GCF agreement with CABEI to unlock finance for climate adaptation in Central America

Today, the Green Climate Fund and the Central American Bank for Economic Integration (CABEI) signed an agreement that will kick off the implementation of the CAMBio II project, aimed at helping micro, small and medium businesses in Central America become more resilient to climate change.

While the agriculture, livestock, and forestry sectors are at the very core of the region’s economy, they are particularly vulnerable to climate change-related natural hazards, such as floods, droughts, and wildfires. To tackle these risks, the sectors, dominated by small, mostly family-run companies, need urgent investments into climate adaptation measures. However, access to finance is hindered by conservative banking practices and high perceived risks associated with the agricultural sector.

The CAMBio II project will reduce these obstacles by providing concessional loans, technical assistance and an incentive scheme in 7 countries in Central America, namely Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Panama. Working with local financial institutions, the project will provide loans to micro, small and medium enterprises to promote the best available adaptation measures and help adapt production systems to climate change. Moreover, the incentive scheme will award businesses and financial institutions for the successful implementation of adaptation activities.

GCF Deputy Executive Director Javier Manzanares said the signing of the agreement marked a significant step in the Fund’s ongoing efforts to work with the private sector in funding climate adaption and reinforced the GCF’s commitment to helping the Central American region raise climate ambition. “The partnership between GCF and CABEI proves that innovative financial solutions are crucial to unlocking climate finance where it is needed the most,” he said.

Dr Dante Mossi, CABEI’s Executive President said: “CABEI is very honored to have formalised the first agreement with the Green Climate Fund that allows us to channel financial resources for the financing of climate change adaptation measures for micro, small and medium-sized enterprises (MSMEs) increasing the resilience to climate change of more than 69,000 people in the region”.

Over the next 15 years, the project is expected to support over 5,000 MSMEs in the region. GCF will be investing USD 15.5 million in the CAMBio II project, with CABEI adding USD 12.5 million.