Why climate finance in Africa is an execution challenge, not a capital one
Global climate capital now exceeds $1.3 trillion annually, yet Africa receives less than 3%.
$43.7 billion
Climate finance flows to Africa (2021–2022 average).
+48% increase from 2019–2020 levels.
What this tells us
Progress is real.
Scale remains limited relative to global flows and continental need.
Even after rapid growth, Africa’s climate finance remains structurally small in absolute and relative terms.
Africa’s climate finance is growing, but from a low base $43.7
Climate finance is mostly debt
60%+ of global climate finance is delivered as debt
(loans, guarantees, credit instruments)
What this tells us
Climate finance is already shaped like banking.
The dominant instrument globally is debt, which requires:
underwriting
portfolio management
repayment discipline
capital recycling
These are functions banks already perform at scale.
Deploying climate and blended finance is not frictionless.
The effective cost of deploying capital commonly absorbs 5–10% of committed capital before funds reach end borrowers.
What this tells us
Delivery efficiency matters.
This means:
slow deployment materially reduces impact
idle capital carries a real opportunity cost
highly bespoke or parallel structures struggle to deliver value for money
Climate finance models that ignore deployment costs or assume frictionless execution are therefore misaligned from the outset.
The cost of deploying climate capital
Africa’s financial system is large, but climate finance often bypasses it.
CGA estimates Africa has around $2.4 trillion in domestic bank, insurance, and pension assets under management, yet international sources provided 87% of tracked climate finance in Africa (2021/22).
By 2050, Africa’s population is projected to reach 2.5 billion.
Globally, SMEs represent 90% of businesses and more than half of employment, they are the core channel for jobs and income growth.
If climate finance is serious about livelihoods and productivity, it must reach SMEs at scale.
Africa’s growth will be financed through SMEs, or not at all.
The win condition is commercial sustainability + concessional catalytic support.
Blended Finance That Respects Commercial Reality
Blended finance works when concessional capital is used to de-risk, accelerate, and crowd in commercial balance sheets, without creating structures that are too complex to execute or too slow to deploy.
Climate finance scales when it is built around the financial sectors underwriting, governance, and operating cadence, because that’s where repeatable deployment lives.