Toronto, February 3, 2021 – Convergence has awarded a feasibility study grant to the Basel Agency for Sustainable Energy (BASE), in partnership with Oxfam in the Pacific, for the development of a remittance-based financing vehicle that aims to advance climate action and sustainable infrastructure development in the Pacific Islands. This grant funding has been awarded through Convergence’s Indo-Pacific Design Funding Window, funded by the Australian Government.
“As the world faces a severe climate crisis, we need to accelerate solutions that will equip countries most exposed to its shocks with the right tools and infrastructure. This feasibility study is set out to do just that, building on BASE’s previously implemented remittance-based financing mechanisms in Haiti and Bolivia, which benefited more than 400,000 people in those countries,” states Robert van Zwieten, Managing Director for the Asia-Pacific region at Convergence.
A sizeable portion of the population in the Pacific Islands live and work along its coastlines, exposed to climate events such as land erosion, flooding, and cyclones. Frequent natural disasters in these under-resourced small island states result in damages worth millions of dollars. Much of the physical damage and associated social and economic devastation can be avoided by investing in sustainable and resilient infrastructure. While remittances are an important source of income for people in the Pacific Islands, the potential for remittances to enhance climate resilience has not yet been realized in the region.
BASE is a Swiss not-for-profit foundation that designs, develops and implements innovative financing mechanisms and business models to unlock investment in climate change solutions. Convergence’s feasibility grant will enable BASE, in partnership with Oxfam in the Pacific, to explore the feasibility of a remittance-based financing mechanism for micro-infrastructure solutions such as roof strappings, solar panels and batteries, and solar heaters and water tanks, for enhanced household resiliency. This mechanism is expected to mobilize impact investors, local financial institutions, migrant workers in Australia and New Zealand and remittance recipients in the Pacific Islands, many of whom will be women. After an initial pilot, the mechanism is expected to be self-sustaining, envisaged to mobilize USD 35 million into local economies, and impact 9,000 households.
“The aim of our program is to design a locally relevant and self-sustaining finance vehicle that enables migrant workers from Pacific Island Countries who live and work abroad to channel part of their remittance payments towards sustainable and climate resilient infrastructure investments for their families and communities at home,” says Jasmine Neve, Deputy Director at BASE.
The feasibility of this mechanism will be explored initially in Samoa, Tonga, Fiji, Vanuatu and Kiribati. Initial work will include detailed research on targeted countries, stakeholder consultations to assess barriers, in-depth gender analysis to understand the impact potential to advance gender equality in the region, and a vehicle structure customized to the identified countries.
About Convergence’s Design Funding Program
Convergence’s Design Funding Program offers a unique market acceleration opportunity for practitioners to secure feasibility study and proof of concept stage design funding to develop and launch catalytic blended finance vehicles that aim to attract private capital to sustainable development at scale.. The Indo-Pacific Design Funding Window, funded by the Australian Government, provides grant funding for the design and launch of catalytic blended finance solutions focused on sustainable & resilient infrastructure and/or gender equality in certain countries in the Indo-Pacific region. Convergence is accepting applications for its current cycle until February 18, 2021. Find out more here.
Convergence is the global network for blended finance. On top of market acceleration through its Design Funding program, Convergence generates blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. Convergence’s global membership includes over 200 public, private, and philanthropic investors as well as sponsors of transactions and funds. To learn more, visit www.convergence.finance.
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