Climate

Finance
in Africa
An overview of climate finance
flows, challenges and opportunities
United Nations Development Programme
September 2024
Climate Finance in Africa

Author: Adeyemi Sandra Freitas and George Mwaniki

Editor: Lisa Baumgartner (UNDP)
Designer: Nina Barrois
Cover Photo: Nairobi, Kenya ©Zac Wolff

Technical reviewers and contributors

Agbessi Arnold (SSA ), Lisa Baumgartner (UNDP- Climate Hub), Louise Brown (Triple Capital), Omnia Elfadel (SSA),
Nohman Ishtiaq (UNDP, Sustainable Finance Hub), Francis Irenikasse (SSA), Christopher Marc Lilyblad (UNDP-
Sustainable Finance Hub), Mahlet Eyassu Melkie (Climate Finance Access Network/Rocky Mountain Institute),
Daisy Mukarakate (UNDP - Climate Hub), Chantal Naidoo (Rabia Transitions), Harsen Nyambe Nyambe (AUC),
Samson Samuel Ogallah (AUC), Genevesi Ogiogio (GRAP), Susanne Olbrisch (UNDP- Climate Hub), Akosua Pepra
(Independent), Louise Postema (SSA), Emmanuel Wafula Siakilo (AUC), Tim Strawson (UNDP - Sustainable Finance
Hub), Kidanemariam Tiruneh (AUC) and Leah Wanambwa (AUC).

About UNDP
UNDP is the leading United Nations organization fighting to end the injustice of poverty, inequality, and climate
change. Working with our broad network of experts and partners in 170 countries, we help nations to build integrated,
lasting solutions for people and planet. Learn more at undp.org or follow at @UNDP.

About UNDP’s Climate Hub

UNDP’s newly established Climate Hub delivers the UN system’s largest portfolio of support on climate action in
nearly 150 countries. This portfolio is worth over US$2 billion in grant financing and draws on UNDP’s expertise on
gender equality, energy, poverty, health, climate security, nature and biodiversity, among others.

About UNDP’s Climate Promise

UNDP’s Climate Promise is the largest global offer on NDC support, covering over 120 countries and territories,
representing 80 percent of all developing countries globally – including 40 least developed countries, 28 small island
developing states, and 14 high emitters – to enhance their Nationally Determined Contributions under the global Paris
Agreement. Delivered in collaboration with a wide variety of partners, it is the world’s largest offer of support for the
enhancement of climate pledges. Learn more at climatepromise.undp.org and follow at @UNDPClimate.

About the African Union

The African Union spearheads Africa’s development and integration in close collaboration with African Union Member
States, the Regional Economic Communities and African citizens. The AU Vision is that of an integrated, prosperous and
peaceful Africa, driven by its own citizens and representing a dynamic force in global arena. Learn more at au.int/en.

UN disclaimer  
The views expressed in this publication are those of the authors and do not necessarily represent those of the United
Nations, including the UN Development Programme, or UN Member States.  

Copyright ©UNDP 2024. All rights reserved. One United Nations Plaza, New York, NY 10017, USA.

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 Climate Finance in Africa

Table of contents

7 Acronyms
9 Executive Summary

13 Chapter 1: Introduction

14 1.1 The context

14 1.1.1 Climate change in Africa
16 1.1.2 Regional overview
19 1.1.3 Climate finance
21 1.2 Report objectives
22 1.3 Methodology

23 Chapter 2: Africa’s climate finance flows

24 2.1 Climate finance flows in Africa (2011 – 2021)

25 2.1.1 Subregional analysis of climate finance flows
26 2.2 Tracking mitigation and adaptation trends in international public and philanthropic climate
finance over 2011 – 2021
28 2.3 International public and philanthropic climate finance flows by funding sources
32 2.4 International public and philanthropic climate finance instruments
34 2.4.1 Climate adaptation finance flows in Africa
36 2.4.1.1 Africa’s adaptation funding by sources
36 2.4.1.2 Sectoral analysis for adaptation finance
37 2.4.2 Climate mitigation finance flows in Africa
37 2.4.2.1 Africa’s mitigation by funding sources
37 2.4.2.2 Sectoral analysis for mitigation finance

39 Chapter 3: Challenges for accessing and mobilizing climate finance in Africa

40 3.1 Mapping the landscape of climate finance gaps in Africa

42 3.2 Challenges and barriers to access climate finance
42 3.2.1 Challenges within African countries
42 3.2.1.1 Institutional capacity limitations

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Climate Finance in Africa

43 3.2.1.2 Planning, policy and budget landscape barriers

44 3.2.1.3 Data and research
46 3.2.2 Challenges within international climate finance sources
46 3.2.2.1 Funding levels
46 3.2.2.3 International public finance terms – debt, risk and liquidity
49 3.2.3.3 One size fits all approaches
50 3.3 Tracking climate finance and climate investment impacts

53 Chapter 4: Opportunities for scaling up climate finance for Africa

54 4.1 Strengthen climate planning, budgeting and investment frameworks

56 4.2 Locally led initiatives
56 4.3 Mobilizing the private sector
58 4.4 Enhance collaboration and partnership
58 4.5 Increase diverse use of climate finance instruments

60 Chapter 5: Recommendations

61 5.1 Recommendations for international public financing institutions

62 5.2 Recommendations for African governments

66 References

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 Climate Finance in Africa

Boxes, figures & tables

Boxes

27 1. The impacts of pandemics on climate finance flows

47 2. The Bridgetown Initiative
52 3. Underlying assumptions, definitions and methodologies to apply to support needed and
received under the ETF

Figures

14 1. Projected income changes in 2049 compared to an economy without climate change

15 2. Climate vulnerability index for African countries

15 3. NDC submission status in Africa

16 4. African Union subregions and their population (2019 – in thousands of inhabitants)

18 5. An estimate of climate finance needs in Africa by subregion, 2020-2030
19 6. Regional international climate finance mobilized from public and private sources for the year
2021/2022 ($ billion)
20 7. Simplified climate finance funding source landscape
24 8. International public and philanthropic climate finance flows in Africa, 2011-2021
25 9. Annual international public and philanthropic climate finance flows by African subregion,
2011-2021
26 10. Total annual international public and philanthropic adaptation, mitigation and cross-cutting
climate finance mobilized for Africa, 2011-2021
28 11. Share of total international public and philanthropic climate finance flows in Africa by
sources of funding, 2011-2021 (%)

29 12. Annual international public and philanthropic climate finance mobilized in Africa by source
of funding, 2011-2021
29 13. Share of international public and philanthropic climate finance mobilized by countries in
Africa, 2011-2021
30 14. Share of total international public and philanthropic climate finance mobilized by African
subregion, 2011-2021 ($ millions)
30 15. Distribution of total international public finance in Africa from different sources by climate
application, 2011-2021

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31 16. Distribution of total international public and philanthropic climate finance flows in Africa to
priority sectors, 2011-2021 (%)
33 17. Most utilized finance tools by international public and philanthropic climate finance to
Africa, by climate application, 2011-2021
36 18. Share of total international public and philanthropic adaptation finance to Africa by sector,
2011-2021 (%)
38 19. Major sources of international public and philanthropic mitigation finance in Africa (annual
averages for 2019 and 2020)
38 20. International public and philanthropic mitigation finance to Africa by sector, 2011-2021 (%)
50 21. CBIT project implementation status in Africa

Tables

17 1. Mitigation and adaptation climate finance needs in African NDCs, per subregion (% share)

32 2. Types of financial instruments used by international climate funds

 Climate Finance in Africa

Acronyms

ABM Adaptation Benefits Mechanisms

ADB Asian Development Bank
AF Adaptation Fund
AfDB African Development Bank
AIIB Asian Infrastructure Investment Bank
AMC Advance Market Commitment
AU African Union
BAU Business-as-Usual
CBT Climate Budget Tagging
CDM Clean Development Mechanism
CILRIF Climate Insurance Linked Resilient Infrastructure Financing
CBDR Common but differentiated responsibilities
COP Conference of the Parties
CPEIR Climate Public Expenditure and Institutional Review
CPI Climate Policy Initiative
DAC Development Assistance Committee
DFI Development Finance Institution
EBRD European Bank for Reconstruction and Development
EIB European Investment Bank
ETF Enhanced Transparency Framework
GCA Global Center on Adaptation
GCF Green Climate Fund
GDP Gross Domestic Product
GEF Global Environment Facility
GGA Global Goal on Adaptation
GGC Green Guarantee Company
GHG Greenhouse gas
GNI Gross National Income
IBRD International Bank for Reconstruction and Development  
IDA International Development Association
IDBG Inter-American Development Bank Group
IFI International Financial Institution

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Climate Finance in Africa

IIED Institute for Environment and Development

IsDB Islamic Development Bank
LDC Least Developed Country
LMIC Lower Middle-Income Country
LoCAL Local Climate Adaptive Living Facility
MDB Multilateral Development Bank
MRV Measurement, Reporting, and Verification
NCQG New Collective Quantified Goal on Climate Finance
NDC Nationally Determined Contribution
NDB National Development Bank
ODA Official Development Assistance
OECD Organization for Economic Co-operation and Development
PFM Public Financial Management
PPP Public Private Partnership
SCF UNFCCC Standing Committee on Finance
SDR Special Drawing Rights
SIDS Small Island Developing States
SME Small- and medium-sized enterprise
SRES Special Report on Emissions Scenarios
UMIC Upper Middle-Income Country
UNCDF United Nations Capital Development Fund
UNDRR United Nations Office for Disaster Risk Reduction
UNEP United Nations Environment Programme
UNFCCC United Nations Framework Convention on Climate Change
UNOCHA United Nations Office for the Coordination of Humanitarian Affairs
WBG World Bank Group
WLO World Labor Organization
WMO World Meteorological Association
WRI World Resources Institute

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 Climate Finance in Africa

Executive Summary

Introduction Climate finance flows

Climate change is arguably the greatest challenge When compared globally, Africa receives only
facing humanity in the 21st century. Its impacts around 2 percent of total global climate finance
have significantly altered the natural world and (CPI, 2023). While climate finance to Africa has
affected global economic performance and increased, growing about 24 percent each year
human well-being. A recent study estimates that over 2011-2021 according to OECD data, the share
damage from climate change globally to farming, of climate finance going to African subregions has
infrastructure, productivity, and health will cost varied. Over this period, East Africa mobilized the
an estimated $38 trillion per year by 2050 and largest total amount of climate finance ($43,866),
see a 19 percent reduction of income (Kotz et al., followed by West Africa ($36,227), Northern Africa
2024). In Africa, this could be as high as 30 percent ($34,607), Southern Africa ($19,817) and lastly,
and provides an example of how climate change Central Africa ($10,834) Regional, multi-country
impacts are experienced unevenly across the world. finance over this period totaled $25,025.

Despite only contributing less than four percent to Overall, total international public and philanthropic
global greenhouse gas emissions (GHGs), African climate finance between 2011 to 2021 to Africa
nations recognize the immense challenges posed was $71.1 billion for adaptation, $74.8 billion for
by climate change to their development agenda mitigation, and $24.6 billion for crosscutting
and have put in place several policy and strategic activities (OECD, 2021). Although adaptation is
initiatives. All 54 African countries have ratified arguably a more pressing need for Africa, mitigation
the Paris Agreement and all but one country finance is higher.
has submitted their Nationally Determined
Contribution (NDC). While more funding goes towards mitigation in
absolute terms, in 2019 and 2020, adaptation
Drawing on recent reports from the United Nations finance surpassed mitigation finance. From these
Framework Convention on Climate Change climate finance flows between 2011 to 2021, most
(UNFCCC) Standing Committee on Finance (SCF), finance came from bilateral sources ($92.57 billion)
UNEP’s Adaptation Gap Reports, Climate Policy and multilateral development banks (MDBs) (about
Initiative’s State of Climate Finance Reports, and $65.61 billion), accounting for approximately 93
data from the Organization for Economic Co- percent of the OECD-reported climate finance
operation and Development’s (OECD) Development mobilized in the continent. While bilateral sources
Assistance Committee (DAC) database from 2011- have historically been the dominant form of
2021*, this report provides a wholistic view of finance, in 2020 and 2021, MDBs surpassed bilateral
Africa’s climate finance landscape and presents sources to become the continent’s leading source
a coherent story of the gap, challenges and of climate finance. From the data, MDBs provide
opportunities that exist for African countries to higher levels of support to mitigation, while bilateral
mobilize climate resources. donors support higher levels of adaptation and

* In this report, OECD data utilizes ODA data from Development Assistance Committee (DAC) members pursuing climate objectives
and reports more broadly on climate-related development finance. This includes other (non-ODA) bilateral flows, multilateral
development finance, philanthropic support and private finance mobilized by official interventions. In terms of philanthropies, the
OECD statistics include project-level information from 41 of the largest private philanthropic foundations working for development.
In turn, OECD DAC data utilized in this report is labeled as “international public and philanthropic climate finance.”

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Climate Finance in Africa

cross-cutting issues. In terms of sectors, the energy and others external. When looking internally, within
sector attracted the largest share (approximately African countries, challenges include:
24 percent) of OECD-reported climate finance in
Africa, followed by agriculture (19 percent), water (11 • Institutional capacity: The challenge of
percent) and transport (10 percent). weak institutions has historically been an
important barrier to accessing climate finance
The types of financial instruments used to support for developing countries. Weaknesses in
climate action include grants, (concessional) loans, institutions can be seen as two dimensional,
equity, climate bonds, risk sharing and guarantee where institutions lack internal capacity and
mechanisms, performance-based payments and weak systems to meet the minimum standards
debt swaps. By far, most of the reported climate set by the international climate funds, and they
finance flows are delivered in the form of grants lack adequate technical capacity to develop
or concessional loans. A smaller proportion of a pipeline of feasible and economically viable
the funding is non-concessional (market rate) climate projects and programmes (UNFCCC,
loans. The domination of concessional finance, 2022a). Specific institutional capacity gaps
both grant and debt-based, highlights the limited that contribute to this include: weak technical
use of other instruments in Africa, such as capacities, lack of clear frameworks to guide
guarantees, equity, debt relief and/or insurance access and absorption of climate funds, poor
products. This suggests a need for more innovative coordination across sectors with overlapping
approaches to finance climate action on the or unclear mandates, lack of adequate data
continent such as using de-risking instruments to inform project development, and varied
that could attract private sector investment into negotiating capacities (Tall et al., 2021;
climate-related sectors. When looking at which Tippmann et al., 2013; UNFCCC, 2022a).
financial tools support mitigation and adaptation, a
disproportionately large portion of debt financing • Policy, planning and budget: An enabling
is directed towards mitigation actions compared to policy environment aligned to clear planning
adaptation actions. processes is critical to informing priorities
for climate investments and signaling to all
stakeholders the priorities and opportunities
The climate finance gap in Africa
for climate action. Most countries have policy
frameworks in place, but issues remain
Based off NDCs, it is estimated that African
that can act as barriers to allocating and
countries need $2.8 trillion between 2020 and
accessing climate finance. These include a
2030 to implement their NDCs (CPI, 2022a).
lack of coherence between climate plans and
Annually, this means that $277 billion is needed.
development plans, limited data and analysis of
Comparing this need against the amount of climate
domestic climate expenditure, lack of a green
finance received in 2021-2022 ($30 billion) shows
taxonomy to direct private sector participation,
that Africa is only receiving 11 percent of what is
and weak or nonexistent NDC Investment
required to implement NDCs (CPI, 2022a; CPI,
Strategies that include project pipelines.
2023). Considering that African governments have
committed to mobilizing around 10 percent of
• Data and research: A lack of locally relevant
their need domestically, this leaves an immense
data, such as scaled down climate vulnerability
gap (around 80 percent or $2.5 trillion) in climate
and risk analyses, that can help tailor climate
finance that is needed to achieve climate mitigation
projects to local contexts and the needs
and adaptation targets in Africa (CPI, 2022a).
of communities has created challenges
for project developers. Limited or weak
Challenges and barriers to access climate capacity at subnational levels may hinder
finance this data availability while disconnects can
exist between research institutions, central
African countries’ ability to mobilize climate finance
government entities and subnational climate
is impacted by various challenges, some internal

