Green for Growth Fund

The Green for Growth Fund promotes energy efficiency and renewable energy in Southeast Europe, the Caucasus, Middle East and North Africa. By providing refinancing to local financial institutions, it helps businesses and households access sustainable energy solutions, fostering energy efficiency and reducing carbon emissions.

GGF was initiated as a public-private partnership by the European Investment Bank and Germany’s KfW Development Bank, with financial support from the European Union, the German Federal Ministry for Economic Cooperation and Development (BMZ) and other international investors. Finance in Motion serves as GGF’s advisor.

“We are excited to welcome Sida as a new guarantee partner to the Green for Growth Fund. This innovative funding approach, being the first of its kind for us, represents a major milestone. We are grateful to Finance in Motion for their exceptional work in structuring this deal. This partnership not only strengthens our capacity to support green initiatives but also enhances our ability to prepare financial institutions and businesses for future opportunities in the EU market,” GGF’s Board Chairperson Simon Gupta stated.

Bridging investment gap in high-risk markets

The Swedish International Development Cooperation’s Agency’s Assistant Director General Kjell Forsberg, responsible for trade, private sector and financial instruments, said the partnership is aimed at supporting countries highly prioritized by Sweden. The guarantee collaboration between the agency and the Green for Growth Fund bridges the investment gap in high-risk markets while complementing other Swedish official development assistance (ODA) contributions as well as the European Union’s programs.

“We are grateful to Sida for their partnership and support. This collaboration is crucial for the Green for Growth Fund, enhancing our efforts in promoting energy efficiency and renewable energy projects,” said Borislav Kostadinov, Fund Director of GGF at Finance in Motion.