European Bank issued the following announcement on Oct. 22.

1500 cows is a lot of cows. But if you want to produce fresh milk in Morocco – a hot country which grows little feed – you need scale. Otherwise local fresh milk cannot compete with imported milk powder.  For that same reason, you also need a resource-efficient operation.

Ali Zoubir, a third generation dairy farmer in Had Soualem, 40 miles from Casablanca, knows a lot about efficiency. He inherited 500 cows and some old-fashioned barns from his father. The cows needed to be fed and cleaned by hand; the stuffy, dark barns had to be lit and ventilated to make them bearable for the animals, guzzling up expensive energy.

“But we are not far from the sea – there is enough breeze,” he says. “We simply needed modern, open barns, where the herd is kept together, and the air is allowed in”.

The farm took a loan from Banque Populaire, under the MorSEFF Programme led by the EBRD, which included an investment grant from the European Union, and underwent a complete re-haul. It is one of 220 businesses which have benefitted from a MorSEFF loan. 

New solar panels now provide all the electricity needed during the day, including pumping water from wells; the sun also powers water heaters providing hot water for cleaning. The new tractors are best in class. The farm’s electricity consumption has dropped 80 per cent, even as the cattle population increased threefold.

The French Montbéliarde cows look relaxed, wandering over to greet visitors.  All of their milk is sold to Danone and local restaurants. But Ali Zoubir dreams of someday  making his own comté and brie,  cheeses which can also be an investment opportunity under future EBRD programmes.

Morocco relies heavily on imported fossil fuels, which depresses the country’s trade balance and burdens businesses with high energy costs. The government is working to increase the share of local renewables in its energy mix with a focus on large-scale projects reducing both pollution and imports. But here, as elsewhere, they know that to achieve this, you also need local involvement and projects such as the ones on Albane Sahel farm.  

This is why a group of international financiers and donors came together to create a credit line for energy efficiency and small renewable energy projects in Morocco. In 2015, EBRD specialists developed the Morocco Sustainable Energy Financing Facility (MorSEFF), a programme which would provide funds to local banks and technical support to companies looking for sustainable energy upgrades.

The funds themselves came from several international sources: investment and technical cooperation (TC) grants from the European Union, financing from the EBRD as the lead financial institution, from France’s AFD, the European Investment Bank, and Germany’s KFW.  TC funding was also topped up from the EBRD-managed SEMED Multi-Donor Account.

If a project qualifies – if it results in enough energy savings, reductions of greenhouse gas emissions or renewable energy capacity and uses best-in-class technologies – it can receive a loan from a local participating financial institution, an investment grant from the EU of typically 10%, and technical assistance helping to develop a bankable project.

This model – with different partners and local variations – is the EBRD’s know-how. In 25 countries, the Bank and its partners, of which the largest is the European Union, enable local financial institutions to support energy security improvements by local businesses and even households and in specific cases also by public sector.

Dr Amal El Mernissi is one of the engineers evaluating potential projects applying funding under the MorSEFF programme. We met as he was making an initial visit to a historic but run-down hotel in the heart of the Moroccan capital, Rabat. The once-gorgeous building with an art-deco façade went through ups and downs; now the owners are planning a complete overhaul including new double-glazed windows and doors, new plumbing and electricity, insulation to keep it cool in the summer, solar panels on roofs to produce clean energy and domestic hot water, and a terrace café bar under the leafy canopy of mature trees.

Dr El Mernissi is not only an engineer within MorSEFF; he is also a part of the national team of experts determining the country’s National Defined Contributions (NDCs), the commitment to reduce greenhouse gas emissions under the Paris Climate Agreement.

If every company could receive an affordable loan to replace old machines and technologies with more efficient physical capital, Morocco could kill two birds with one stone: reduce fossil fuel imports and move towards its goal under the Paris Climate Agreement.

Dr Mernissi explains: “To achieve this, the government believes US$ 50 billion in climate financing would need to be invested between 2010 and 2030. This level would only be possible if international financing is available. In that case, Morocco can reduce greenhouse gas emissions by 42 per cent by 2030. The country can reduce emissions by only about 17 per cent relying on domestic sources.”

 “In Morocco, we have other international programmes which offer advice and technical assistance in the area of energy efficiency. But this one stands out: it achieves consistent results because technical assistance is tied to financing. Businesses may have good intentions to save energy, but often they will go for equipment which is cheap today, even if it is more costly to run in the future. Getting an affordable loan for a longer tenor is a great incentive to go for the best-in-class, which will save costs and emissions in the long run”.

 The EU's financial support for the MORSEFF program is proof of the cooperation between the EU and Morocco to promote the green transition of the Moroccan economy, especially small businesses such as the dairy farm.

"Energy efficiency for more competitiveness: this is our common goal with the Moroccan private sector" said Claudia Wiedey, Ambassador, Head of the EU Delegation to Morocco.

To quality for financing and incentive grant under the programme, the company needs to demonstrate that improvements will be significant and feasible. To start with, an engineer makes a site visit. His current assignment is the run-down hotel in Rabat.

“Once it opens, our terrace cafe will be the most important meeting place in Morocco”, Dr Mernissi says. “You just can’t beat this location.”

Financing programmes such as MorSEFF have a defined life cycle; as financing draws to an end, new programmes come into being, often with different names. The four original partner financial institutions – Banque Populaire and BMCE and their respective leasing subsidiaries Maroc leasing and Maghrebail – are still disbursing funds to their clients.

In the coming months, new green financing programmes such as the Green Value Chain, will be rolled out in Morocco, supporting and complementing MorSEFF. It will also be managed by the EBRD and financially supported by the European Union and the Green Climate Fund (GCF) in order to help SMEs finance their investments in green technologies.

So the dairy farm, the cheese maker, the distributor with cold storage and refrigerated vans can all participate in the improvement of the ecosystem in which they operate and decrease their carbon footprint in coordination.

Victoria Zinchuk, Head of Morocco, EBRD says: “The EBRD closely cooperates with the EU and local commercial banks in Morocco while successfully blending financing and advisory services. It allows us to help local businesses – and soon the entire value chains - in the most efficient way. We are proud to support local Moroccan enterprises to expand their business and thus increase the number of new job opportunities for the local population”. 

Environmental sustainability is part of the EBRD’s mandate, as is private sector development. The Bank is now a leader in making those two principles work together: green economy financing facilities (GEFFs), of which MorSEFF is one example, created with participation from donors and other development institutions, are now provided to local banks, and through them to local SMEs, in 25 countries

Find out more about programmes like MorSEFF by following: GEFFS and how to apply for financing.

The SEMED Multi-Donor Account is supported by Germany, Australia, Finland, France, Italy, Norway, the Netherlands, the United Kingdom and Taipei China.

Original source can be found here.