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 Climate Finance in Africa

practitioners. Without a strong evidence base adaptation and mitigation finance having similar
for investment projects, decision makers and terms despite different needs and that direct
potential investors may struggle to justify access are required to adhere to complex fit-
project interventions in particular sectors or for-purpose fiduciary standards despite some
geographies. Data scarcity is a major contributor of these national institutions being relatively
to perceived investor risk in climate projects in young.
Africa (Rahman, 2023).
Tracking climate finance and climate
Looking externally, to international climate finance investment impacts
sources, challenges include:
The connections between transparency, MRV
• Funding levels: In addition to developed systems and accessing and mobilizing climate
countries’ failure to meet their ‘fair share’ of finance, both domestically and internationally, are
financial contributions, there is also a debate considerable. As transparency is rooted in building
on how to track climate finance contributions, trust between climate actors by providing clear and
and specifically, the issue of ‘double counting’, reliable information, it has a defining role to play in
where ODA contributions are counted towards helping countries secure additional climate finance.
both development finance and climate finance. For the many African countries where transparency
frameworks are incomplete or ineffective, this can
• International public finance terms (debt,
create barriers to securing finance.
risk and liquidity): There has been increasing
criticism in recent years of the ways in which
Opportunities for scaling up climate
international public financial institutions
finance for Africa
such as MDBs and bilateral agencies deliver
climate finance to developing countries,
Despite the numerous challenges, there are also
being characterized as entrenched systems
robust opportunities that African governments
of imbalanced power dynamics that favour
and climate finance funders can engange on. They
the funder and place an unreasonable burden
include:
on the recipient. Several factors contribute to
this imbalance including the use of non-grant • Strengthen climate planning, budgeting and
instruments that can exacerbate countries’ investment frameworks: There are a multitude
vulnerability by increasing their level of of approaches and tools that can be utilized
indebtedness and transferring risk of financial to improve climate planning, budgeting
losses to developing country governments; and investment and which contribute to
how the cost of capital imposed on African opportunities for finance mobilization. These
governments is often many times higher than include developing NDC Implementation
what developed country governments pay Plans and supporting the mainstreaming of
(Avinash, 2023); that credit risk assessments, climate and NDC targets at sector levels; tools
often based on perceived risk – become an such as CPEIRs and climate budget tagging
unsurmountable hurdle; and when facing back- (CBT) to support governments to understand
to-back disasters many vulnerable countries how they are contributing to climate finance
do not have access to liquidity at favorable through domestic budgets; developing a
(concessional) terms. NDC Investment Strategy or NDC Finance
Strategy to determine NDC investment needs
• One size fits all approaches: While the
and supporting activities; utilizing Integrated
international climate finance landscape
National Financing Frameworks (INFFs) and
supports the needs of a heterogenous group of
SDG mapping to help identify SDG-aligned
developing countries, climate finance funders,
investment opportunity areas, many of which
do not always appreciate the differences
are highly relevant for NDC implementation.
between countries. Examples include

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Climate Finance in Africa

• Locally led initiatives: Recognition is growing Recommendations

about the need to scale up the use of direct
access modalities so that African countries can Recommendations for international public
access climate finance through capacitated financing institutions include:
and empowered national and subnational
institutions, without passing through 1. DFIs, MDBs and climate change funds should
international intermediaries. Strengthening have a higher risk appetite;
these national institutions to access these
2. Integration of climate change into all
funds is paramount.
development finance;

• Mobilizing the private sector: The private 3. Enhance the capacity of national and
sector is vital to achieving both climate targets subnational government actors to take lead in
and securing levels of finance required. Some mobilizing climate finance;
concrete actions that governments can take
4. Reform adaptation finance to align with the
to increase private sector participation in
principles of locally led adaptation; and
climate action include developing a sustainable
taxonomy that helps direct investment but 5. Increased investment in project preparation
allows financial players to identify, track and piloting of new approaches through grant
and validate their sustainable, green or blue funding (or reimbursable grants).
activities; strengthening a NDC project pipeline
of bankable projects that translates investment Recommendations for African governments
needs into specific investment projects ready include:
for financing; supporting small- and medium-
1. Improve coordination and planning between
sized enterprises (SMEs) that are constrained
climate change actors;
by access to finance but have massive growth
potential. 2. Track climate finance at the national level;
3. Develop or strengthen climate investment
• Enhance collaboration and partnership: At
frameworks; and
national level, NDC Coordination Committees
can lead in improving institutional capacity and 4. Strengthen the enabling environment for
coordination issues related to climate change climate investment.
and NDCs. International organizations, including
UN agencies, bilateral institutions and MDBs, It has never been clearer that the climate
can increase support, to address technical or finance needs of African countries are severely
skills gaps that can enhance the capacity of underfunded. If the continent is to successfully
national and local actors to develop project achieve its climate change commitments and
pipelines. Increasing South-South partnership targets to mitigate climate change and build
and learning opportunities is also needed. resilience and adapt to its impacts, then drastic
action is required from both governments and
• Increase diverse use of climate finance climate finance funders alike.
instruments: There is a need to expand the use
of climate finance instruments to ensure that
the correct tools being used to respond to a
country’s needs and are aligned to the country’s
climate and financial management risk profile
and the level of capacity needed to support the
implementation of the proposed projects.

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Chapter 1.

Introduction
Cape Town, South Africa © Dan Grinwis
Climate Finance in Africa

1.1. The context

1.1.1. Climate change in Africa
Climate change is arguably the greatest challenge This has increased the frequency and severity of coastal
facing humanity in the 21st century. Its impacts have flooding, erosion and salinity in low-lying cities. Changes
significantly altered the natural world and affected in climate will bring an increase in the frequency and
global economic performance and human well-being. intensity of extreme weather events, such as droughts
A recent study estimates that damage from climate and flooding. These impacts can reduce socio-economic
change globally to farming, infrastructure, productivity, development at the community and household levels, a
and health will cost an estimated $38 trillion per year worrying trend for a continent that depends heavily on its
by 2050 and see a 19 percent reduction of income natural resource base for livelihoods.
(Kotz et al., 2024). As climate change impacts are being
experienced globally, they are not evenly distributed, and At the economy level, climate change is expected to
Africa is projected to be impacted significantly more than significantly impact Africa’s economic development
other parts of the world. It is also a region with the least with estimates indicating lower Gross Domestic Product
capacity to adapt to the impacts of climate change and (GDP) per capita growth ranging, on average, from 10 to
contributes less than four percent of global greenhouse 13 percent (UNECA and ACPC, 2019). When looking at
gas emissions (GHGs) (Global Carbon Budget, 2022). reduction of income, Africa fares the worst globally, with
Yet, the disproportionate impacts of climate change in some countries facing up to a 30 percent reduction in
Africa are confirmed by several reports, including the income in 2049 due to climate change (Kotz et al., 2024)
World Meteorological Organization (WMO, 2022), which (Figure 1). This economic impact will be exacerbated
found that Africa’s average temperature has increased by the continent’s low climate adaptive capacity and
faster than other parts of the world, leading to an above the vulnerability of major sectors. For example, the
average increase in sea level rise along African coastlines. agriculture sector is highly impacted by prolonged

Figure 1. Projected income changes in 2049 compared to an economy without climate change

Source: Kotz et al., 2024.

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 Climate Finance in Africa

drought episodes while the service and industry sectors and as of the beginning of 2024, 48 African countries
have shown a higher sensitivity to extreme rain events had submitted their enhanced or updated Nationally
(UNECA and ACPC, 2019). These economic impacts Determined Contributions (NDCs), where they commit to
are occurring when most African countries face other national mitigation targets and adaptation measures and
diverse economic challenges that equally affect their prioritize actions to reduce emissions and build resilience
economic output and outlook. These challenges include to climate change. Figure 3 illustrates the type of NDCs
a slowdown in global growth, rising inflation exacerbated submitted by African countries. While most countries
by the war in Ukraine, a tightening of global financial submitted updated or enhanced NDCs, five countries
conditions, and the rising risk of debt distress (WBG, 2023). remain with their first NDC (Algeria, Botswana, Djibouti,
Eritrea and Lesotho), and one country did not submit an
Such compounding challenges make Africa among NDC (Libya) (Climate Watch, 2023).
the world’s most vulnerable regions to the impacts of
climate change. According to the University of Notre Figure 3. NDC submission status in Africa
Dame Global Adaptation Initiative (ND-GAIN), which
summarizes a country’s climate change vulnerabilities
and readiness to adapt, African countries are classified 48 New or updated NDCs
as the most vulnerable and have the least capacity to
5 Only first NDC
adapt to climate impacts. Figure 2 shows the recent
classification of countries under the index. 1 Document not submitted

Note: Analysis is from the 54 African countries’ latest

African countries recognize the challenges posed by
submission of NDCs.
climate change to their development agenda and have
Source: Climate Watch, 2024.
put in place several national policy and strategic initiatives
to address them. Globally, recognizing the need to work
collectively with other governments, 54 African countries Due to the limited financial base in many countries,
ratified the Paris Agreement. Under the Paris Agreement commitments are generally indicated as conditional or
unconditional. Conditional commitments, which make
Figure 2. Climate vulnerability index for African up approximately 85 percent of the commitments from
countries African countries, include adaptation and mitigation
targets that may be achieved only with financial and
technical support from external sources (AfDB, 2019b).

It is estimated that African countries need $2.8 trillion

between 2020 and 2030 to implement their NDCs (CPI,
2022a). An estimated 64 percent of the required climate
finance will be dedicated to mitigation efforts, while
36 percent will be invested in climate adaptation. Such
resources may come partly from developed countries’
public commitments but will also require mobilizing
significant private sector investment. Internationally
mobilized resources are expected to support priority
sectors of agriculture, water, health, energy, transport, and
ecosystems (AfDB, 2021; CPI, 2022a). While estimates for
NDC finance needs are substantial, they are also likely
underestimated. This is because an accurate estimation
of financial needs is limited by capacity constraints, data
limitations, uncertainties regarding global mitigation
Worse Better outcomes that would impact adaptation costs, and
limited information on the adaptation needs of
Source: Notre Dame Global Adaptation Initiative, 2023.
vulnerable communities.

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Climate Finance in Africa

1.1.2. Regional overview

Africa, the second largest continent after Asia, growth rate of approximately 40 percent (UNDESA,
has 55 Member States to the African Union1 and 2022). In this projection, Nigeria will be the third
it is home to more than 1.4 billion people. The most-populous country in the world, and five of
continent has the highest population growth rate, the eight fastest-growing countries in the world
and it is expected to add more than a billion people will be in Africa, with the growth mainly among
by the year 2030 (UNDESA, 2022). working-age populations (Democratic Republic of
the Congo, Egypt, Ethiopia, Nigeria and Tanzania)
The African Union (AU) classifies the continent into (UNDESA, 2022).
five main subregions: Northern Africa, Southern
Africa, Eastern Africa, Western Africa, and Central This population growth will have cumulative
Africa (Figure 4). These regions are based on the climatic impacts across the continent, significantly
country’s geographical location suggesting that influencing countries’ GDP. Estimates indicate
they share some similarities in terms of climate that this might result in an annual decline of 4.7
vulnerability and economic development. percent of GDP by 2050 in Africa (EIU, 2019). The
continent leads in being hardest hit by this GDP
The United Nations estimates that by the year 2050, decline when compared to other regions such
Africa will have more than 2.5 billion people, which as Latin America (3.8 percent), Middle East (3.7
means the continent has the highest population percent), Eastern Europe (3 percent) and Asia-

Figure 4. African Union subregions and their population (2019 – in thousands of inhabitants)

Top 10 contributors to population increase in Africa

Average annual population increase
between 1980 and 2015 (in thousands)

Nigeria
3,100
Ethiopia
1,833
DR Congo
1,455
Egypt
1,375
East Africa 388,668
Tanzania
944
Kenya
West Africa 387,511 851
Uganda
757
Southern Africa 228,757 Sudan
738
Northern Africa 204,079 South Africa
726
Central Africa 153,481 Algeria
581
Source: United Nations, Department of Economic and Social Affairs, 2022.

1
In addition to the 54 African countries that are Member States to the United Nations, the African Union also recognizes the Sahrawi
Arab Democratic Republic as a Member State.

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 Climate Finance in Africa

Pacific (2.6 percent) (EIU, 2019). This is expected to four percent to total global emissions (Global
further exacerbate financial pressures on African Carbon Budget, 2022).
governments and could intensify socio-economic
and political instability and increase poverty levels, Considering the continent’s vulnerability to climate
as was seen during the COVID-19 pandemic, which impacts, the lower investment needs for adaptation
accelerated adverse economic impacts on the suggest a major focus for African governments on
continent. transitioning to a low-carbon economy. Nonetheless,
this could also be influenced by the fact that
It is important to note that the double burden mitigation targets in NDCs are mandatory while
of climate change and gender inequality makes those for adaptation are not and because adaptation
women and girls more vulnerable as they will is largely still supported by concessional finance.
likely have less access to financial and social This could also indicate the challenges of estimating
services in the face of climate impacts. This could the investment needed to increase communities’
mean women and girls have limited education adaptive capacity. While development partners and
and livelihood opportunities and more restricted initiatives such as UNDP’s Climate Promise support
resources and rights surrounding land tenure, governments to increase the inclusiveness of the
social and legal services, political participation, paid NDC revision and implementation process through
livelihoods, governance and infrastructure. This the promotion of whole-of-society consultations
ultimately negatively impacts the adaptive capacity and coordination mechanisms, NDCs can still be the
of women and girls to climate risks. Vulnerable product of top-down processes (UNFCCC, 2021b).
groups such as this are likely to experience unequal Strengthened inclusion of marginal actors such as
and differentiated impacts as climate change youth, women, and Indigenous Peoples, as well as
continues. private sector actors, is needed to better understand
local dynamics and priorities for adaptation as
Turning to climate finance needs identified in opposed to those only of central government.
NDCs, the analysis finds that investments in
mitigation take a larger share of finance needs The sources of climate finance can come from
compared to adaptation as can be seen in Table 1. governments themselves (domestic public finance),
from international public finance (International
These needs are heavily inclined towards Financial Institutions (IFIs), Development Finance
supporting emission reduction efforts, even though Institutions (DFIs), Multilateral Development
Africa’s total GHG emissions contribute less than Banks (MDBs), bilateral stakeholders, etc.), from

Table 1. Mitigation and adaptation climate finance needs in African NDCs, per subregion (% share)

Subregion % share mitigation % share adaptation % share cross-cutting

Central Africa 70 % 30 % --

East Africa 57 % 22 % 21 %

Northern Africa 22 % 29 % 57 %

Southern Africa 75 % 25 % --

West Africa 77 % 14 % 9%

Source: CPI, 2022a.

