Kathmandu, 1 July. International Finance Corporation (IFC), a member of the World Bank Group, is providing a $25 million loan to NMB Bank to boost financing for green projects and small and medium enterprises (SMEs).
The investment is expected to help expand NMB’s SME portfolio to over US$1 billion by 2025—creating up to 50,000 jobs over the next five years.
“SMEs have been a key engine of growth in Nepal, contributing 20 percent of GDP and creating over 60 percent of jobs in the country. The project is expected to see a doubling in the amount of loans available for SMEs from NMB, creating more jobs in the economy,” said the IFC.
The loan marks IFC’s first climate focused lending to a financial institution in Nepal, incorporating the internationally recognized green loan principles.
The support for green financing, excluding hydro financing, is expected to contribute towards reducing CO2 emissions in the country. IFC said that it expects the project will also build up NMB’s capacity to identify and evaluate green lending opportunities and increase access to green financing in Nepal over the next five years – trebling the amount of loans available for ‘going green’.
“Our investments comprise of a balanced mix of real sector exposures which includes hydro power, agriculture, microfinance, infrastructure, tourism, SMEs and green projects that are key drivers of economic growth and sustainability. In the current COVID -19 scenario, the new investment from IFC adds considerable value in helping us significantly increase our current portfolio and widen the scope for investment in sustainable and green projects” said Sunil KC, Chief Executive Officer of the bank.
Additionally, access to climate finance is limited in Nepal, which is expected to face a further setback due to the reduction in the flow of credit, in the wake of the impacts of the COVID-19 pandemic.
“This investment is supporting SMEs and Nepal’s sustainable development during this economic downtown. IFC believes in the tremendous opportunity for green growth through mobilizing the private sector,” said Wendy Werner, IFC Country Manager for Nepal, Bangladesh and Bhutan. “The project will help boost access to finance for small and medium sized enterprises, which have been highly affected by the impacts of the pandemic. SMEs will contribute to Nepal’s recovery in the aftermath of the pandemic.”
Based on Nepal’s commitment to the Paris Climate Agreement, IFC estimates the country’s has climate-smart investment opportunities of US$46 billion by 2030. IFC’s own Climate Implementation Plan of April 2016 has an overall target of scaling up climate investments to reach 28 percent of IFC’s annual financing and catalyzing US$13 billion in private sector capital annually by 2020.
