Econostrum | Economic News in the Mediterranean

UN subsidises North Macedonia's SDG investments

Written by Frédéric Dubessy on Tuesday, February 15th 2022 à 18:20 | Read 592 times

UN supports North Macedonia's efforts towards the SDGs (photo: UN RCO)
UN supports North Macedonia's efforts towards the SDGs (photo: UN RCO)
NORTHERN MACEDONIA. Five countries, including North Macedonia, will be supported by the UN Joint Fund for Sustainable Development (see box below) with a total of $54.5 million (€48.02 million).

"The Fund is able to bridge the gap between donations and impact investments," said Hiro Mizuno on Monday 14 February 2022. According to the UN Special Envoy for Innovative Finance and Sustainable Investment, it offers "a sustainable investment model by leveraging the power of markets to accelerate businesses, empower communities and provide a clear path to self-sufficiency."

Part of this sum, $7.97m (€7.02m) available in April 2022, will feed into the Green Finance Facility (GFF) deployed by the government of North Macedonia. Scheduled to be launched in the summer of 2022 and fully operational by the end of that year, it aims to finance renewable energy projects with a total amount of $46.5m (€40.96m). The UN grant is expected to leverage some $38.7m (€34.07m).

This new financial vehicle will enable small and medium-sized enterprises, individuals and households to access affordable green finance to invest in renewable energy and energy efficiency solutions. The GFF is supported by the United Nations Development Programme (UNDP), the United Nations Economic Commission for Europe (UNECE), the International Organisation for Migration (IOM), the European Bank for Reconstruction and Development (EBRD) and most of the country's private banks.

For businesses and households

According to Rossana Dudziak, UN Resident Coordinator in North Macedonia, the GFF allows "combining and leveraging government and private sector financing (...) It brings together the financing and expertise of the government, the country's banking sector, one of the most experienced international financial institutions in this field - the EBRD - and the UN for renewable energy and energy efficiency."

The GFF is expected to provide loans to 105 businesses and 650 households. For businesses, the facility will provide a $31.4m (€27.63m) line of credit to local banks, which will in turn lend to businesses with a target interest rate of between 3% and 5% and a maturity of up to ten years. The facility will also provide $3.9m (€3.43m) in technical assistance and performance-based payments. These will represent up to 10% of the initial loan amount. For households, the facility will provide $6.5m (€5.72m) in loans through local banks (5-6% interest rate) for up to seven years. These loans will be complemented by performance-based payments of up to 30% of the original loan amount.

Today, more than 60% of electricity in North Macedonia is produced from coal. In 2018, air pollution in its capital Skopje (40 μg/m3) was 60% above EU standards and four times the level recommended by the World Health Organisation (WHO).

10.7 MW of new renewable energy capacity

"Over the past five years, we have provided more than €70m of green finance to SMEs and households through the local banking system and with significant donor support. These instruments have been very successful and have created a strong demand for green products", comments Andi Aranitasi, EBRD Head of Northern Macedonia. "We are very pleased that the UN and the MDG Trust Fund, through their grant support, will further strengthen the infrastructure we have created in the market for the rapid deployment of such attractive products. This will be the first ever cooperation of this nature between the EBRD and the UN system and it is a great honour for us that North Macedonia is the pilot country for this cooperation," he added.

"The Green Finance Facility is the future of finance and economic growth in achieving the green transition from a small to a modern, resource-efficient and competitive economy. Our government is already taking steps to open up new alternatives for the economy where citizens and businesses have the opportunity to achieve a 'green' and sustainable way of living and doing business," said Fatmir Bytiqy, Deputy Prime Minister of North Macedonia, in a statement issued by the local UN office.

At the heart of the programme's goals are the achievement of 70,068 MWh of annual energy savings, the non-emission of 80,510 tonnes of greenhouse gas emissions and the creation of 10.7 MW of new renewable energy capacity within four years.

Ten countries covered by the UN Joint Fund
The UN Joint Fund for the Sustainable Development Goals (SDGs) is a multi-stakeholder trust fund that supports member states by reducing the risks for investments that accelerate the achievement of the SDGs.

It was established a year ago by the UN General Assembly and "aims to disburse one billion dollars in grants per year - with the objective of all programmes turning multi-million dollar grants from the Joint Fund into billions of dollars for sustainable development through leverage," the UN said.

Also included in the announcement on Monday 14 February 2022 are Kenya, Madagascar, Suriname and Zimbabwe. Together with Northern Macedonia, these four countries were selected from proposals submitted by more than 100 others "as being the most effective, having the highest leverage of co-financing, and ready for investment", the UN said. 

The fund has already released an initial $41m (€36.12m) for four programmes in Indonesia, Malawi, Uruguay and Fiji. In 2021, it has also funded projects in Papua New Guinea for $17.9m (€15.77m).

To date, with the five new countries, "the portfolio of catalytic investments of the Joint Fund for the SDGs will increase to $114m (€100.43m)", says the UN. It should eventually mobilise some $5bn (€4.4bn) in favour of the SDGs in the ten countries concerned.

"The objective of this fund is to disburse $1 billion in grants per year in the run-up to 2030. All the programmes share a key element: their ability to transform the multi-million dollar grants of the Common Fund for the SDGs into billions for sustainable development," says a UN statement.


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