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Climate Finance in Africa

Figure 5. An estimate of climate finance needs in Africa by subregion, 2020-2030

$ millions Other
Cost of
1,200 Climate finance needs
implementing (from other sources)
NDCs
Public climate finance
committed
1,000

800

600

400

200

0
Western Africa Southern Africa Central Africa Northen Africa Eastern Africa

Note: In this figure “Public climate finance committed” includes domestic public climate finance commitments made by countries
in their NDCs. “Climate finance needs” is the external financial support, required beyond domestic public sources. This comes from
international public sources and domestic and international private sources. “Other” includes the estimation of loss and damage when
provided by countries. However, some subregions have not estimated this properly, making it difficult to add it for all subregions. In
general, it is accepted that recorded climate finance needs are estimated as they are based on the costed needs by countries in their
NDCs. For many countries, the absence of robust data at the local level needs can hamper effectively assessing these costs.

Source: CPI, 2022a.

philanthropies (private sector) and from other between 10 and 30 percent of the resources
domestic and international private sector sources. required to implement their climate priorities, this
could be impacted by rising levels of indebtedness,
Figure 5 illustrates how domestic public finance, potentially competing development and growth
and all other sources of finance are to meet NDC objectives and budgetary needs, and other
commitments across Africa’s subregions. externalities such as recovery from the Covid-19
pandemic. This raises the urgency of access to
Despite difficult domestic circumstances, African climate finance for African countries if these
governments and stakeholders have undertaken nations are to support the transition to low-carbon
significant efforts to mobilize resources and align and climate resilient economies. Currently, the
various domestic and private finance flows with continent’s access to climate finance falls grossly
climate objectives. While African countries have under indicated needs, with reports estimating
made commitments to mobilize domestically that current flows amount to only around 11
percent of what is required (CPI, 2022b).

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 Climate Finance in Africa

Figure 6. Regional international climate finance mobilized from public and private sources for
the year 2021/2022 ($ billion)

Central Asia &

Eastern Europe
Western Europe
US & Canada
34
325
175
Middle East & South Asia
North Africa
45
East Asia
19 & Pacific
Latin America & 558
Carribean Sub-Saharan Africa

175 30
Other Oceania
Public
Private Transregional 13 14

All figures are $ billion

Source: CPI, 2023.

When looking at the global flow of both public and - drawn from public, private and alternative sources
private climate finance (Figure 6), Africa’s share of financing - that seeks to support mitigation and
remains low at 2 percent ($30 billion), especially in adaptation actions that will address climate change.
comparison to East Asia and Pacific, which receives The importance of mobilizing climate finance
44 percent of total flows ($558 billion) (CPI, 2023). was emphasized during the 16th Conference
Notably, these figures also show that Africa depends of the Parties (COP) in 2010, where developed
heavily on international public finance to fund countries formalized their collective climate finance
climate action, with most of Africa’s $30 billion commitment made in 2009 at COP15 in Copenhagen
coming from this source. For developed economies, of “mobilizing jointly $100 billion per year by 2020 to
these dynamics switch, and these regions see the address the needs of developing countries, from a
majority of international finance come from private wide variety of sources, public and private, bilateral
sources as opposed to public. and multilateral, including alternative sources”. The
goal has however not been met after all this time
as parties have struggled to break the overall $100

1.1.3. Climate finance billion goal down into concrete commitments for
different finance providers, to identify how the
amount should be allocated among receivers, and to
Climate finance is a complex topic and there is decide on what share to dedicate to mitigation versus
no global agreement on what constitutes climate adaptation. To overcome these challenges, currently,
finance or its specific accounting rules. However, parties to the Paris Agreement are working to agree to
under the United Nations Framework Convention a New Collective Quantified Goal on Climate Finance
on Climate Change (UNFCCC), climate finance is (NCQG) that is supposed to be more specific and
described as local, national or transnational financing therefore more feasible to be reached, and that

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Climate Finance in Africa

will take effect from 2025. However, the fact that a sources, including MDBs and climate-specific funds
common definition for climate finance is still being such as the Green Climate Fund, Adaptation Fund,
negotiated presents an obstacle for making further Global Environment Facility and other smaller and/or
progress on the NCQG because the definition is regional or national funds. Private finance can either
expected to indicate which types of finance would come from domestic private sector sources or from
count as climate finance (e.g. grants versus loans), as international private sector sources including foreign
well as whether loss and damage finance would be direct investment and philanthropic funding2.
regarded as part of climate finance or separately.
In Africa, countries particularly mobilize international
While no universal definition exists to define climate finance through climate funds, debt
the boundaries of climate finance and its flow instruments (e.g. green and blue bonds, debt for
mechanisms, different research and academic climate/nature swaps, sovereign and corporate
groups have attempted to. One such effort was bonds), international carbon credit initiatives and
conducted by Watson and Schalatek (2020), who climate-related insurance schemes. Additional
provided a working framework of global climate instruments that can be used to mobilize climate
finance architecture that included private and public finance but are not widespread include equity and
and alternative sources and the overlap within guarantees. Nonetheless, in Africa the most dominant
these sources. For the purposes of this report, a instrument used is concessional climate finance
simplified mapping of climate finance based on this which is primarily comprised of loans, grants, and/
architecture has been adopted in Figure 7. or equity and it is typically sourced from bilateral
and multilateral donors, climate funds and MDBs.
Countries mobilize climate finance through either Concessional finance aims to act as a flexible and
public or private sources. Domestic public sourcing accessible tool to bridge the gap from limited
equates to governments committing and using public sector and/or philanthropic resources, to
budgetary resources. International public climate much larger (commercial) private sector funding
finance comes from bilateral and multilateral opportunities.

Figure 7. Simplified climate finance funding source landscape

Funding source

Public Private

Internationally mobilized
Domestic financing Philanthropic financing Commercial financing
financing

Other
Bilateral Multilateral
Climate funds South-South international
organizations organizations
organizations

Source: Design is adopted from CPI, 2022b; OECD, 2021; and Watson and Schalatek, 2020.

2
Philanthropic funding in this report refers to the private philanthropies that are included in OECD DAC statistics. They include
organizations such as The Bill and Melinda Gates Foundation, The Mastercard Foundation, The Open Society Foundations and the
Bezos Earth Fund.

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 Climate Finance in Africa

1.2. Report objectives

In the recent past, three key studies have analysed with a widening gap: current adaptation finance
issues related to climate finance and access by needs are between 10 to 18 times as great as
developing countries, providing context to this current international public adaptation finance
report’s rationale. Among these is a report by the flows, which is at least 50 percent higher than
UNFCCC’s Standing Committee on Finance (SCF) previously estimated. This adaptation finance gap
(2022c) which provided an overview of climate is estimated to be about $194-366 billion per year
finance flows up until 2020, highlighting the trends globally. Meanwhile, it shows that international
and the implications of these flows towards adaptation finance flows have been declining
addressing the climate crisis. Findings from the since 2020. The report also notes that only 2
report include the development of frameworks, by percent of current international public adaptation
a limited number of countries, for tracking climate finance is assessed as gender-responsive, while
finance as per the Paris Agreement’s Enhanced 24 percent considered is gender-specific or
Transparency Framework (ETF). Under the ETF, to integrative, showing a clear lack in gender equality
enhance the transparency of support needed and considerations in international public adaptation
received by countries, countries are to undertake finance flows. Furthermore, the report notes that
activities that map and track public expenditures the slow and insufficient action on both mitigation
related to climate change, any external climate and adaptation leads to increasingly reaching the
finance support received and their investment soft and hard limits to adaptation, and an increasing
needs for implementing mitigation and adaptation need for loss and damage.
actions.
Lastly, a report by the Climate Policy Initiative (CPI)
The report also found that public finance flows (2022a) sought to determine African climate finance
from developed to developing countries were needs and found that the continent will need
directed more to mitigation efforts than adaptation more than $2.8 trillion between 2020 and 2030 to
despite adaptation finance increasing overall from implement the continent’s climate ambitions as
bilateral sources and MDBs. articulated in NDCs. This suggests that the current
estimated climate finance flows in the continent
Among the challenges identified by the report can only meet approximately 10 percent of the
include the limited information on South-South identified needs. It is important to note, that in the
cooperation in climate finance flows, which for report, the level of financing needs identified was
the most part, remains relatively underreported. likely underestimated due to the limited capacities
However, the SCF’s report, as with previous reports, of many African governments to make accurate
did not delve into the different sources of finance assessments of climate needs, in part, because of
flows from developed to developing countries a lack of data from subnational governments and
owing to limited data availability on the subject. vulnerable communities.

The UN Environment Programme’s (UNEP) Whilst these reports provide valuable insights on
Adaptation Gap Report 2023 evaluated the level the climate finance landscape and climate finance
of climate finance flows for climate adaptation needs, and to some extent, level of finance flows,
and argued that there is an urgent need to scale- there is a need to bring these datasets together to
up adaptation financing. It found that currently improve our understanding of the financing level
there is a strong mismatch between adaptation vis-à-vis current climate finance flows and their
needs and the level of climate adaptation finance, delivery modalities.

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Climate Finance in Africa

To respond to this gap in analysis, specifically 3. Provide a review of the main financial
surrounding international public climate finance, instruments employed in delivering climate
this report brings together findings from UNFCCC, finance in the continent;
UNEP and CPI to provide a wholistic view of Africa’s
4. Identify major challenges experienced by
climate finance landscape and present a coherent
various entities in mobilizing climate finance
story of the gaps and opportunities that exist for
and the available opportunities to enhance
African countries to mobilize climate resources. To
mobilization of resources to support the
achieve this, the report has five objectives:
continent’s climate ambitions; and

1. Provide an overview of international public and 5. Make key recommendations to increase and
private philanthropic climate finance flows to enable the effective use of climate finance in
Africa. Africa.

2. Provide an overview of climate finance needs

and projections in Africa between 2020-2030;

1.3. Methodology
This report analyses Africa’s climate finance flows Improvements in the provision of international
and trends from 2011 to 2021, with a specific public and philanthropic climate finance data
emphasis on international public and private over the past years have allowed for more ease
philanthropic finance flows and trends, including in their analysis. However, scattered data on the
the funding sources, delivery channels and contribution of the private sector comprehensively
instruments, and purpose of funding. to climate action, as well as challenges in tracking
domestic public sources, have limited the
In addition to the SCF, UNEP and CPI reports analysis from these critical angles. Whenever new
mentioned above, this analysis leverages data quantitative analysis was undertaken beyond the
derived primarily from the Organization for reporting of insights from other key reports, this
Economic Co-operation and Development focused primarily on international public and
(OECD) database (which tracks public and private philanthropic sources of climate finance that are
philanthropic international climate finance) and tracked by the OECD Development Assistance
MDBs 2021 Joint Report on MDB Climate Finance Committee (DAC) database. It should be noted,
to further understand climate flows from MDBs. that when using this OECD data, the share of
The Global Center for Adaptation’s State and Trends philanthropic funds, in comparison to international
in Adaptation Report 2022 is used for analysis of public funds, is marginal.
Africa’s cost of adaptation and the Climate Policy
Initiative’s Landscape of Climate Finance in Africa Despite data limitations, the report provides a
2022 report to provide further insights on all fair perspective of where countries in Africa stand
climate finance flows. in their efforts to mobilize finance to tackle their
urgent needs to address adaptation.

3
In this report, OECD data utilizes Official Development Assistance (ODA) data from Development Assistance Committee (DAC) members
pursuing climate objectives and reports more broadly on climate-related development finance. This includes other (non-ODA) bilateral
flows, multilateral development finance, philanthropic support and private finance mobilized by official interventions. In terms of
philanthropies, the OECD statistics include project-level information from 41 of the largest private philanthropic foundations working for
development. Data reported by these philanthropies are standardised using the same statistical standards and definitions as ODA.

Page 22
Chapter 2.

Africa’s climate
finance flows
Senegal © Curioso photography
Climate Finance in Africa

2.1. Climate finance flows in Africa

(2011 – 2021)

According to the assessment of the OECD DAC The increase seen in the OECD DAC data from 2011
data on climate finance flows, in 2011 reported to 2021 represents an average growth rate for Africa
international public and philanthropic climate finance of around 24 percent annually. However, this increase
flows to Africa stood at $3.95 billion and grew seven- has not been steady across the years with some
fold to $28.44 billion in 2021. It should be noted recording minimal increases (Figure 8). Nonetheless,
that this certainly represents an underestimation this increase is aligned to the global average annual
of climate finance flows to Africa as it excludes growth of public international climate finance, which
domestic investments by African governments is just over 24 percent (OECD, 2021). It is important to
through their national budgets, as well as the majority note that the increase in international public climate
of private sector investment (outside of philanthropic finance flows is closely linked to decreased official
sources), both of which are not tracked by the OECD. development assistance (ODA)4 as tracked by OECD
CPI’s analysis in 2022, which attempts to capture for African countries. This suggests that increases in
some additional private sector and domestic public public international climate finance flows may be the
climate finance, estimates climate finance flows to result of previously earmarked ODA from developed
Africa in 2019/20 at approximately $30 billion, while countries being reallocated towards climate finance,
also acknowledging that this figure is underestimated a finding supported by Bhattacharya (2022) and
(CPI, 2022b). Mitchell et al. (2021).

Figure 8. International public and philanthropic climate finance flows in Africa, 2011-2021

$ millions
30,000 28,440

25,000 24,418

20,000
18,017 20,524
15,104 18,485
15,000
11,692 11,975
10,000 11,342
6,423

5,000 3,954

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: Adopted from OECD, 2021.

4
ODA flows to countries and territories on the DAC List of ODA Recipients and to multilateral development institutions are: i. Provided by
official agencies, including state and local governments, or by their executive agencies; and ii. Concessional (i.e. grants and soft loans) and
administered with the promotion of the economic development and welfare of developing countries as the main objective (OECD, 2024).
ODA is a key category within OECD DAC tracking of assistance, in addition to climate finance.

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 Climate Finance in Africa

2.1.1. Subregional analysis of climate finance flows

All subregions within the continent registered the figures, West Africa’s average annual growth
a continuous growth of climate finance flows rate is at $711 million, which represents an annual
over the period 2011 to 2021 according to the increase of 35 percent. This is considerably higher
OECD DAC statistics on international public and than the overall growth rate of international public
philanthropic climate finance flows. East Africa and philanthropic climate finance allocated to
mobilized the largest amount of funding among climate mitigation and adaptation activities in the
all the African subregions, however, in recent continent. The remaining regions also recorded
years, West Africa is progressively becoming noticeable growth, with annual growth rates at an
the highest receiver of international public and average of $461 million for East Africa, $413 million
philanthropic climate finance with a remarkable for Northern Africa, $181 million for Southern Africa
record of growth in absolute terms. In looking at and $176 million for Central Africa (Figure 9).

Figure 9. Annual international public and philanthropic climate finance flows by African
subregion, 2011-2021

$ millions

8,000
7,649

6,000
5,932

4,631

4,000

2,401

2,000
2,059

1,315

640
535
500
244
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Central East Northern Southern West

Source: Adopted from OECD, 2021.

