On the International Day of Banks, we recognize the pivotal role that banks play in advancing sustainable development, fostering innovation, and building a resilient future. North Macedonia’s Green Financing Facility (GFF) is a shining example of how banking systems can be harnessed to address urgent environmental challenges while promoting a just energy transition.
With air pollution levels five times higher than what the World Health Organization (WHO) deems healthy and more than 70% of the country’s energy coming from coal, the need for cleaner energy is urgent. The GFF makes this transition possible by offering affordable loans through local banks, allowing businesses and households to invest in green technologies that improve air quality and reduce reliance on coal.
Supported by the Joint SDG Fund, the GFF exemplifies the transformative potential of banking in achieving the SDGs. This innovative initiative brings together key partners, including local banks, to empower small businesses and underserved households to invest in energy-efficient and renewable energy technologies.
What is the Green Financing Facility?
The Green Financing Facility offers favorable loans to small and medium-sized businesses (SMEs) and underserved households, enabling them to adopt clean energy and energy-efficient technologies. The joint programme’s ultimate goal is to reduce North Macedonia’s dependence on coal and create a healthier environment by improving air quality.
Businesses and households receive these loans from partner banks, such as Sparkasse Bank, ProCredit Bank, and Silk Road Bank, which are supported by a €30 million credit line from the European Bank for Reconstruction and Development (EBRD). To encourage investment, the GFF offers performance-based cash refunds—up to 10% of the loan for businesses and 30% for households—once the projects are completed and verified.
The Power of Partnerships
The success of the GFF is built on strong partnerships. By bringing together local banks, the Government of North Macedonia, the EBRD, and UN agencies, the facility demonstrates the power of collaboration in driving meaningful change. The UN Resident Coordinator in North Macedonia is central in coordinating these partnerships to ensure that all parties are aligned and working toward the same goals.
UN agencies such as the United Nations Development Programme (UNDP), the International Organization for Migration (IOM), and the United Nations Economic Commission for Europe (UNECE) play crucial roles in the implementation of the GFF. They provide technical expertise, manage the operational aspects, and ensure that businesses and households make sustainable and impactful investments.
How Does the GFF Work?
The GFF operates through two key components:
Business Component: Small and medium-sized businesses (SMEs) can access loans through partner financial institutions to invest in energy-efficient technologies and renewable energy projects. Once their projects are completed, businesses receive a cash-back incentive of up to 10%, incentivizing energy efficiency upgrades and renewable energy adoption.
Household Component: Households, particularly those from underserved communities, can access loans from local financial institutions with a 30% cash refund for making energy-efficient home improvements. With the added benefit of technical assistance, households can choose the best solutions to lower their energy bills and reduce their carbon footprint.
This approach ensures that both businesses and households are empowered to contribute to North Macedonia’s clean energy transition, with financial incentives and expert guidance available to maximize the impact of their investments.
Ensuring a Just Energy Transition
At the heart of the GFF is the commitment to a just energy transition, ensuring that vulnerable and underserved communities can benefit from the shift to clean energy. By providing substantial cash refunds and expert technical assistance, the GFF lowers the barriers to participation, making it easier for both small businesses and households to take part in the country’s energy transformation.
Rossana Dudziak, former UN Resident Coordinator in North Macedonia, emphasizes the importance of this inclusive approach: “The banking sector is learning from us, especially when it comes to serving populations they’ve never considered before. The GFF is not just about addressing air pollution. It is about changing the way we think about investments in sustainability and ensuring that everyone, from small businesses to underserved communities, has the opportunity to benefit from this green transition.”
A Sustainable Future for North Macedonia
The Green Financing Facility is a shining example of how innovative financial mechanisms, paired with strong partnerships, can drive sustainable development. By providing loans through local banks and offering financial incentives, the GFF is enabling North Macedonia to reduce its reliance on coal, improve air quality, and transition to a more sustainable energy system.
With the continued support of the GFF, North Macedonia is poised to achieve significant reductions in carbon emissions and improvements in air quality, contributing to the country’s long-term sustainability goals. The GFF serves as a model for how countries can implement just energy transitions through collaboration, innovation, and a commitment to ensuring that everyone benefits from the clean energy revolution.
Note:
All joint programmes of the Joint SDG Fund are led by UN Resident Coordinators and implemented by the agencies, funds and programmes of the United Nations development system. With sincere appreciation for the contributions from the European Union and Governments of Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, Monaco, The Netherlands, Norway, Poland, Portugal, Republic of Korea, Saudi Arabia, Spain, Sweden, Switzerland and our private sector funding partners, for a transformative movement towards achieving the SDGs by 2030.
