Assessing the Green Economy Financing Facility (GEFF) performance

THE BACKGROUND

Morocco remains highly vulnerable to climate variability and change, particularly in the country’s water, agriculture, energy, coastal zones, and fisheries sectors. For instance, the country’s water resources have been rapidly depleted from 2,600 m3 per capita in 1960 to about 700 m3 today. Similarly, the country’s energy demand has grown by about five times from 1974 to mid-2010, putting pressure on the import of fossil fuels to meet this increased demand. As a result, the government has set ambitious targets for its green transition. Through its Nationally Determined Contribution (NDC), Morocco aims to achieve a 45.5% reduction of its greenhouse gas emissions by 2030 compared to a business-as-usual scenario.

The Green Economy Financing Facility (GEFF) seeks to help MSMEs to meet green targets. Morocco’s GEFF is a credit line facility of up to EUR163.5 million to participating financing institutions in Morocco to on-lend to businesses investing in energy efficiency, renewable energy, green buildings, water saving, waste reduction and circular economy projects. Pre-approved technologies have been assessed and are automatically eligible for GEFF financing through a participating financial institution. Technical assistance and Investment grants are also available for MSMEs to help them adopt green technologies.

THE PROJECT

Our team conducted a performance review of the GEFF against its original objectives. We have met with local financial institutions and beneficiaries to review the existing green technology portfolios and selected projects. We have also assessed the appropriateness of blending financial solutions, including using investment grants for creating leverage (mobilizing private sector funding).

THE RESULTS

The Facility has enabled partner financial institutions to increase the offer of green financial products and increase access to green finance in the local market. The GEFF has the capacity to deliver a critical mass of small- to medium-sized green economy projects across key sectors, achieving an economy-wide demonstration effect. Under its current set-up, the GEFF encourages sub-borrowers to adopt green technologies over green technologies by providing direct incentives upon the completion of projects.