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Climate Finance in Africa

2.2. Tracking mitigation and

adaptation trends in international
public and philanthropic climate
finance (2011 – 2021)

While the growth in international public and and programmes that address both mitigation and
philanthropic climate finance flows across all adaptation concerns, as cross-cutting investments
African subregions has been positive over the grew much slower than adaptation and mitigation
period 2011 to 2021, the growth has not been investments.
consistent for mitigation and adaptation. In Africa,
total international public and philanthropic climate During 2013-2015, the growth in the amount of
finance between 2011 to 2021 was $71.1 billion for international public and philanthropic climate
adaptation, $74.8 billion for mitigation, and $24.6 finance was relatively insignificant and recorded
billion for cross-cutting activities. Within the period, even negative growth for adaptation in 2014 and for
adaptation finance grew by 750 percent, mitigation mitigation in 2015 (Figure 10). It is worth noting that
finance grew by 814 percent and finance on cross- during this period, the continent experienced several
cutting activities grew by 489 percent (OECD, 2021). challenges, including the worst Ebola outbreak West
This shows the slight dominance of mitigation Africa has ever faced (see Box 1, overleaf). It is also
finance over adaptation finance, despite adaptation interesting to note that in 2019 and 2020 adaptation
being a higher priority for the continent. It also shows finance surpassed mitigation finance.
the limited ability of financiers to invest in projects

Figure 10. Total annual international public and philanthropic adaptation, mitigation and cross-
cutting climate finance mobilized for Africa, 2011-2021

$ billions Adaptation Mitigation Cross-cutting

14
12,4 12,7
12 11,4

10 9,6 9,2
8,4 8,5 8,6
8
6,8 7 7 6,9
6 5,4 5,5
4,9 5
4,4 4,4
4 3,1
3,8
3,1
2,5 2,6 2,9
2,2 2,4
1,9
2 1,7 1,4
1,1 1,4 1,4
0,9

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: Adopted from OECD, 2021.

Page 26
 Box 1. The impacts of
pandemics on climate
finance flows

From 2014-2016 West Africa experienced sharp decline in climate finance in 2020.
the worst outbreak of Ebola that has Some insights on the impact on climate
ever occurred, registering the highest finance during this Covid-19 pandemic
death toll since the disease’s discovery include:
in 1976. The outbreak started in Guinea
and spread to surrounding countries • Adaptation finance declined when
including Sierra Leone, Mali, Nigeria, financing transitioned to emergency
Senegal and Liberia, and in August 2014, and public health relief;
the World Health Organization declared
• Not all economic recovery plans took
it a public health emergency. During this
into consideration climate action,
period bilateral and multilateral finances
and the importance of supporting
were aimed at addressing the outbreak
climate change and economic
and could potentially explain the decline
recovery (green recovery);
in climate finance flows.
• An inability to attract large-scale
This trend was also observed during private sector investment as
the Covid-19 pandemic which had, countries were perceived as high
and continues to have, unprecedented investment risk; and
impacts on the global economy. The • Weakened technical and financial
World Economic Outlook (IMF, 2021) capacities to access long-term
estimated a 3.5 percent contraction in sustainable financing.
global growth in 2020, which was far
higher than the 0.1 percent recorded
after the 2008 financial crisis. While
the situation hit all parts of the world,
its devastation did not hit all countries
equally and African countries witnessed a
Climate Finance in Africa

2.3. International public and

philanthropic climate finance
flows by funding sources
From the NDCs submitted by African countries, According to OECD data, from the year 2011 to
approximately 70-90 percent of the finance 2021, most of the reported international climate
required is expected to come from external finance flows in the region were drawn from
sources, including bilateral and multilateral sources, bilateral sources ($92.57 billion) and MDBs (about
philanthropic organizations and the private sector. $65.61 billion) for approximately 93 percent of the
This section provides an assessment of the trends reported climate finance mobilized in the continent
in development partner finance (i.e. international (Figure 11).
public and philanthropic climate finance) to Africa
over the last ten years and puts into perspective the For the period under review, bilateral sources were
level of effort required by both African governments the most important sources of international public
and their development partners if national climate climate finance in Africa. However, the last two
targets are to be met. years, from 2020 to 2021, MDBs surpassed bilateral

Figure 11. Share of total international public and philanthropic climate finance flows in Africa by
sources of funding, 2011-2021 (%)

54.33% Bilateral

38.51% MDB

4.64% Climate Funds

1.41% Other international organisation

0.73% Philanthropic funder

0.38% South-South

Source: Adopted from OECD DAC climate finance statistic 2011-2021.

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 Climate Finance in Africa

Figure 12. Annual international public and philanthropic climate finance mobilized in Africa by
source of funding, 2011-2021

Bilateral MDB Climate Funds Other international organisation Philanthropic funder South-South

$ billions
14

12

10

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Adopted from OECD DAC climate finance statistic 2011-2021.

sources to become the continent’s leading source of finance flows for all African countries between the
climate finance, contributing $13.8 billion compared period 2011 to 2021 revealed that a few countries
to $12.78 billion from bilateral sources in 2021 (Egypt, Ethiopia, Kenya, Morocco and Nigeria) are the
(Figure 12). largest recipients of this climate finance (Figure 13).
These five countries alone accounted for one-third
A country-by-country analysis of the sources of (or 33 percent) of the total climate funding received
international public and philanthropic climate by the entire African continent.

Figure 13. Share of international public and philanthropic climate finance mobilized by countries
in Africa, 2011-2021

$ billions 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

25

20

15

10

5
Madagascar

Niger
Djibouti
Algeria
Angola
Benin
Botswana
Burkina Faso
Burundi

DRC
Egypt

Libya
Cabo Verde
Cameroon
Central African Republic
Chad
Comorros
Congo
Côte d’Ivoire

Equatorial Guinea

Gabon
Eritrea
Eswatini
Ethiopia

Gambia
Ghana
Guinea
Guinea-Bissau

Lesotho
Kenya

Liberia

Malawi
Mali
Mauritania
Mauritius
Morocco
Mozambique
Namibia

Nigeria
Regional
Rwanda

Senegal
Seychelles

Somalia

Togo
Sao Tome and Principe

Sierra Leone

South Africa
South Sudan
Sudan
Tanzania

Tunisia
Uganda
Zambia
Zimbabwe

Source: Adopted from OECD DAC climate finance statistic 2011-2021.

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Climate Finance in Africa

Analysis by OECD income group classification: Figure 14. Share of total international public
OECD data demonstrates that there is no strong and philanthropic climate finance mobilized
division between least developed countries (LDCs) by African subregion, 2011-2021 ($ millions)
and lower-middle-income countries (LMICs) in terms
of climate finance received. Of the five countries
receiving the most climate finance in Africa, Lesotho,
Mozambique and Rwanda are classified as LDCs, while
Algeria, Equatorial Guinea are considered LIMCs.

Analysis by AU subregions:
A regional overview indicates that Central Africa
received the lowest share of funding among all
the five subregions with a total of $10,834 million,
followed by Southern Africa with $19,817 million.
The highest level of climate finance was received
by East Africa with $43,866 million and is followed
by West Africa with $34,227 million. These figures
illustrate that the amount of climate finance received
at regional level roughly corresponds to regional
population levels. In that, East Africa and West Regional
Africa have the first and second largest populations, (multi-country)
East $ 43,866
respectively, and also receive the first and second
largest amounts of climate finance. Whereas West $ 36,337
Central Africa has the smallest population of Africa’s Northern $ 34,607
subregions and also received the lowest amount of
Regional (multi-country) $ 25,025
climate finance.
Southern $ 19,817
Analysis by development finance application: Central $ 10,834
Figure 15 showcases that MDBs provide higher levels
of support to mitigation, while bilateral donors support Source: Adopted from OECD DAC climate finance statistic
higher levels of adaptation and cross-cutting issues. 2011-2021.

Figure 15. Distribution of total international public finance in Africa from different sources by
climate application, 2011-2021

$ billions Adaptation Mitigation Cross-cutting

40
37.43 37.08
33.47

30
27.33

21.67
20

10

2.99 3.38
1.53 2.28
1.20 0.97 0.21 0.52
0.08 0.04 0.07 0.03 0.09
Bilateral Climate Funds MDB
Other international Philanthropic South-South
organisation funder
Source: Adopted from OECD DAC climate finance statistic 2011-2021.

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 Climate Finance in Africa

In addition, the balance of adaptation and mobilized from sources such as climate funds
mitigation climate finance varies between and philanthropic funders indicates potential
international public and philanthropic climate opportunities for African governments to source
finance sources based on their mandates and additional resources but could also signify that
objectives. Despite the growth in adaptation these finance sources, proportionally, have smaller
finance at the latter part of the period, which is resources available than the other sources tracked.
critical due to the continent’s high vulnerability to
climate change, its total value is much less than is Analysis by sector:
required to adequately prepare for and address the For the period under review, the energy sector
climate impacts communities and governments attracted the largest share of OECD-reported
face. MDB climate finance has tended to favour international public climate finance flows,
mitigation over adaptation, which may reflect amounting to approximately $40.37 billion, or
their investment in larger scale projects such as about 24 percent of total reported climate finance
renewable energy initiatives and infrastructure. to the continent. This is followed by the agriculture,
Meanwhile, bilateral funders, other international water and transport sectors, which attracted
organizations and philanthropic funders dedicated approximately $32.66 billion (19 percent), $18.83
a greater share of resources towards adaptation billion (11 percent), and $16.98 billion (10 percent)
and cross-cutting projects. Climate funds have of reported mobilized finance, respectively. All
tended to be more balanced, although they other sectors attracted less than $10 billion each
represent a small contribution to the total funding (Figure 16).
amount. The limited availability of climate finance

Figure 16. Distribution of total international public and philanthropic climate finance flows in
Africa to priority sectors, 2011-2021 (%)

23.7% Energy

19.2% Agriculture, forestry, fishing

11.1% Water & sanitation

10% Transport, storage & communications

5.7% General environment protection

5.2% Social services

4% Disaster risk management & response

3.2% Governance

2.8% Industry and SME development

2.5% Urban development

2.5% Financial sector development

2.3% Health

2.3% Rural development

1.7% Education

0.3% Other multisector

0.2% General budget support

Source: Adopted from OECD DAC climate finance statistic 2011-2021.

Page 31
Climate Finance in Africa

2.4. International public and

philanthropic climate finance
instruments
There are many different financial instruments used by several authors, including Carty et al. (2020), who
to support climate action. These include grants, argue that non-grant instruments should be counted
(concessional) loans, equity, climate bonds, risk at their grant-equivalent value.
sharing and guarantee mechanisms, performance-
based payments, and debt swaps. By far, most of The Green Climate Fund (GCF) and other climate
the reported international public and philanthropic funds are designed to provide financing to
climate finance flows are delivered in the form of developing countries in the form of grants and
grants or concessional loans. A smaller proportion concessional lending as well as other modalities,
of the funding is non-concessional (market rate) instruments or facilities (GCF, 2021). Generally, under
loans. Other more innovative approaches, like debt climate funds such as the GCF, concessionality is
swaps, climate bonds or guarantee mechanisms, defined as finance that is provided with a below-
are slowly gaining popularity but currently represent market set of terms and conditions. For example,
just a fraction of overall climate finance. For the the minimum of concessionality can fund the entire
purposes of this analysis, non-grant finance is operational cost of the project or the programme.
reported at face value, and thus, a loan is considered Table 2 showcases the most common and desired
equivalent to a grant of the same value. This financial instruments provided by international
approach overestimates the real value of non-grant climate funds to developing countries for mitigation
finance provided and has been called into question and adaptation projects and programmes.

Table 2. Types of financial instruments used by international climate funds

Financial instrument Description

Grants are non-refundable funds provided for countries. This is the most desirable type
of instrument by African countries as it is 100 percent concessional, meaning it does
Grants not have to be paid back. Especially for climate actions with limited or no return on
investment, like technical assistance, capacity building or many adaptation actions, grant
financing is crucial.

These are grants that, when the project is implemented successfully, can be paid back to
Reimbursable grants
the finance provider. These grants have no interest.

The loans provided for countries under this financial instrument are highly concessional,
Concessional loans meaning they provide below-market interest rates with longer repayment periods.
Different forms of concessional loans can be used.

This instrument provides a level of guarantee to the lender that they will be paid in case
Guarantees
the borrower defaults on payments of debts.

Investors purchase shares in a company or a dedicated investment vehicle and become

Equity investments
partial owners of that company.

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 Climate Finance in Africa

Grant finance is the primary instrument of current The domination of concessional finance, both
international public and philanthropic climate grant and debt-based, highlights the limited use
finance, followed by concessional debt instruments. of other instruments in Africa, such as guarantees,
For mitigation investments, debt instruments equity, debt relief and/or insurance products. This
represent a larger proportion of the finance, which suggests a need for more innovative approaches
reflects the revenue-generating nature of many to finance climate action on the continent such
categories of mitigation projects (such as renewable
as using de-risking instruments that could attract
energy, forestry or clean transport projects). For
private sector investment into climate-related
adaptation, most of the funding is in the form
sectors. Such innovative instruments can take the
of grants, however, a significant proportion (30.6
form of insurance, blended finance schemes, bonds
percent) is in the form of debt (Figure 17). This
raises concerns since adaptation projects offer integrating guarantee mechanisms, or carbon
more limited opportunities for revenue generation market initiatives.
and therefore funding them through debt may be
unsustainable and increase the risks that come with
high levels of indebtedness.

Figure 17. Most utilized finance tools by international public and philanthropic climate finance to
Africa, by climate application, 2011-2021

Debt instrument Grant Equity and shares in collective investment vehicles

49.8
50

40
40
$ billions

30.6
30

20.7
20 19.2

10

4.8

1.4
0.3 0.5

Adaptation Mitigation Cross-cutting

Source: Adopted from OECD DAC climate finance statistic 2011-2021.

