Despite needing $277 billion annually to meet its climate goals, Africa receives just 12% of that sum, less than 5% of global climate finance. In this in-depth analysis, we uncover the systemic barriers throttling access, from risk-averse investors to red tape in international climate funds, and spotlight scalable solutions led by African innovators. With the continent’s future on the line, rethinking climate finance is no longer optional, it is imperative. In this report, explore why Africa still waits, what is broken, and how climate finance reform can unlock a just, resilient future aligned with the SDGs.
By Ethical Business Staff Writers
Published: May 2025
In the race to tackle climate change, money talks. Yet for Africa, the continent most vulnerable to climate shocks, climate finance remains elusive. According to a 2023 report by the African Development Bank, despite bold global commitments, Africa receives only 12% of the climate finance it needs. Why the gap? Why the wait? And what must shift to unlock these critical funds? So, what is holding things back? Why does Africa keep getting shortchanged – and what needs to change to fix it?
In this special report, Ethical Business unpacks the inherent barriers – structural, political, and financial – that stand in the way. More crucially, we explore what it will take to ultimately open the taps and underwrite Africa’s climate future, justly, urgently, and at scale.
Climate finance gap: Why Africa is still waiting
Africa needs an estimated $277 billion every year by 2030 to tackle climate change and meet its climate targets, according to the African Development Bank (AfDB). But in 2022, the continent received just $30 billion, barely 15% of what is needed.
Zooming out, the imbalance becomes even clearer. Despite total global climate finance reaching $600 billion, Africa’s share was less than 5%.
Adding to the challenge, private investment in climate finance remains scarce. Globally, the private sector contributes nearly half (49%) of climate funding. In the continent, that number drops oddly to just 14%, according to the Climate Policy Initiative’s 2023 Global Landscape of Climate Finance report.
What is holding Africa back?
After reviewing multiple reports from institutions such as the Organisation for Economic Co-operation and Development – Development Assistance Committee (OECD DAC) and the United Nations Environment Programme Finance Initiative (UNEP FI), and the African Climate Policy Centre, Ethical Business identified three key barriers preventing African countries from accessing climate finance effectively.
1. Perceived risk
African countries are often categorized as high-risk investment destinations, a label shaped largely by global credit rating agencies. However, these assessments frequently rely on outdated data or biased methodologies, failing to reflect the true realities and potential on the ground. As a result, promising climate and development opportunities across the continent are unfairly overlooked, with international investors deterred not by facts, but by perception.
“Africa’s credit ratings are more reflective of bias than balance,” notes Dr. Akinwumi Adesina, President of the African Development Bank.
2. Weak institutional and technical capacity
Accessing climate finance is often an exceedingly intricate process.
“A lack of climate finance readiness undermines even the best climate policies,” a United Nations Economic Commission for Africa (UNECA) 2024 reported observed.
Funds like the Green Climate Fund (GCF) and Global Environment Facility (GEF) require applicants to orbit complex proposal and endorsement procedures. Presently, only a small number of African institutions are authorised to receive funding directly. As of 2023, just 16% of the GCF’s disbursements have gone directly to African countries, with project approvals typically taking 18 to 24 months.
3. Limited project readiness
Many African nations struggle with climate finance readiness. They often lack the necessary technical know-how, data, and a catalogue of well-prepared, bankable projects to attract funding. As yet, only six African countries have developed strong national climate finance strategies aligned with Sustainable Development Goal 13 (Climate Action).
Multilateral climate funds: Lifelines or bottlenecks?
Funds like the Green Climate Fund (GCF), Adaptation Fund, and the World Bank’s Climate Investment Funds were created to support climate resilience and green transitions in developing regions. But for many African countries, they have become more of an impediment than a shot in the arm.
As of 2024, only five African national entities are accredited to access the GCF directly. Much of the funding is routed through large international intermediaries, limiting the autonomy of local governments and innovators. The result? African voices often have the least sway over climate investments meant to serve them.
Changing the game: What can actually work
1. De-risking investment
To unlock more climate finance, Africa needs smart financial tools that reduce risk for private investors. Blended finance mechanisms, such as guarantees, first-loss capital, and political risk insurance, can make green investments more attractive.
A case in point is the African Development Bank’s Sustainable Energy Fund for Africa (SEFA) that has catalysed over $2.5 billion in private investment by offering concessional capital.
2. Building local green banks
National green investment banks or climate finance facilities, like Rwanda’s Green Fund (FONERWA), demonstrate how domestic climate finance mechanisms can fast-track access, manage funds locally, and build trust. They reduce red tape, enhance accountability, and increase the efficiency of resource use.
3. Simplifying access to global climate funds
Streamlining accreditation processes for African entities is vital. Intensifying technical assistance can help governments design strong proposals and develop a robust pipeline of bankable projects.
4. Aligning projects with SDGs
Investors progressively want impact. By aligning climate projects with the Sustainable Development Goals (SDGs), our countries can fortify their appeal. For example, a solar-powered irrigation initiative supports SDG 7 (Clean Energy), SDG 2 (Zero Hunger), and SDG 13 (Climate Action), making it more probable to attract funding.
Local innovation leading the way
A successful case study is Rwanda’s Green Fund (FONERWA), which has financed 44 green projects, mobilised over $200 million, and created 150,000 green jobs. Another is Kenya’s Climate Finance Policy, launched in 2023, integrates climate considerations into national budgeting and aims to attract $5 billion by 2030.
Meanwhile, Senegal’s 2024 sovereign green bond raised $150 million to support sustainable agriculture and coastal resilience.
The SDG imperative: Why it matters
In the pursuit of a more sustainable and equitable world, climate finance has emerged not as a luxury, but as an absolute necessity. At the heart of the Sustainable Development Goals (SDGs) lies an urgent imperative: without bold and inclusive investment in climate resilience, progress on nearly every global goal will stall, or worse, unravel.
Today, the greatest barrier to climate action remains the lack of finance. Without adequate funding, innovation is stifled, clean technologies go undeveloped, and industries struggle to transition. This directly impedes SDG 13 (Climate Action) and SDG 9 (Industry, Innovation, and Infrastructure), placing the planet’s future, and economic transformation, in jeopardy.
Equally concerning is the inequitable access to available climate funds. Many of the nations and communities most vulnerable to climate change, particularly across Africa, find themselves locked out of the global finance system. This fuels further inequality, undermining efforts to achieve SDG 10 (Reduced Inequalities) and SDG 17 (Partnerships for the Goals), goals meant to ensure no one is left behind.
Meanwhile, poor infrastructure continues to hold back sustainable development across cities and rural areas alike. Without reliable energy grids, clean transportation, and resilient urban systems, achieving SDG 11 (Sustainable Cities and Communities) and SDG 7 (Affordable and Clean Energy) remains out of reach for millions.
The message is clear: Investing in Africa’s climate future is not just critical; it is vital to realising the full promise of the SDGs. Climate finance must become scalable, inclusive, and immediate. Only then can we unlock a sustainable future that works for everyone, everywhere. The time to act is now.
Finance with justice
It is callous the continent contributes the least to the climate crisis, yet bears some of its heaviest burdens, and gets the least support. Bridging the climate finance gap demands more than practical solutions. It requires a shift in mindset: one that redefines risk, empowers local institutions, and reimagines global funding systems to prioritise equity over mere efficiency.
As the world moves toward a just transition, climate finance should not linger at Africa’s doorstep. It must walk through, boldly, urgently, and with purpose.
This article supports SDG 13 (Climate Action), SDG 17 (Partnerships), and SDG 10 (Reduced Inequalities), among others.
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