The Kuali Fund, a new impact investment fund led by COFIDES, already has the approval of the European Union (EU) and the Executive Committee of the Fund for the Promotion of Development (FONPRODE), of the Spanish Agency for International Development Cooperation (AECID). As an accredited entity, COFIDES will be in charge of managing the EU's participation.

The main objective of the Kuali Fund, whose manager will be GAWA Capital Partners, is the transformation of the business models and production processes of its beneficiaries to turn them into greener, more efficient, inclusive and sustainable models and processes. Thus, it will expand the range of solutions for mitigation and adaptation to climate change. Kuali expects to directly support more than 486,000 small farmers and 16,000 SMEs in 15 countries in Latin America and the Caribbean, as well as India. It also intends on avoiding the emission of 14.2 million anticipated tonnes of CO2 equivalent during the 10 years of the fund's activity.

PARTICIPATION OF THE GREEN CLIMATE FUND

To do so, the Kuali Fund will have a target size of between 250 and 300 million euros, which will be achieved with contributions from the EU (first tranche of losses of 12 million and 5 million of technical assistance), along with the contribution that COFIDES has requested from the Green Climate Fund (first tranche of losses of 25 million and 5 million of technical assistance) and financing from the Spanish Agency for International Development Cooperation through FONPRODE (50 million euros of concessionary debt and 2 million euros of technical assistance).The objective is for these contributions to make it possible to mobilise up to 213 million euros from private investors.

COFIDES chairman and CEO, José Luis Curbelo, said that "although the objective is ambitious, we hope to replicate the good functioning and high mobilisation of resources from third parties that we achieved with the Huruma Fund.”

In his opinion, "this type of fund is an example of how combined financing or blending can make it easier for private investment to get involved in impact projects, thus favouring compliance with the 2030 Agenda. The new Kuali Fund, in which, in addition to the EU, we hope to have the support of the United Nations Green Climate Fund, represents a challenge to promote a paradigm shift with which developing countries can make their low-emission and climate-resilient climate projects a reality and develop infrastructures in accordance with the Paris Agreement".

The general manager of FONPRODE, Carlos Jiménez Aguirre, has also pointed out that "the new Kuali Fund is fully aligned with the commitments made by the Government of Spain to increase its climate financing." Likewise, he points out that "the Kuali Fund will be a clear example of how the Spanish Agency for International Development Cooperation takes advantage of all the available potential to further its work in Latin America while building bridges with other important regions on the planet, such as India." In his opinion, "the promotion of South-South alliances is in the DNA of our Cooperation".

THE HURUMA FUND, A PIONEER IMPACT FUND AND AN EXAMPLE OF A BLENDED FINANCE PROJECT

The Kuali Fund benefits from the lessons learned from its predecessor, the Huruma Fund, the first project led by COFIDES within the framework of the EU blended finance facilities. Also managed by GAWA Capital, it has 120 million euros contributed by the EU, FONPRODE, COFIDES and private investors, thanks to the collaboration of CaixaBank Banca Privada, which has distributed the fund through its national network.

Its objective is to facilitate access to credit for farmers in underserved rural areas of Latin America, the Caribbean, sub-Saharan Africa and Asia. It has a Technical Assistance Facility (TAF) to provide consulting or training services in matters related to agriculture and contribute to the improvement of the entities in which the fund invests so that they broaden their impact on the excluded rural population.

The Huruma Fund has also been recognised by the OECD as an example of good practice when it comes to mobilising private equity to support small farmers.

ABOUT COFIDES

COFIDES is a a state-owned company engaging in the management of State and third-party as well as its own funds, pursues a number of aims: internationalisation of Spain’s economy, furtherance of economic development and fortification of the solvency of companies affected by COVID-19. In addition to the Spanish State, its shareholders include Banco Santander, Banco Bilbao Vizcaya Argentaria (BBVA), Banco Sabadell and Development Bank of Latin America (CAF).

ABOUT THE AECID

TheAECID, or Spanish Agency for International Development Cooperation, is Spanish Cooperation's chief management body, focused on sustainable human development and the fight against poverty. It is under the responsibility of the Ministry for Foreign Affairs, the European Union and Cooperation through the Secretariat of State for International Cooperation.

The agency works alongside its partners in more than 30 countries, through its network of Technical Cooperation Offices, Cultural Centres and Training Centres. It employs instruments such as technical cooperation, economic and financial cooperation, humanitarian aid and education for development and social awareness.

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