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Climate Finance in Africa

2.4.1. Climate adaptation finance flows in Africa

There is increasing recognition of the importance At COP28, as part of the UAE Consensus, the decision
of scaling up funding for adaptation to meet needs, on the GGA was adopted and renamed the UAE
which is equally, if not more, of a pressing priority Framework for Global Resilience. Some important
for most African countries than mitigation. Shares developments related to the GGA decision from
of adaptation finance have increased over the past COP28 are:
years but are still hugely insufficient to meet needs.
This lag of adaptation finance in relation to needs
• It sets a timeline for targets by 2030 for all
is also driven by the fact that a disproportionately
Parties and contains thematic targets, although
large portion of debt financing is directed towards
not quantified, related to water and sanitation,
mitigation actions compared to adaptation actions.
food and agriculture, health, biodiversity and
Unfortunately, there is limited comprehensive data
ecosystems, poverty eradication and livelihoods,
on private financing for climate action globally,
and cultural heritage, as well as targets related
despite growing interest to improve the consistency
to the adaptation planning cycle (assessments,
and coverage or reporting within businesses on
planning, implementation, monitoring, evaluation
sustainable finance, which will hopefully lead to more
and learning systems).
comprehensive data in the mid-term (TCFD, 2021).
• It specifically indicates that all countries should
There has been a push to define and operationalize have NAPs, policy instruments, planning
the Global Goal on Adaptation (GGA) as part of the processes and/or strategies and mainstream
first Global Stocktake in 2023 and as a means to adaptation in development planning by 2030.
increase and scale adaptation financing. In 2021, • It sets a target that by 2027 all Parties will have
at COP26, the Glasgow–Sharm el-Sheikh work established multi-hazard early warning systems,
programme on the GGA was launched and new climate information services for risk reduction,
financial pledges were made to support developing and systematic observation to support improved
countries in achieving this goal (UNFCCC, 2021a). climate-related data, information, and services.
• It recognizes the leadership of Indigenous Peoples
and local communities and their knowledge and
includes a mention to strengthening climate
education and youth empowerment.
• It launches a two-year ‘UAE-Belem work
A)
tion (GG programme’ to ‘as needed’ develop indicators and
n Adapta
al Goal o
The Glob ‘potential’ quantified elements.
aims to: capacity
e th e a d aptative • It reiterates the call for doubling adaptation
nc
• Enha d finance and references the needs of developing
ience; an
and sil
re
a view countries, especially LDCs and Small Island
u ln e ra b ility; with
ce v inable Developing States (SIDS), but does not refer to
• Redu ti n g to susta
tr ib u the principle of common but differentiated
to con
ent.
developm aptation
responsibilities (CBDR).
n a d e quate ad
sure a oal of
It will en c o n te x t of the g Other relevant developments related to adaptation
in the ing well
response g lo bal warm from COP28 include:
ve ra g e
holding a efforts to
°C a n d pursuing
below 2 . • Pledges were made for $3.5 billion in new money
elow 1.5°C
hold it b to replenish the GCF, $133.6 million toward the
Adaptation Fund, $129.3 million toward the LDC

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 Climate Finance in Africa

Lagos, Nigeria © Joshua Oluwagbemiga

Fund, and $31 million to the Special Climate highlights principles like CBDR, equity, and
Change Fund (SCCF). sustainable development and underlines the
importance of international cooperation.
• The UAE launched a $30 billion catalytic fund,
ALTÉRRA, which aims to mobilize an additional • Noteworthy Declarations include COP28 UAE
$250 billion by 2030 to stimulate a new climate Declaration on Sustainable Agriculture, Resilient
economy by improving access to funding for the Food Systems and Climate Action (endorsed by
Global South - including LDCs and SIDS. 147 countries) and the COP28 UAE Declaration
on Climate and Health (endorsed by 135
• The adaptation sections of the Global Stocktake
countries).
outcome refer to the challenges in accessing
finance for implementing NAPs and the gaps in
assessment and effectiveness of adaptation. Although Africa receives the largest share of
international adaptation finance (31 percent or $11
• A new Loss and Damage Fund and funding
billion in 2021/2022), a massive funding gap remains
arrangements decision was adopted and
(CPI, 2023). Estimating the cost of Africa’s adaptation
$792 million in pledges were secured. The
needs, a 2022 report by the Global Center on
decision provides the basis for a new fund
Adaptation (GCA) found that $52 billion annually until
to provide financial support to developing
2030 is required. UNEP’s 2023 Adaption Gap Report
countries to respond to loss and damage from
estimates $46 billion annually until 2030 is needed
both sudden and slow onset events, covering
for adaptation finance for Sub-Saharan Africa,
both economic and non-economic losses and
while CPI (2023) estimated that adaptation finance
damages.
needs for African countries, based on estimates
• The UAE Just Transition Work Programme was from their NDCs, are $52 billion annually until 2030.
adopted unanimously and broadened the scope While estimates differ, likely due to differences in
of work to encompass a whole-of-society and methodologies, all evidence points to the adaptation
whole-of-economy approach. The programme finance needs of NDCs being much higher than

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Climate Finance in Africa

current financing. In 2022, $11.4 billion of adaptation were in agriculture (25 percent), water (17 percent),
finance was disbursed in Africa, which represents infrastructure and building (12 percent), disaster
only 39 percent of total climate finance committed prevention and preparedness (10 percent), and health
to the continent annually (GCA, 2022). (8 percent).

2.4.1.1. Africa’s adaptation funding by sources In the current analysis of OECD data, 33 percent of
the adaptation finance flows in Africa supported
From the OECD DAC data analysis, most of the initiatives in the agriculture sector, while water
climate finance flows in Africa targeting adaptation and sanitation received 20 percent, disaster risk
initiatives are drawn from international public sources, management received 8.7 percent and social services
and only 1 percent comes from private philanthropic received 7.1 percent (Figure 18).
funders. This data excludes national commitments of
African governments from domestic budgets, as well
as most private sector adaptation finance, and is thus
Figure 18. Share of total international public
likely to be an underestimate of the total adaptation and philanthropic adaptation finance to Africa
finance flows in the African region. by sector, 2011-2021 (%)

In some African countries such as Namibia, South

Africa and Rwanda, national governments are making
notable investments in adaptation through their
budget allocations. There are also some examples of
private sector investment in adaptation in Africa, such
as a GCF-funded project supporting climate-resilient
agriculture across several African countries; however
private sector adaptation investment in Africa is likely
to be very modest. GCA (2022) estimates that only 2
percent of private sector climate finance goes toward
adaptation in Africa (See Chapter 3 for more on the
challenges surrounding mobilizing private climate
finance).

As reported under the OECD database, South-

South support for adaptation is also a notable, albeit
modest, source of support for adaptation in Africa,
such as investments by the United Arab Emirates 32.7% Agriculture, forestry, fishing
in water and sanitation projects in certain African 20% Water & sanitation
countries. South-South support, while like bilateral 8.7% Disaster risk management & response
support, is characterized as a different group in 7.1% Social services
climate finance in this report as well as in OECD 6.6% Transport, storage & communications
DAC databases, because it is not part of ODA going 4% Governance
through the DAC. 3.9% Rural development
3.9% Health
2.4.1.2. Sectoral analysis for adaptation finance 3.8% General environment protection
3.1% Urban development
According the Adaptation Gap Report (UNEP, 2021) 2.3% Industry and SME development
agriculture, water and infrastructure are considered 2.2% Education
critical adaptation sectors with significant financing 1.4% Energy
needs. This was further validated by CPI (2022b)
Source: Adopted from OECD DAC climate finance statistic
which found that for African countries that provided
2011-2021.
sector specific data on adaptation, most needs

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 Climate Finance in Africa

2.4.2. Climate mitigation finance flows in Africa

Overall, mitigation initiatives have attracted 2.4.2.1. Africa’s mitigation by funding
a large share of international public and sources
philanthropic climate finance flows, taking up
to 44 percent of the global share (OECD, 2021). Based on OECD data, 50 percent of mitigation
This is primarily driven by the ease of making financing tracked in Africa between 2011-
a strong business case for mitigation initiatives 2021 came from MDBs ($37 billion) and 45
e.g., initiatives that can provide returns such as percent from bilateral sources ($33.47 billion)
renewable energy as compared to adaptation (Figure 19, overleaf). Climate Funds are the third
initiatives like wetland conservation, which most important source of mitigation finance,
may not have such clear and direct financial accounting for 5 percent of total mitigation
benefits. During COP27, a work programme on finance over the same period. Climate financing
mitigation was launched which aims to scale for mitigation from philanthropic funders
up mitigation ambition and implementation. represents less than 1 percent of the total
This work programme began immediately after financing received. It is likely that these figures
COP27 and continues until 2030 and supports at significantly underestimate mitigation finance
least two global dialogues each year. Critically, at since they don’t capture the majority of private
COP28, the Global Stocktake outcome proposes sector mitigation finance or domestic public
“transitioning away from fossil fuels in the energy finance put towards mitigation. Indeed, CPI
systems” so as to reach net zero by 2050 while estimated approximately S4.2 billion in private
repeating the COP26 call to phase out inefficient climate finance to Africa in 2019/20, almost all of
fossil fuel subsidies. which is for mitigation, albeit concentrated in a
small number of more advanced economies (CPI,
Additional relevant mitigation outcomes from 2022b).
COP28 include:
2.4.2.2. Sectoral analysis for mitigation
• Parties are “called on” to undertake the finance
European Union’s goal of tripling renewable
energy capacity globally and doubling Support for mitigation actions in Africa over the
the global average annual rate of energy 2011-2021 period is dominated by initiatives
efficiency improvements by 2030, as well as aimed at decarbonizing the most carbon-
accelerating efforts towards phase-down of intensive sectors, such as agriculture, transport
unabated coal power. and energy (Figure 20, overleaf). The three sectors
• Parties endorsed the Global Renewables and account for about 77 percent of total mitigation
Energy Efficiency Pledge (endorsed by 130 financing allocations. However, the agriculture
countries) and the Global Cooling Pledge sector, which is the leading source of GHG
(endorsed by 66 countries). emissions in Africa, only received 6 percent of
the allocations. This would suggest that most of
• Parties are encouraged to communicate
the agricultural initiatives supported by climate
NDCs in 2025, with an end date of 2035, that
finance were accounted for under adaptation
are informed by the outcomes of the Global
finance.
Stocktake, have economy-wide emission
reduction targets, and are aligned with long-
According to the OECD DAC data, the Northern
term strategies.
Africa subregion attracted the largest share of
mitigation financing in the continent at $23.3
billion, which is more than 36 percent of total
funding for mitigation in Africa.

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Climate Finance in Africa

Figure 19. Major sources of international public and philanthropic mitigation finance in Africa
(annual averages for 2019 and 2020)

$ millions

$ 3,372 PRIVATE

$ 11,214 PUBLIC

$ 5,342 Multilateral DFI

$ 2,458 National DFI
$ 1,995 Export Credit Agency (ECA)
$ 529 SOE SOFI
$ 497 Multilateral Climate Funds
$ 199 Government
$ 194 Bilateral DFI

Source: CPI, 2022b (adapted from source data).

Figure 20. International public and philanthropic mitigation finance to Africa by sector, 2011-2021 (%)

54% Energy

17% Transport, storage & communications

6% Agriculture, forestry, fishing

4% Water & sanitation

4% General environment protection

3% Social services

3% Industry and SME development

3% Financial sector development

2% Governance

2% Urban development

1% Education

Source: Adopted from OECD DAC climate finance statistic 2011-2021.

Page 38
Chapter 3.

Challenges for accessing

and mobilizing climate
finance in Africa
Lake Retba, Senegal © Curioso photography
Climate Finance in Africa

3.1. Mapping the landscape of

climate finance gaps in Africa
Despite the immense financial need for African annually. When compared to the estimated annual
countries to address climate change challenges, total climate finance needs for Africa of $277 billion,
the continent still lags other regions in mobilizing this means Africa is only receiving 11 percent of
climate finance. It is estimated that the continent what is required as per African NDCs (CPI, 2022b).
requires around $2.8 trillion between 2020 and Although it is likely that the real figures, for both
2030 to implement their NDCs (CPI, 2022a). finance received and needs, are higher than
According to the analysis presented in the previous estimated, it’s clear that the finance provided falls
section using OECD data, in 2021, the continent far short of meeting Africa’s needs. This low level
accessed approximately $28.4 billion from primarily of climate finance mobilization emphasizes the
international public sources. While this is only a urgent need for a concerted effort by development
subset of all climate finance, excluding domestic partners (multilateral and bilateral institutions,
public finance and non-philanthropic private MDBs), African governments and the private sector
finance, it accounts for the largest share of climate to scale up climate finance to Africa to meet needs.
finance in Africa. Estimates by CPI (2022b) include
a wider set of funding sources, including some While international public climate finance will
domestic public finance and some private sector continue to be a vital source of climate finance
sources, and put the figure around $29.5 billion for African countries, many African governments

Yaoundé, Cameroon © Ada Mbita

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 Climate Finance in Africa

are allocating significant funding to climate action however, as its total climate finance needs are
through their national budgets. As of 2023, African estimated at 141 percent of the country’s GDP, this
countries had made explicit commitments within still leaves most climate measures unfunded (CPI,
their NDCs to mobilize domestic public resources 2022a).
to support their climate ambitions, and despite
competing development priorities and high debt According to CPI (2022a), the unconditional
burdens, African governments have committed commitments from African governments fall
$264 billion of domestic public resources towards short of meeting their estimated NDC financing
financing the implementation of their respective needs. Mobilization of external resources is critical
NDCs, amounting to 10 percent of the total if the continent is to make significant progress
estimated costs for implementation (CPI, 2022a), towards meeting its various national climate
The remaining $2.5 trillion needs to be sourced targets. Limitations of domestic public revenues for
from the international donor community and the climate financing due to a low tax base, combined
private sector (CPI, 2022a). with a high debt burden and multiple competing
development and economic priorities in African
Although these domestic funds may be modest countries provides a rationale for the need to
in scale compared to those requested from the effectively mobilize, and access additional sources
international community, they have the potential of climate finance.
to be catalytic in their impact if used strategically.
The Central Africa subregion, despite being the
region with the least access to international
climate finance, has made the most significant
commitment to mobilize domestic resources
(CPI, 2022a). This subregion has committed to
raising slightly above a third of its climate finance
needs through national budgets. The Southern
Africa subregion has reported some of the greatest
needs amounting to approximately $1.1 trillion,
representing 40 percent of the continent’s reported
climate finance needs (CPI, 2022a). CPI reported
that the subregion aims to mobilize less than 1
percent domestically from this amount, or a little
less than $7 billion. Other subregions of Eastern
Africa, Western Africa and Northern Africa aim to
finance 11 percent, 7 percent and 13 percent of
the relative subregional totals, respectively, from
national budgets (CPI, 2022a).

In country specific data, it is notable that countries

with low GDPs such as the Democratic Republic of
the Congo (DRC), Somalia and South Sudan have
the greatest needs relative to their GDPs. For these
countries, needs represent more than 80 percent
of their annual GDP. This demonstrates the support
required to mobilize climate finance, especially by
poorer countries, which likely have less capacity
to develop bankable programmes and projects to
attract the required climate finance. Laudably, the
Democratic Republic of the Congo plans to allocate
10 percent of its GDP to finance climate measures Casablanca, Morocco © Steeph Almer

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Climate Finance in Africa

3.2. Challenges and barriers to

access climate finance
African countries’ ability to mobilize climate finance and externally, from the climate finance sources.
is impacted by various challenges, some internal Chapter 4, which turns to opportunities, will
and others external. This section will explore in address these challenges by providing examples of
more detail the challenges and barriers from approaches and tools that have been employed to
the recipient side, from within African countries, overcome limitations.

