Africa's Climate Finance Challenges: Reflections on Africa Climate Summit and Africa Climate Week 2023

The #AfricaClimateSummit23 and #AfricaClimateWeek taking place this week in Nairobi, Kenya, present a timely opportunity to reflect on Africa’s climate finance challenges and opportunities in the lead-up to #COP28. Climate finance is still undoubtedly one of Africa’s most significant challenges. COP27 closed with yet another pledge to scale up climate finance support to developing countries. Despite this pledge, climate finance inflow into Africa has not changed much. Africa is still one of the world’s most vulnerable regions to climate change and still has contributed the least to greenhouse gas emissions (GHG) globally. ¹² In comparison to the top ten developed economies, with 75% of global economic output as measured by GDP that emit two-thirds of annual global GHGs,³ Africa’s contribution to global GHGs stood at less than 4% as of 2020 (Chart 1 Panel A). Overall, Africa’s CO2 emissions per capita have barely increased over the past three decades despite the two-fold increase in the sub-region’s population from 509 million people in 1990 to 1.11 billion in 2019.

Yet Africa still faces a huge financing gap: Conservative estimates indicate that Africa needs US$250 billion annually in both conditional and unconditional financing between 2020 and 2030 to implement its NDCs under the Paris Climate Agreement (Chart 3)⁴. This climate financing gap is separate from Africa’s other infrastructure financing needs. 86% of current reported climate finance annual inflows come from public finances, mostly from multilateral development finance institutions, and only 14% from the private sector.⁵ Additionally, the structure of existing climate finance continues to perpetuate more significant inequities as much of the funding is disbursed as loans, which represent 71% of public climate finance, and not as grants.⁶

What Africa requires to finance its technological and societal transformation for a net-zero, climate-resilient future is novel forms of finance provided at no to low cost. Grant-based or highly concessional finance and private financing clearly need to be stepped up. While there is scope to use climate mitigation financing to increase the renewable energy penetration in the energy mix, such novel financing should prioritize more adaptation-related financing.

Read more on the key findings of our Climate Finance in Africa: Needs, challenges, and opportunities to deliver the financial resources needed to drive a just transition here.