Climate Finance

Climate Finance: Fuelling Africa’s Climate Ambition

Climate finance enables financial flows and instruments from public, private, and alternative sources to support climate mitigation (emissions reduction) and adaptation (resilience building). It underpins transformational investment across sectors such as clean energy, agriculture, infrastructure, and ecosystem restoration. Developed countries have pledged to mobilize new and additional support to developing nations to help them meet their climate goals, bridging the gap between ambition and implementation.

Unlocking Flows for Adaptation and Mitigation

Despite being one of the most climate-vulnerable regions, Eastern Africa receives less than 5% of the global climate finance it requires. Innovative approaches are beginning to change this: Ethiopia’s Climate Resilient Green Economy (CRGE) strategy is leveraging donor support for resilience, while Rwanda and Kenya are piloting green bonds to mobilize private capital.

Blended finance, carbon levy reinvestments, and Article 6 revenues represent further untapped opportunities. The challenge and opportunity is to create financing structures that can move beyond pilot projects to large-scale impact. Climate finance is not charity; it is investment in resilience and growth. Eastern Africa can demonstrate leadership by blending public, private, and market-based finance to deliver measurable results for people and the planet.

Strategic Priorities & Emerging Trends

Eastern Africa could turn climate finance into real impact through;

  1. Scale Blended Finance Approaches
    Use concessional capital, guarantees, and public support to mobilize institutional investors. For instance, the World Bank’s Blended Finance Facility and Risk Mitigation Facility are proving valuable in unlocking private investment in climate-smart agriculture, renewables, and resilience projects.
  1. Advance Dual-Benefit, Integrated Solutions
    Projects that deliver both mitigation and adaptation maximize return on every dollar. Decentralized renewable energy systems, sustainable agriculture practices (like agroforestry), and climate-smart building design are prime candidates for integrated investment.
  2. Leverage Carbon Markets
    As Article 6 and voluntary markets mature, revenue from carbon credits can be blended with concessional finance to make projects viable. Eastern Africa has latent potential for carbon levy reinvestments and redirected carbon flows.
  3. Enhance Institutional & Technical Capabilities
    Closing gaps in pipeline development, financial modelling, credit appraisal, and governance is essential to attract large-scale climate capital. Technical assistance must be scaled in parallel with financing deployment.
  4. Innovation in Climate Instruments
    Climate impact bonds, resilience impact funds, and outcomes-based payment schemes are emerging globally. Eastern Africa could pilot these models to diversify financing beyond grants and loans.