3.2.1. Challenges within African countries

Within countries, internal challenges include capacity and weak systems to meet the minimum
limited technical and institutional capacity to standards set by the international climate funds,
access climate funds and negotiate beneficial deals and they lack adequate technical capacity to
with development partners, limited data to inform develop a pipeline of feasible and economically
decision-making, poor and uncoordinated climate viable climate projects and programmes (UNFCCC,
planning, lack of climate finance tracking, the 2022a).
lack of a conducive policy environment to attract
climate investment, gaps in awareness surrounding Some of the specific institutional capacity
climate-related risks and opportunities, and limited gaps that have been identified include: weak
access to technology that could enable climate technical capacities, lack of clear frameworks to
action, among others (Adenle, Manning, and Arbiol, guide access and absorption of climate funds,
2017; Tippmann et al., 2013; UNFCCC, 2022a). These poor coordination between sectors, and lack of
challenges can broadly be classified into three adequate data to inform project development
categories of barriers: institutional capacity; policy, (Tall et al., 2021; Tippmann et al., 2013; UNFCCC,
planning and budget; and data and research. Each 2022a). Furthermore, African institutions don’t
is discussed below. always have access to strong negotiating capacities
to engage development partners in defining the
3.2.1.1. Institutional capacity limitations terms of climate finance deals, with the result that a
significant amount of climate finance is provided on
The challenge of weak institutions has historically terms that favour the donor and may enhance the
been an important barrier to accessing climate indebtedness or risk exposure of African countries
finance for developing countries. For instance, it (V20, 2022; Voïta, 2023).
was cited as one of the key barriers to accessing
finance under the Clean Development Mechanism Poor institutional coordination across different
(CDM), which was one of several mechanisms sectors in African countries can also pose a
under the Kyoto Protocol, where African countries challenge, with overlapping or unclear mandates
accessed less than 3 percent of the total financing of various ministries and agencies when it comes
allocated to the mechanism (Byigero, Clancy, and to planning and implementing adaptation and
Skutsch, 2010; Desanker, 2005; Fenhann, Agger, mitigation measures. Climate action and leadership
and Hansen, 2009). This weakness can be seen as often sit with ministries of environment which, in
two dimensional, where institutions lack internal many instances, lack the convening power and

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 Climate Finance in Africa

political clout to bring all the relevant actors around 3.2.1.2. Planning, policy and budget
the table and ensure that climate targets and landscape barriers
plans are mainstreamed into sectoral policies and
development plans and are implemented by all An enabling policy environment aligned to
relevant ministries and actors. As a result, NDCs and clear planning processes is critical to informing
other climate plans may only sometimes be well priorities for climate investments and signaling to
aligned with development plans and integrated into all stakeholders the priorities and opportunities
sector priorities, creating a challenge for financing for climate action. Policy frameworks provide the
and implementation. mandate for government institutions to support
the climate agenda, which in turn shapes how
Addressing the challenge of institutional capacity coordination is to take place, including engagement
is paramount to ensuring Africa can access with non-government actors, such as civil society,
the financing it requires to achieve its climate private sector and local communities. Moreover,
objectives. Strong national and local institutions clearly defined plans and coherent enabling
are critical to supporting the implementation of policies can incentivize investment in climate-
climate actions. For instance, strong institutions compatible sectors.
were attributed to the rapid implementation of
Germany’s energy efficient policies (Ringel et al., Most African countries are putting in substantive
2016) and in the increase of renewable energy efforts to develop their policy frameworks to
output in Sweden (Hultman et al., 2012). support climate efforts, as evidenced by NDCs and
their impact on influencing and mainstreaming
Another important aspect of developing strong climate action across national and sector policy,
institutions is so they can access climate finance planning and budgeting. However, issues remain
directly from international climate funds. Experience that can act as barriers to allocating and accessing
in Africa with the Adaptation Fund and the GCF climate finance. These include a lack of coherence
has shown that when national institutions are between climate plans and development
strengthened and empowered to access and deploy plans, limited data and analysis of domestic
climate finance without relying on international climate expenditure, lack of a green taxonomy
intermediaries, they are effective in driving impactful to direct private sector participation, and weak
projects that respond to the needs and priorities of or nonexistent NDC Investment Strategies that
their countries and of communities on the ground. include project pipelines. These limitations can
For example, the Centre de Suivi Ecologique (CSE) in lead to haphazard and uncoordinated investments
Senegal was the first developing country institution in climate-relevant sectors, with a fragmented
to achieve accreditation to the Adaptation Fund, and landscape of donor-driven and standalone projects
later to the GCF, and was able to successfully mobilize rather than projects feeding into a coordinated,
adaptation finance to support a collaboration of prioritized and strategic investment plan (Tall et al.,
local institutions to enhance the resilience of coastal 2021).
communities in Senegal. This accreditation not
only facilitated direct access to climate finance for Weak climate planning presents a fundamental
the affected communities but also strengthened challenge to accessing finance. Because climate
the institutional capacity of the CSE to manage action requires transformational change through
climate finance leading to additional donor funding low-carbon development pathways across multiple
being channeled through the institution (Schäfer et sectors of the economy and with a multitude of
al., 2014). In another example, the Environmental stakeholders, robust planning becomes essential. It
Investment Fund of Namibia was accredited to the can turn NDC targets into action, but also support
GCF in 2016 and has mobilized close to $35 million prioritizing and sequencing of climate action across
(Namibian $640 million) for local adaptation projects an economy. For countries with a limited resource
and piloted new approaches to get adaptation base, having multiple development priorities
funding directly to the local communities most may find sustainable development and climate
vulnerable to climate change (GCF et al., 2021).

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Climate Finance in Africa

action competing for limited funds rather than attributed to the limited technical capacity to turn
leveraging their inherent synergies. Strengthening targets into projects as well as the ability to provide
NDC Implementation Plans that include all cost estimates. Targeted grant funding is required
relevant sectors can be an important step to to build the capacity of African public institutions
support mainstreaming across an economy. SDG to develop and prepare projects and programmes
Investment mapping as well as Integrated National effectively over longer timeframes. Doing so would
Financing Frameworks are two additional tools undoubtedly benefit not only the country but also
that can help bring together a country’s SDGs and the development partner community, as pipelines
climate targets. can bring coherence to funding priorities and
coordination for development partners. However,
Another critical challenge surrounds public financial such types of capacity support are often not
management systems and a lack of tracking and provided, difficult to access, or very limited in scope
analysis around domestic climate expenditure. Even and scale. For instance, the African Development
though most African countries have committed Bank (AfDB) has the Sustainable Energy Fund for
public resources to climate action many lack the Africa and NEPAD Infrastructure Project Preparation
necessary systems to support Climate Public Facility, but these have very specific mandates,
Expenditure and Institutional Reviews (CPEIRs) and/ funding restrictions and small funding amounts.
or climate budget tagging and coding. For countries
where national budgets include some form of Lastly, a final barrier that brings together the
climate coding and traction, the tagging often does challenges discussed above cumulatively, is
not happen at an activity level due to the high- that many African countries do not have a
capacity demand it requires. This means that often it comprehensive NDC Investment Strategy. To
is supported by a development partner and occurs determine NDC investment needs requires a well-
at a high level where minimal tagging is done at defined set of investments and supporting activities
activity or local levels. that unlock the mitigation and adaptation actions
required to achieve NDC targets.
When looking at how governments can better Without an understanding of what a country’s
attract climate finance, especially from the private priority climate and NDC investment and support
sector, many African countries are lacking green needs are, countries are less able to effectively seek
taxonomies. As countries turn to low-carbon resources or properly target strategic sources of
development pathways, this will require innovative climate finance.
technologies and solutions that support this
transition to be sustainable and inclusive. For 3.2.1.3. Data and research
private sector actors and specifically financial
institutions, understanding how investments and Another vital area where challenges for climate
loans can contribute to environmental, social, project developers persist is in the lack of locally
and climate-friendly outcomes and incomes can relevant data, such as scaled down climate
incentivize their involvement. Globally, taxonomies vulnerability and risk analyses, that could help
are being developed and a lack of comparability tailor climate projects to local contexts and
could create hurdles for trade and international the needs of communities. Limited or weak
capital flows towards low-carbon projects and capacity at subnational levels may hinder this
cause greenwashing in the market (UNEP, 2023). data availability and/ or disconnects can exist
between research institutions, central government
Another challenge to mobilizing climate finance entities and subnational climate practitioners
and attracting private sector investment surrounds (both from government and civil society). This can
a lack of bankable projects that translate NDC and lead to the development of climate projects and
climate targets into tangible action. Many African programmes that are not always fully cognizant of
countries do not have project pipelines or have the local needs and can create challenges in their
not created them comprehensively across NDC implementation that makes it difficult to achieve
priority sectors. Lacking proper pipelines can be the envisioned impact in a sustainable manner.

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 Climate Finance in Africa

Maputo, Mozambique © Rohan Reddy

For decision makers and potential investors, to track progress on meeting NDC and climate
having a strong evidence base for investment targets may be weak or incomplete in many African
projects helps to justify project interventions in countries, especially at subnational levels. The
particular sectors or geographies. This may require lack of such standards has often led to climate
scientific evidence, calculations, outline baseline investment inefficiencies, where projects do not
vulnerabilities, risks and emissions scenarios, build on previously achieved targets and, in some
methodologies for emissions calculations, cases, duplication of investments and project
quantitative information on emissions avoided, interventions. Building off the point made above
and resilience-building potential of interventions. about developing an evidence base for investment
This type of data, research, and analysis contributes projects, similarly, transparency systems can also
to a project’s climate rationale and is particularly help improve the reliability and coherence of data
relevant when applying to international funds that are fundamental to informed decision-making
(e.g., GCF, GEF, AF) (NDC Partnership, 2023). For and policy development across sectors. More on
many countries across the continent, having MRV is explored in Section 3.3 below.
processes that can help systematically develop
and maintain this evidence base may be weak or Lastly, data scarcity is a major contributor to
lacking. Yet, having such information and analysis perceived investor risk in climate projects in Africa
is vital to prioritizing and making choices about (Rahman, 2023). There is a need for comprehensive
public climate expenditure as well as for attracting data to assess risks and potential returns on
international public and private climate finance. investments effectively to mobilize more private
capital. Reducing this risk perception gap is crucial
Another important data limitation surrounds to attracting the necessary finance needed and
developing and operationalizing robust, therefore, strengthening data systems that target
coordinated MRV systems that include the perceived risk is key.
necessary metrics, standards, and definitions

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Climate Finance in Africa

3.2.2. Challenges within international climate finance sources

3.2.2.1. Funding levels only 7 percent of reported climate finance was

additional to the long-standing international
A defining commitment made at COP15 that commitment made by wealthy countries to
underpins international cooperation on climate provide 0.7 percent of their Gross National
change was that developed countries would Income (GNI) as ODA” (CARE, 2023). Moreover, it
provide up to $100 billion per year by 2030 to has been reported that more than 40 percent of
support developing countries implement their public climate finance is non-concessional, which
climate change priorities. At COP28, the Global translates to being expensive and potentially a
Stocktake decision acknowledged that countries financial liability to developing countries with high
failed to meet this target in 2021 but did not debt burdens (Carty et al., 2020).
specify whether or how to make up the deficit.
COP28 deferred adoption of a new climate 3.2.2.2. International
public finance terms –
finance goal, NCQG, to COP29. The new NCQG will debt, risk and liquidity
replace the previous $100 billion commitment and
must consider developing countries’ needs and There has been increasing criticism in recent years
priorities. For Africa, these needs and priorities are of the ways in which international public financial
high. institutions such as MDBs and bilateral agencies
deliver climate finance to developing countries,
CPI (2023) estimates that to meet adaptation being characterized as entrenched systems of
needs alone requires 2.5 percent of Africa’s GDP, imbalanced power dynamics that favour the funder
which means international support needs to scale and place an unreasonable burden on the recipient.
at least five-fold by 2030. It is paramount that Under the Bridgetown Initiative—a proposal to
efforts to mobilize additional financing from both reform the architecture of global development
public and private sectors remain urgent, especially finance (see Box 2, overleaf) – these imbalances
for African countries that have historically faced are being called into question as the global
challenges in attracting private sector resources to development finance system is increasingly seen as
address climate change. not fit for purpose. The system has left developing
countries facing debt overhangs, higher borrowing
In addition to developed countries’ failure to costs, and limited access to liquidity in times of
meet their ‘fair share’ of financial contributions, crisis (United Nations, 2023).
there is also a debate on how to track climate
finance contributions. Most of what has been It is well-known that the use of non-grant
reported under the OECD database of climate instruments can exacerbate countries’ vulnerability
financial flows to the continent as contributions by increasing their level of indebtedness and
towards the 100 billion per year goal has mainly transferring risk of financial losses to developing
constituted concessional loans and other non- country governments. The transfer of this risk
grant instruments. Donor reports tend to overstate means that developing country governments can
their contribution to this target by a huge margin often find themselves paying far more than they
because often loans are counted at their full-face are receiving due to the debt conditions built into
value, rather than as the amount of money given finance instruments (IIED, 2023a). For example,
to a developing country once repayments, interest most international financial institutions, if they
and other factors are accounted for (Carty et al., provide a guarantee to a developing country
2020). Another concern is the issue of ‘double government or financial institution or project,
counting’, where ODA contributions are counted require a counter-guarantee from the recipient
towards both development finance and climate country government. This means that in the event
finance. In fact, a 2023 report found that “in total, of a default, the recipient government ends up

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 Box 2. The
Bridgetown Initiative

The Bridgetown Initiative is a proposal to 2. Expand multilateral lending to

reform the world of development finance, developing countries by $1 trillion.
particularly how rich countries help poor
countries cope with and adapt to climate • World Bank and other MDBs must
change. Under leadership from the Prime use remaining headroom, increased
Minister of Barbados, Mia Mottley, the risk appetite, new guarantees and the
Bridgetown Initiative was introduced at holding of SDRs to expand lending to
COP27. The Initiative aims to address governments by $1 trillion.
three interconnected crisis: the spiraling
• New concessional lending should
cost of living crisis, the developing country
prioritize attaining the SDGs and
debt crisis and the climate crisis. To do
building climate resilience in climate-
so, it proposes three bold steps to reform
vulnerable countries.
international development finance:
3. Set up a new global mechanism – with
1. Increase emergency liquidity and
private-sector backing – to fund climate
change the terms around how funding is
mitigation and reconstruction after a
loaned and repaid, specifically:
climate disaster.

• The IMF should redirect at least $100

• A multilateral mechanism that raises
billion of unused Special Drawing
reconstruction grants for any country
Rights (SDRs) to countries who need
that experiences a climate disaster.
it most;
• A new issuance of 500 billion SDRs
• The G20 should agree an ambitious
($650 billion) or other low-interest,
Debt Service Suspension Initiative that
long-term instruments to back a
includes all MDB loans to the poorest
multilateral agency that accelerates
countries, and COVID-related loans to
private investment in the low carbon
the middle-income; and
transition.
• Major issuers of debt to the markets
should help normalize Natural
Disaster and Pandemic Clauses in all
debt instruments to absorb shocks
better.
Climate Finance in Africa

taking the loss. This is particularly common in the Bridgetown Initiative, it has been proposed
MDBs, which rarely take the financing risk despite that all lending instruments include a ‘natural
that they are backed by developed country disasters and pandemic clause’ that would allow
governments and not beholden to capital market countries to temporarily pause their debt servicing
fluctuations and therefore have the capacity to take obligations.
on significant financial risk without jeopardizing
their financial sustainability (Laxton et al., 2023). The unique position of international public finance,
Moreover, the costs of debt servicing can also such as MDBs and IFIs, should be utilized to
increase beyond a government’s capacity to pay enhance climate finance flows to countries and
— an especially worrying position when borrowing communities that need them the most.
is often done in foreign currency and subject to
exchange rate increases (Alayza et al., 2023). In These institutions play a pivotal role in not only
Africa, as of 2022, there are 24 countries with a ratio providing public finance at favorable terms but
of debt-to-GDP above 60 percent (United Nations also in de-risking and mobilizing private finance by
Global Crisis Response Group, 2023). attracting the private sector to invest in projects
and markets that would otherwise be perceived as
In addition to debt, another imbalance concerns too risky, particularly for adaptation finance (Laxton
loans and how the cost of capital imposed on et al., 2023).
African governments is often many times higher
than what developed country governments pay
(Avinash, 2023). For example, developed countries
can borrow capital with interest rates between 1 to
4 percent while developing countries – which are
seen as riskier investments – have interest rates
around 14 percent (Ezeobele, 2023). Indeed, African
countries borrow on average at rates four times
higher than the United States and as much as eight
times higher than Germany (United Nations Crisis
Global Response Group, 2023). In this sense, credit
risk assessment, often based on perceived risk –
becomes an unsurmountable hurdle. The impacts
of these credit ratings can stifle economic growth
and limit a country’s development. It creates
barriers for countries to fund vital investments,
especially surrounding adaptation, and can
undermine debt sustainability.

