Green Financing Facility to Improve Air Quality & Combat Climate Change in North Macedonia

North Macedonia
Europe and Central Asia
Impact Areas
Energy and climate action
Set-up phase


Progress in funding
7,974,431 of 46,674,431 USD
Total requested (USD)
Allocated by Joint SDG Fund (USD)
Total Funding (USD)
Leverage Target (USD)


The joint programme is expected to start in April 2022, after the completion of the design and pre-feasibility phase in 2021.

The programme


More than 60% of North Macedonia's electricity is generated by coal, with very limited use of renewable and efficient energy. Because of this, North Macedonia, and its capital of Skopje, has some of the highest pollution in Europe - in 2018, Skopje's air pollution of 40 μg/m3 was 60% higher than EU guidelines, and four times the level recommended by the WHO. Climate change will only exacerbate this problem, necessitating the adoption of renewable energy and energy efficiency retrofitting of homes and businesses. 


By providing both underserved households and businesses with financing to install renewable and efficient energy technology, the Green financing facility aims to increase North Macedonia's renewable energy generation by 10.7 MW over four years. The programme is anticipated to extend loans to 105 businesses and 650 households, ultimately leading to 80,000 tonnes of greenhouse gas emissions avoided and 86,000 MWh of energy saved.


The US$ 44.4 million Green Financing Facility will support loans to households and small businesses to adopt renewable and efficient energy technologies. To incentivize businesses and households to take advantage of the loans supported by the facility, it will also offer technical assistance and performance based payments. The loans will be disbursed to households and businesses through local banks, and women, and single parent led households will be prioritized, alongside households that receive remittances or contain returning migrants.

Financial instruments

To best serve both households and businesses, the facility will use a slightly different structure for each. For businesses, the facility will provide a US$ 31.4 million credit line to local banks, which will in turn lend to businesses at a target IRR of 3 - 5% with tenors of up to 10 years. The facility will also provide US$ 3.9 million in technical assistance and performance based payments. The PBPs to small businesses will be up to 10% of the amount of the original loan. For households, the facility will provide US$ 6.5 million in loans through local banks, with an expected IRR of 5 - 6% and an expected tenor of up to 7 years. This will be complemented by performance based payments equal to up to 30% of the original loan amount.

UN Implementers

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Impact Areas

Energy and climate action

This impact area covers financing solutions that leverage public and private resources for cleaner and more efficient energy systems and climate adaptation and mitigation action.

Energy accounts for two-thirds of total greenhouse gas, being the main contributor to emissions production. Despite 70% of clean energy investments are privately financed worldwide, in accordance to a special report developed by energy investments on clean energy in developing economies needs to expand by more than seven times, to above US$ 1 trillion, to put the world on track to reach net-zero emissions by 2050. Catalytic grants from the Joint SDG Fund are a critical bound to development finance institutions lending and attract private capital injections. Our portfolio brings financial solutions that span from lending and impact investing to insurance and smart subsidies. It aims to attract private investment to markets and sectors at early stages of readiness – or in situations where the risks are hard to mitigate, such as energy access projects for vulnerable communities or in remote areas.

Blue Economy

This impact area scopes financing solutions that leverage public and private resources for the blue economy.

The monetary value of the world’s oceans has been estimated at US$ 24 trillion by the World Wide Fund for Nature. This wealth is at risk because overfishing, pollution and climate change put an unprecedented strain upon marine ecosystems. Oceans are getting warmer, stormier and more acidic, impacting the health of sensitive marine ecosystems and the lives of human communities that rely on them. Ocean reefs, the home of the planet’s most diverse ecosystem, contribute to the livelihoods of at least 500 million people worldwide generating US$ 36 billion per year for the global tourism industry. Our programmes and pipeline in the blue economy space bring financing solutions that are adapted to the needs of island nations and coastal communities to preserve marine resources and coral reefs while offering income opportunities to coastal populations. They support scalable blue economy businesses, through equity and debt finance, risk guarantees, performance grants, incubation and technical assistance, to build resilience in coastal ecosystems and create jobs not only to allow us to save our planet, but also to build more resilient economies.

Food systems and agriculture

This impact area consists of financing solutions that leverage public and private resources for sustainable agricultural systems and enhanced food security.

Poverty is deeply intertwined with successes or failures in agriculture and food security, with the majority of the rural poor depending on agriculture and natural resources for their livelihoods. Recent estimates from FAO show that nearly 10% of the world population is still undernourished. The impacts of climate change, conflicts and Covid-19 pandemic take an even higher toll - resulting in an estimated 118 million more people suffering from hunger and one in three people not having access to adequate food in 2020. On the other hand, the ecological footprint of the global food system continues to grow in terms of energy, resource use, and the contribution to greenhouse gas emissions. To address these issues, the traditional approach to food policy must be reoriented towards food-system-wide approaches that provide incentives for investments in inclusive and sustainable development of food systems and for steering consumer behavior and food preferences toward healthier and more sustainable diets. Investments in food system innovations are key in driving change towards more a more sustainable and food secure future. Our programmes and pipeline in this area include solutions financial solutions that include microcredit and microinsurance, downscaling schemes from multilateral development banks, and a variety of blended finance facilities supporting agricultural supply chains, smallholder farmers, rural development, nutrition, and sustainable farming transitions. repurpose finance to support sustainable and resilient food systems, reduce finance that is destroying/degrading food systems, optimize finance to mobilize investment and increase access, and scale up public and private finance flowing to healthier diets. Examples include blended finance facilities, de-risking and collateral support mechanisms, sovereign and impacts bonds, business incubators, among others.

Social Impact

This impact area covers financing solutions that leverage public and private resources for social impact sectors including health, education, waste, water, and sanitation. These include Innovative financing concepts that improve the well-being of people and communities, especially vulnerable groups.

Leave no one behind (LNOB) is the central, transformative promise of the 2030 Agenda for Sustainable Development. LNOB not only requires the elimination of social practices that leave particular groups of people further and further behind, but it also demands equal access to basic services, resources and opportunities for all. This will come at a cost. Achieving LNOB will require significantly more financing than is currently invested in human and sustainable development, and for these funds to be channeled towards improving the lives of those who are furthest away from reaching SDG targets. Focusing on the social sectors, the Overseas Development Institute estimates that global financing requirements for education, healthcare, and social protection transfers alone amount to US$ 137 billion annually in low-income countries. While these sectors require large investments to make the required transition, they often rely on public funds. These are rarely the sectors that private funds invest in, as their objective is to earn a return that is higher than the initial investment, no matter how minimal. Therefore, our programmes and solutions focusing on LNOB innovate the way we finance and address these barriers and close the financing gap, by offering viability gap financing, early stage capital investments, de-risking mechanisms, smart subsidies, and technical assistance to empower people and early stage enterprises driving impact in key social sectors.