When it comes to facing the impacts of climate

change, especially recurrent disasters, these
institutions have proven to be not well equipped
to deal with such challenges. When emerging
economies and developing countries are faced
with back-to-back disasters, in addition to having
to continue servicing debt, many vulnerable
countries do not have access to liquidity - at
favorable (concessional) terms. As highlighted
by vulnerable countries and island states,
responding to natural disasters and protecting
the environment are becoming the single most
significant causes for increases in debt. As part of Addis Ababa, Ethiopia © Solen Feyissa

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 Climate Finance in Africa

3.2.2.3. One size fits all approaches

The international climate finance landscape

supports the needs of a heterogenous group of
developing countries. Climate finance funders,
however, do not always appreciate the differences
between countries. For instance, direct access
entities, which are the accredited institutions
that can receive climate finance through the GCF,
are required to adhere to the GCF’s complex fit-
for-purpose fiduciary standards despite some of
these national institutions being relatively young
compared to other established institutions that have
been accredited from the GCF. Even though funding
is often provided to enhance the capacity of these
institutions to meet fiduciary standards, this assumes
that the country has the required technical capacity
to support this process, even beyond the initial
capacity enhancement project. In most cases, this
is not true, and may be complicated by the fact that
some developing countries do not have the financial
capacity to sustain highly qualified personnel within
their institutions.

In addition to the complex requirements to

become accredited, it can take several years for an
institution to receive this accreditation and also for
projects to be approved (Caldwell and Larsen, 2021).
These lengthy processes can be a disincentive to
developing countries who are considering accessing
this finance.

Additionally, current practices in adaptation finance

tend to provide similar terms that are applied
to mitigation finance, even though the needs of
adaptation are very different. Adaptation aims to
support communities in enhancing their climate
resilience and, therefore, is inherently specific to the
local context. This also means that getting funding to
the local level so that communities can design and
implement solutions that respond to the specific
vulnerabilities they face is paramount. However,
under the current practice, very little international
public finance for climate adaptation reaches
the local level directly. In most cases, adaptation
projects are implemented by large multilateral
institutions that may lack an appreciation of local
realities, and rarely put local institutions or actors in
the driver’s seat (Caldwell and Larsen, 2021).

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Tamnougalt, Morocco © Sergey Pesterev

Climate Finance in Africa

3.3. Tracking climate finance and

climate investment impacts
The Paris Agreement negotiations Figure 21. CBIT projects implementation status in Africa
have established a common reporting
framework, the Enhanced Transparency
Framework (ETF), for tracking and reporting
the progress of existing and future country
commitments, with built-in flexibility
included for developing country Parties. It
is made up of four main components: 1)
national GHG Inventory, 2) progress made
in implementing and achieving NDC, 3)
climate change impacts and adaptation,
and 4) financial, technology transfer and
capacity-building support needed and
received under Articles 9, 10 and 11.

To support developing countries,

actualize transparency systems and
report, the Capacity-Building Initiative for
Transparency (CBIT) was created at the
request of Parties to help strengthen MRV
institutional and technical capacities.5
Specifically, the GEF established the
CBIT fund to support these objectives
and initially set aside approximately $1 Concept approved
million for each developing country for
this process. Figure 21 shows the number Concluded
of countries in Africa that have received
Project approved
this funding and are in the process of
establishing MRV systems, many of which Under implementation
are supported by UNDP.
Note: 0-represents countries that have not initiated a CBIT project
Even though several countries have while 4 indicates countries that have completed a CBIT project.
established systems for mitigation and Values between 1 and 3 represents different stages of the project
implementation.
adaptation MRV, these systems are at
different stages of development and Source: Climate Transparency Platform, 2023.
use. In addition, the effectiveness of

5
The CBIT was established as per paragraph 85 of the COP decision adopting the Paris Agreement. The aim was to 1) Strengthen
national institutions for transparency-related activities in line with national priorities; 2) To provide relevant tools, training and
assistance for meeting the provisions stipulated in Article 13 of the Agreement; Article 13 requires each Party to provide the
following information: a) A national inventory report of anthropogenic emissions by sources and removals by sinks of greenhouse
gases, prepared using good practice methodologies accepted by the IPCCC, b.) Information necessary to track progress made in
implementing and achieving its NDC. 3) To assist in the improvement of transparency over time.

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 Climate Finance in Africa

these systems in informing countries of climate made should not result in the double counting of
change work varies substantially based on the finance needed or finance received when being
quality of data captured under the MRV system. reported. The effects of having no internationally
A national transparency system can help improve agreed definition of climate finance underscore
the reliability and coherence of data which is the need for countries to describe their
central to informed decision-making and policy assumptions, definitions and methodologies.
development across sectors (UNFCCC, 2023).
By providing reliable and timely information In Africa, assessing and resolving data gaps and
on national progress, transparency systems are data uncertainties is a key challenge for countries.
fundamental to building trust and confidence There may be significant gaps in the coverage
among institutions, organizations and countries. of sectors and sources of climate finance,
Under the ETF, the need to strengthen these particularly regarding private investment, and
systems with more robust and locally generated adaptation and resilience. The understanding of
data is critical if these systems are to be effective. public and private sources of finance and the
financial instruments used may be inadequate.
Whilst the fourth component of the ETF- to Most of the uncertainties associated with each
report on financial capacity-building and support source of data have different underlying causes,
received and needed—is not mandatory for such as: a) lack of geographic coverage of data;
developing countries, there are many benefits b) differences in the way tracking methods
in reporting this information. First, it can provide are applied; c) lack of transparency of data
a clear sense of gaps, inflows and impacts, and for determining private climate finance; d)
an avenue to make the provision of international differences in the assumptions used in underlying
support more responsive to national priorities formulas for attributing finance from MDBs to
and needs (UNFCCC, 2023). Secondly, it can developed countries; and e) the classification of
help coordinate donor strategies, enhance sustainable or green finance (UNFCCC, 2021b)
transparency about the geographical and Strengthening sources of data is needed for
sectoral distribution of support received, and African countries to effectively report under the
facilitate the steering of budgets towards climate ETF on their climate finance needs and support.
action (UNFCCC, 2023). Domestically, having
an accurate understanding of climate finance The connections between transparency, MRV
received can help countries plan and prioritize systems and accessing and mobilizing climate
subnational budget allocations while improving finance, both domestically and internationally,
decision-making and accountability more broadly are considerable. As transparency is rooted
(UNFCCC, 2023). in building trust between climate actors by
providing clear and reliable information, it has
In relation to reporting on support needed and a defining role to play in helping countries
received, UNFCCC Decision 18/CMA.1 provides secure additional climate finance. For the many
guidance to Parties (Box 3, overleaf). Critically, it African countries where transparency frameworks
stresses the importance of describing underlying are incomplete or ineffective, this can create
assumptions, definitions and methodologies additional barriers to securing finance.
used, for example, by describing the tools or
methodologies used to collect data on finance
needed and received. It can also describe how
the country identified which sources or projects
fall under their definition/s of climate finance. A
key ETF modality, procedures and guidance (MPG)
principle mentioned here is ‘ensuring that double
counting is avoided’. This means, for example, that
the tools and methodologies used, or the way
climate finance is defined, or any assumptions

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 Box 3. Underlying assumptions,
definitions and methodologies
to apply to support needed and
received under the ETF
UNFCCC Decision 18/CMA.1 provides (g) Identify and report the channel
guidance to Parties on how to report (bilateral, regional or multilateral);
support needed and received that (h) Identify and report the type of
describes underlying assumption, support (mitigation, adaptation or
definitions and methodologies used. cross-cutting);
These factors are essential to indicate
(i) Identify and report the financial
as they make the information and data
instrument (grant, concessional
that is reported understandable because
loan, non-concessional loan, equity,
they explain the basis on which the
guarantee or other);
information is reported. The decision says:
(j) Identify and report sectors and
subsectors;
131. In reporting information on support
needed and received, developing (k) Report on the use, impact and
country Parties should describe the estimated results of the support
underlying assumptions, definitions needed and received;
and methodologies used to provide (l) Identify and report support
information on support needed and as contributing to technology
received, including, as applicable, those development and transfer and
used to: capacity-building;
(a) Convert domestic currency into (m) Avoid double counting in reporting
United States dollars; information on support needed and
(b) Estimate the amount of support received for the implementation of
needed; Article 13 of the Paris Agreement
and transparency-related activities,
(c) Determine the reporting year or time
including for transparency-related
frame;
capacity-building, when reporting
(d) Identify support as coming from
such information separately from
specific sources;
other information on support needed
(e) Determine support as committed, and received.
received or needed;
(f) Identify and report the status of the
supported activity (planned, ongoing
or completed);

Source: UNFCCC, 2018, Decision 19/CM.A1.

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Chapter 4.

Opportunities for scaling up

climate finance for Africa
Three Rondavels, South Africa © Lina Loos
Climate Finance in Africa

4.1. Strengthen climate planning,

budgeting and investment
frameworks
There are a multitude of approaches and tools and marks climate-relevant expenditures in
that can be utilized to improve climate planning, a government’s budget system, enabling the
budgeting and investment and which contribute estimation, monitoring and tracking of those
to opportunities for finance mobilization. Firstly, expenditures. It includes the process of attaching
developing NDC Implementation Plans and a climate budget marker, such as a tag or account
supporting the mainstreaming of climate and NDC code, to budget lines or groups of budget lines.
targets at sector level is vital to strengthening the It can be adapted to the context of national PFM
alignment between development planning and systems and climate change policy and seeks to
climate change action. Rwanda has integrated institutionalize, and make routine, expenditure
climate change into its national and sectoral analysis that draws on the CPEIR findings and
development plans and undertaken an exercise to recommendations. Budget tagging is important
fully mainstream its NDC into national, sectoral and because it helps countries understand government
district level development plans and budgets (IMF, allocations or existing spending while contributing
2023). to identifying the funding gap and under-resourced
priorities. This helps both in supporting the most
Effective tools to support governments to effective targeting of existing resources, as well
understand how they are contributing to climate as informing government’s efforts to mobilize
finance through domestic budgets include additional resources. CBT may also facilitate
CPEIRs and climate budget tagging (CBT)6 stronger interlinkages with other cross-cutting
systems. CPEIRs can provide a starting point to themes – for instance in supporting the inclusion of
mainstream climate change into public financial gender and poverty in climate expenditure analysis.
management (PFM). They are diagnostic tools that Lastly, budget tagging can serve as an incentive to
provide a qualitative and quantitative analysis national and subnational governments as it helps
of a country’s public expenditures and how they in identifying co-financing opportunities in order to
relate to climate change, its climate change plans mobilize additional climate funding (Allan et al., 2019).
and policies, institutional framework and public
finance architecture. Conducting a CPEIR will The data and analysis from CPEIRs can also be
examine relevant expenditure out of the total used to inform a NDC Investment Strategy or NDC
national budget and measure fiscal policies, such Finance Strategy.7 Such strategies should be rooted
as tax incentives and subsidies, as part of climate in national strategic and planning frameworks.
financing instruments. Developing a strategy will help determine NDC
investment needs and supporting activities that
CBT can also help countries mainstream climate unlock actions required to achieve NDC targets.
change in PFM. CBT identifies, classifies, weights Moreover, prioritizing NDC investment needs and
6
For CPEIR methodology, please see UNDP’s 2015 publication: A Methodological Guidebook: Climate Public Expenditure and
Institutional Review (CPEIR). For CBT methodology, please see UNDP’s 2019 publication: Knowing What You Spend: A guidance note
for governments to track climate change finance in their budgets. See UNDP’s 2022 report, Global Climate Public Finance Review,
for a global stock take study on the various tools/methodologies for climate finance (including CPEIRs and CBT).
7
For more information, see NDC Partnership’s 2023 guide: NDC Investment Planning Guide: Best Practices.

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 Climate Finance in Africa

gaps facilitates the channeling of financing into of NDCs within national planning and financing
areas with the most potential for mitigation and systems. INFFs are useful to identify linkages across
adaptation, as well as alignment with broader financing policy areas to maximize synergies
national priorities. Identified investment gaps and minimize incoherencies. Crucially, they use
can be assessed to understand if they are best a whole-of-economy approach that establishes
served by domestic public finance, international greater convergence between climate and
public finance, private sector investment, or a economic development as well as corresponding
combination of both. Examples of NDC Finance integrated financing systems.
Strategies that have been supported by UNDP can
be found in Ghana and Kenya. Lastly, SDG investor maps are another integration
tool that can bring together SDG and NDC
Integrated National Financing Frameworks (INFFs)8 investment needs. Like NDC Investment Strategy
are another important tool that could be utilized outcomes, SDG mapping can identify SDG-aligned
to assess finance for both SDGs and climate action. investment opportunity areas, many of which
For countries that have already developed INFFs, are highly relevant for NDC implementation. At
further climate specific analysis can be undertaken least ten countries in Africa have undertaken this
to deepen understanding on climate finance process.9
needs and gaps and to support the mainstreaming

Dar es Salaam, Tanzania © Peter Mitchell

8
For more information on INFF methodology and country experience see INFF Facility. For more information on INFF and climate
finance see Integrating Climate into INFF Process.
9
For more information see UNDP’s 2023 publication: UNDP Africa Investment Insights Report.

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Climate Finance in Africa

4.2. Locally led initiatives

Recognition is growing about the need to scale- GCF (e.g. Attijariwafa in Morocco, CRDB in Tanzania,
up the use of direct access modalities so that DBSA in South Africa, DBZ in Zambia, Ecobank Ghana,
African countries can access climate finance etc.) and the Adaptation Fund (e.g. Banque Agricole
through capacitated and empowered national and du Niger (BAGRI) that provide an avenue for local
subnational institutions, without passing through private sector entities to directly access climate
international intermediaries. However, as shown finance to invest in climate relevant sectors. There
in the previous section, there are several barriers is an urgent need for more national and subnational
to accreditation and the process can be slow and institutions to be accredited to access international
tedious. public climate funds, and for every African country
to have the option to access climate finance through
Despite the challenges, national institutions in effective national institutions.
Africa are proving that it is possible and beneficial
to become direct access entities or institutions. In The ‘principles of locally led adaptation’ were
Africa, seven national entities are accredited to the developed in 2021 and are increasingly being
GCF and nine national entities are accredited to the viewed as best practice for designing and funding
Adaptation Fund. adaptation interventions at the local level, with
many international institutions committing to
The Environmental Investment Fund in Namibia, them as an avenue to accelerate adaptation (IIED,
the Centre de Suive Ecologique (CSE) in Senegal, 2023b). Adaptation needs and vulnerabilities are
FONERWA in Rwanda and the South African National locally specific, and the communities and actors
Biodiversity Institute (SANBI) are all playing an on the ground are best placed to identify and
important role in accessing international climate implement the interventions needed to respond to
finance and channeling it to vulnerable communities their climate vulnerabilities. However, less than 10
on the frontlines of the climate crisis in their percent of climate finance flows to the local level,
countries. highlighting an opportunity to increase the share
of finance going there (IIED, 2023b). Several of the
In addition to national government institutions being tools described in section 4.1 above can be applied
accredited to these climate funds, several financial to deepening engagement with local levels and
institutions in Africa have also been accredited to the ultimately, channel funds there.

4.3. Mobilizing the private sector

The business and financial sectors globally and in sector actors and they can drive markets in more
Africa are becoming increasingly aware of the risks sustainable directions. To facilitate and accelerate
and opportunities associated with climate change, this trend, governments should provide a policy
and the role that they can play in being part of the environment that is conducive to and provides
solution. This is an evolution that has the potential incentives for low-carbon, climate-resilient
to be transformational, as these actors hold the investment, and to de-risk finance across multiple
key to much larger funding amounts than public sectors.

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 Climate Finance in Africa

Some concrete actions that governments can take to under the leadership of the National Treasury and
increase private sector participation in climate action a taxonomy working group comprising financial
include developing a sustainable taxonomy and sector stakeholders (Carbon Trust, 2022). Cabo Verde
a NDC project pipeline. Sustainable taxonomies10 was the first country to develop a blue taxonomy,
(also referred to as green taxonomies or blue alongside blue securities regulation, which were two
taxonomies), in the context of sustainable finance, is vital elements that preceded the issuance of the
a classification system identifying activities, assets, county’s first blue bond.
and/or project categories that deliver on key climate,
green, blue, social, or sustainable objectives with Another useful tool that can attract and match
reference to identified thresholds and/or targets investment is to develop a NDC project pipeline
(ICMA, 2021). Taxonomies are science-based and of bankable projects. This consists of translating
provide clear guidance to market participants to investment needs into specific investment projects
identify projects, assets and activities that are low- that are ready for financing and implementation. In
carbon or compatible with low-carbon economic the process of identifying NDC investment needs
development and/or environmental sustainability (through tools discussed in section 4.1) countries
and help avoid greenwashing. Developing a identified specific projects and activities at different
sustainable taxonomy can not only help direct stages of the investment cycle. For those at idea
investment but allows financial players to identify, stage, this means moving them to a place where
track and validate their ‘sustainable, green or blue they are project ready. These pipelines can also
activities.’ Such taxonomies should seek to strike speak to the sequencing of activities and investment
a balance between standardization (international over the short-, medium-, and long-term and
environmental sustainability standards, including identify those that are quick gains and those that
environmental, social, and governance (ESG) require more sustained engagement.
criteria) but also incorporate local context and
developments. Taxonomies can also serve as Lastly, the African private sector is dominated by
guiding documents for the disclosure and labelling small- and medium-sized enterprises (SMEs) that
of financial products and are used by market are constrained by access to finance but have
participants for asset, portfolio and entity-level massive growth potential. There is an opportunity
alignment approaches (e.g., transition plans), among to drive SME development in a climate-compatible
others. Importantly, national sustainable taxonomies direction that aligns it with NDC priorities through
in Africa should aim to be regionally interoperable, the provision of blended finance solutions. Blended
meaning they are based on similar guiding finance solutions can be provided at various levels,
principles, have design elements such as objectives, where international public finance could develop
classification systems for sectors and activities that a de-risk instrument so that local banks and other
are comparable and are similar in approaches and local financial institutions such as microfinance,
methodologies used for defining eligibility. insurance companies, equity funds etc. can offer
funding products and instruments that incentivize
In Rwanda, under the IMF’s Resilience and climate resilient and low-carbon investments by
Sustainability Facility, the country is undertaking SMEs. These modalities can also be used to scale-
reforms to catalyze further finance to build up already existing initiatives such as affordable loan
resilience to climate change. As part of this, and schemes for smallholder farmers to invest in climate
with additional support from GIZ, Rwanda is resilient farming practices, crop varieties, production
developing the first phase of its green taxonomy methods or technologies; equity funds that invest
that will provide clear signals about which projects in SMEs that provide climate smart technologies
and activities are aligned with the nation’s climate or services; and pay-as-you-go models for off-grid
goals (IMF, 2023). In doing so, it aims to direct private solar in rural areas, where regular payments for
financial flows to those climate actions. South Africa services are made over time for the equipment
completed its Green Finance Taxonomy in 2022 instead of fully upfront.
For more information and to see guidance developed for Latin America and the Caribbean region, see UNDP’s 2023 publication,
10

Common Framework of Sustainable Finance Taxonomies for Latin America and the Caribbean.

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Climate Finance in Africa

4.4. Enhance collaboration and

partnership
Within countries and externally, collaboration itself more strategically for high-integrity carbon
and partnership present several opportunities to markets.
increase capacity to mobilize and attract climate
finance. Internally, NDC Coordination Committees There are also ample opportunities for Africa to
can lead in improving institutional capacity and benefit from increased global and South-South
coordination issues related to climate change and partnership and learning. For instance, the Coalition
NDCs. Active and inclusive coordination structures of Finance Ministers for Climate Action, is a global
can strengthen countries’ ability to coordinate network that supports Finance Ministers to share
and prioritize climate action across the whole-of- best practices and experience on macro, fiscal, and
economy, which includes mobilizing finance and PFM policies. Specifically, it helps countries mobilize
investment. Codifying these structures can ensure and align the finance needed to implement climate
their mandate and membership is clear. action, establish best practices such as climate
budgeting and strategies for green investment
In relation to developing project pipelines, another and procurement, and factor climate risks and
strategy for enhancing access to climate finance in vulnerabilities into members’ economic planning.
Africa includes increasing support from international
organizations, including UN agencies, bilateral Finally, as scrutiny increases on the role of MDBs and
institutions and MDBs, to address technical or skills other key actors within the global financial system
gaps that can enhance the capacity of national and and calls for development finance reform heighten,
local actors to develop the project pipeline. This is there is an opportunity for African countries to
particularly important for carbon markets, to ensure bolster their engagement in this discussion, to
Africa leverages emerging opportunities, learning ensure African perspectives are captured so they can
from the weaknesses of the CDM and to position take advantage of any positive future reforms.

4.5. Increase diverse use of climate

finance instruments
There is a need to expand the use of climate Policy lending/policy development financing:
finance instruments to ensure that the correct tools Provided in the form of grants, concessional loans,
being used to respond to a country’s needs and or convertible instruments and aimed at supporting
are aligned to the country’s climate and financial policy formulation and implementation. This
management risk profile and the level of capacity could be targeted to help a country establish the
needed to support the implementation of the necessary enabling environment, generally with
proposed projects. These instruments include, but the view to attract climate related investment’s
are not limited to, the following: especially from the private sector.

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 Climate Finance in Africa

Advance market commitments: Performance-based payments:

An advance market commitment (AMC) is Pay for performance schemes have been applied
a binding contract, typically offered by a to achieve climate goals by creating incentives to
government or other financial entity, used to overcome governance challenges and implement
guarantee a viable market for a product once it is necessary policy changes and public actions
successfully developed or produced. They are a towards achieving adaptation and mitigation goals.
powerful policy tool that can be used to develop
climate technology fields or other innovative
climate ventures.

Climate investment lending/ green credit lines:

These are generally blended finance facilities
established by local banks and financial
institutions and dedicated to on-lend to ‘green’,
‘climate’ or ‘adaptation’ projects and programmes
through the financial system.

Thematic bonds (green, blue, social, sustainability,

climate or resilient bonds):
They represent debt financing mobilized from
the financial markets (international, regional
or national where in existence). While these
instruments have been gaining traction and grew
globally by $600 billion in 2021, and with further
potential to grow, Africa accounted for only 0.077
percent of the global green bonds market in 2021
(GCF, 2022).

Debt swaps:
A debt for climate swap is an agreement between
a sovereign debtor and one or more of its
international creditors by which the latter forgive
all or a portion of the debtor’s external debt in
exchange for a commitment by the debtor to
invest, in domestic currency, in specific climate
projects during a commonly agreed period.

Local currency finance and currency risk hedging

instruments:
Local currency financing tools provide the
opportunity to reduce the currency exposure and
minimize the risk for both borrower and lender.

Risk sharing instruments:

These types of instruments refer to a range of
finance tools available to take on and share some
of the risks that prevent projects and programmes
to be ‘bankable’. They are deployed to guarantee
the total or partial coverage of a defined risk, if
possible, in exchange for an agreed remuneration. Cairo, Egypt © Spencer Davis

Page 59
 Chapter 5.

Recommendations
Kigali, Rwanda © Reagan M.
 Climate Finance in Africa

5.1. Recommendations for

international public financing
institutions
1. DFIs, MDBs and climate change is effective11); taking first loss positions in equity
funds; or grant financing for results-based finance
funds should have a higher risk
models.
appetite

From the analysis, Africa needs more financial

2. Integration of climate change into
innovations and incentives to encourage the all development finance
participation of private capital in climate change
priorities. International financial institutions have Development finance to African countries should
a major role to play as they have the financial be structured to ensure investments do not
muscle to absorb more risk rather than passing the aggravate climate impacts or increase GHGs. This
investment risk to private entities. These institutions is of critical importance to MDBs which routinely
can also drive innovation around climate change finance a range of development projects but don’t
solutions, including through blended finance always consider climate risk and opportunities.
structures in which the DFI, MDB or climate fund
takes on a higher risk position to de-risk private 3. Enhance the capacity of national
sector investment. This type of finance can be and subnational government actors
transformational. A public finance de-risking
to take lead in mobilizing climate
contribution enables the private sector to invest
in projects or markets that would otherwise be
finance
viewed as too risky. Thus, a relatively small amount
The localization of climate action is of critical
of public finance, used strategically, can unlock a
importance if the actions are to be locally relevant
significant quantity of private finance. Once the
and have a greater stakeholder buy-in. Increased
market is unlocked and the private sector actor
effort is needed to promote the participation of
becomes more familiar and comfortable with the
local entities as drivers of climate change action,
market they can continue to finance and engage
especially through strengthening their direct
in the future without the need for public finance
access to climate finance. This can be achieved
contribution.
through better and scaled-up use of direct access
modalities and more investment in institutional
De-risking finance can take many forms, e.g.,
strengthening. Prioritizing direct access to
guarantees to banks or funds that cover part of the
climate finance through national and subnational
risk in the event of a default, allowing the lender or
institutions over international institutions should
investor to take on more risk; concessional credit
be actively facilitated by MDBs and climate change
lines to banks (often along with a grant element to
funds.
provide technical assistance to ensure the finance

11
For example, the grant element could allow them to on-lend to farmers for climate-smart agricultural practices or technologies,
or to provide lease-to-own financing models for equipment like solar pumps, solar panels, water-smart irrigation systems, and the
subsidy of insurance premiums for climate insurance schemes.

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Climate Finance in Africa

4. Reform adaptation finance to actors at local level (communities, CSOs, farmers,

cooperatives, micro businesses, etc.) to access
align with the principles of locally
funds at a scale and on terms that align with their
led adaptation needs and absorptive capacities.

For climate adaptation needs to be addressed at

the local level where the impacts are experienced,
5. Increased investment in project
adaptation measures should be decentralized, preparation and piloting of new
facilitating decision-making around local solutions approaches through grant funding
to local vulnerabilities. This recommendation can (or reimbursable grants)
potentially have a major impact if it is implemented
gradually to allow for local entities to grow their Developing a climate change project pipeline
capacity for stakeholder engagement and project requires substantial financial resources, especially
and financial management. An initial investment in countries with limited local data on climate
is likely needed to build capacity and strengthen vulnerabilities and emission levels. Therefore, key
institutions at the local level. Entry points include investments in supporting the development of a
using national and subnational institutions (both climate change/NDC project pipeline are needed.
government and financial institutions) to run This level of support can be used to pilot innovative
small grant programmes, results-based grant ideas to gauge their acceptability and relevance in
programmes, revolving funds, or micro-loan addressing local climate change challenges.
or micro-insurance programmes that enable

5.2. Recommendations for African

governments
1. Improve coordination and Coordination Committees and NDC stakeholder
platforms can be effective mechanisms, especially
planning between climate change
if codified, to continuously bring these actors
actors to the table to agree on shared climate change
goals and to make sure they are reflected in
Better coordination and planning around
relevant sector plans, policies and strategies.
climate change priorities and targets is needed
NDC Implementation Plans can support in
both to ensure buy-in and action across the
prioritizing and sequencing climate action across
whole-of-economy and to signal priorities for
these sectors and actors. Importantly, improved
climate finance and investment. Having clear
leadership, coordination and planning will support
and mandated institutional leadership and
prioritizing low-carbon development pathways
coordination of climate action and to oversee
and to ensure that these transformational changes
the NDC update and its implementation is vital.
are done synergistically and cost-effectively with
There is a need for governments to strengthen
other national development and growth priorities.
coordination mechanisms for all actors
A strong institutional enabling environment around
including ministries of finance and planning,
climate action will build confidence for potential
sector ministries, private sector, civil society,
investment, signaling a country is prioritizing low-
development partners and local governments.
carbon development and climate resilience.
Coordination mechanisms such as NDC

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 Climate Finance in Africa

2. Track climate finance at the establishing strong macroeconomic management,

clear and conducive regulation for climate
national level
investment, and incentives for climate investment
and disincentives for non-climate friendly investment.
Tracking climate finance from both domestic and
Measures to support this include developing green
international sources is a major challenge for African
taxonomies, eliminating fossil fuel subsidies, reducing
governments. Weak finance tracking limits the ability
import tax duties on climate technologies introducing
of government to report on its climate actions as well
vehicle emission standards and energy efficiency
as understand major financing gaps and investment
standards for appliances, and considering tax
needs. Strengthening or reforming PFM to facilitate
incentives for certain clean industries, among others.
the tracking and further integration of climate change
into national budgets through tools such as CPEIRs
In addition, where there are strategic priorities,
and CBT has proven effective. This requires strong
governments should utilize blended finance
engagement from ministries of finance to ensure that
modalities to de-risk investment. Allocating seed
all sector ministries ‘climate proof’ their budgets. The
funding for pilot projects or proof of concept and
national budget, even if limited in scale, is a powerful
galvanize development partners or private sector to
tool for driving the direction of climate investment.
engage and scale up the initiative. Governments can
While countries don’t necessarily need to reallocate
allocate funds through their development finance
funds away from priority sectors to climate, they can
institutions (e.g., national development banks (NDB)
ensure that existing allocations are implemented
or climate funds) to de-risk initiatives, such as by
in ways that support low-carbon development
providing a guarantee through an NDB to promote
pathways and enhance climate resiliency.
commercial banks to lend to small businesses in
Additionally, tracking climate finance domestically
climate-compatible sectors. This kind of strategic use
will support national reporting under the ETF and
of limited public budgets can leverage small amounts
contribute to a stronger transparency framework.
of funding for greater development and climate
impact.
3. Develop or strengthen climate
investment frameworks

Having a robust climate investment framework

that lays out a well-defined set of investments and
activities to understand where needs and gaps exist
is crucial to accessing climate finance. Developing
NDC Investment Strategies, NDC Finance Plans, and
project pipelines all serve as tools to strengthen
climate investment frameworks. To drive coordination
between financing policy and sustainable
development objectives, many African governments
have chosen to develop INFFs, which can also be
expanded to connect directly to a country’s NDC.

4. Strengthen the enabling

environment for climate investment

Uncertain policy and regulatory environments

coupled with weak economic management
challenge private sector investment in climate action.
Governments can aim to build the confidence of
private investors and lower perceptions of risk by
Pretoria, South Africa © Sipho Ndebele

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Climate Finance in Africa

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United Nations African Union

Development Programme
(UNDP) P.O. Box 3243,
Roosvelt Street W21K19
1 UN Plaza Addis Ababa, Ethiopia
New York, NY 10017, USA
au.int
undp.org climatepromise.undp.org
@UNDP @UNDPClimate

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