Africa Reimagines Climate Finance

Mar 14 , 2026
By Saliem Fakir

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For years, climate action in Africa often arrived as a project, not a system and as an outside prescription, not a domestic priority. Investment platforms like the one in South Africa signalled a different approach, one built around bankable projects, lower capital costs and financing that reaches deeper into the real economy. In this commentary provided by Project Syndicate (PS), Saliem Fakir, founder and executive director of the African Climate Foundation, writes that the model is still young, but the shift in design is already visible.

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Africa is taking control of its climate future. Unable to count on foreign aid and traditional development finance to meet its needs, the continent is mobilising investment using new models that integrate climate initiatives with development objectives.

This is not merely a matter of repackaging old approaches but a fundamental change in how climate action is designed and delivered across Africa.

When climate finance first emerged in the 1990s, it was shaped by the principles of responsibility and assistance, with developed economies expected to support their developing-country counterparts through financial transfers. Early climate finance was oriented largely toward mitigation and structured through project-based mechanisms that reflected donor priorities rather than recipient needs.

The Clean Development Mechanism (CDM), established under the 1997 Kyoto Protocol, exemplified this approach. The Mechanism allowed industrialised countries to invest in projects that reduced emissions in developing economies, rather than pursuing more expensive emissions reductions at home, regardless of whether the projects aligned with countries' development pathways or adaptation needs.

As the climate regime evolved, the shortcomings of this early approach were acknowledged, and the scope of climate finance broadened to include adaptation and longer-term financing commitments. The 2015 Paris climate agreement's introduction of Nationally Determined Contributions was a particularly promising step, as it explicitly sought to align financing with countries' development strategies.

In practice, however, the climate-finance model in Africa remained largely unchanged. Climate action continued to be tied to soft power, funded by official development assistance, and implemented largely on a project-by-project basis. And mitigation continued to take precedence over adaptation, despite Africa's acute vulnerability to the effects of climate change.

More fundamentally, outside actors, such as governments, NGOs, and development agencies, continued to base decisions on their own perceptions of climate risk, imposing solutions that did not reflect African priorities or perspectives. While individual projects might have sometimes delivered localised benefits, they consistently failed to close infrastructure gaps, let alone strengthen state capacity or transform markets and economic ecosystems.

These weaknesses were exacerbated during the COVID-19 crisis, when flows of climate finance to Africa stagnated, and they were not resolved in the pandemic's wake, even as flows rebounded. According to the Climate Policy Initiative, climate finance to Africa surged by 48pc between 2019-20 and 2021-22, from 29.5 billion to 43.7 billion dollars, driven largely by renewed multilateral engagement and a partial recovery in private investment.

This recovery mirrored a broader global rebound. Worldwide climate finance surpassed two trillion dollars for the first time in 2024, representing approximately eight percent growth year on year. Nonetheless, this was still slower than the 15pc growth recorded between 2022 and 2023, reflecting headwinds including elevated interest rates, lower natural-gas prices, and grid infrastructure constraints. And Africa's share of the pie has not kept pace with overall growth.

There has also been a shift back toward mitigation-oriented investments. In 2019-20 and 2021-22, the share of total finance dedicated to adaptation in Africa declined from 39pc to 32pc, owing largely to the expansion of dual-benefit finance that combines mitigation and adaptation objectives. While this dwarfs the share elsewhere, including Latin America, South and Southeast Asia, and the Middle East (one percent to 14pc), the total remains insufficient to safeguard African countries from rapidly escalating climate impacts.

The largest increases in climate finance in 2024 occurred in transport, particularly electric vehicles, making them mitigation-focused, with China, Brazil, Vietnam, and Indonesia leading the way.

Faced with stagnating adaptation financing and intensifying climate impacts, Africans are taking matters into their own hands, devising new approaches to climate finance that better reflect their needs. One prominent example is South Africa's "Just Energy Transition Partnership", a pioneering investment platform that seeks to align climate-related finance, particularly to support decarbonising the energy system, with broader strategies for economic development and growth.

Since the concept's introduction at the 2021 United Nations Climate Change Conference in Glasgow (COP26), Indonesia, Vietnam, and Senegal have followed South Africa's lead in signing JETPs with the advanced economies of the International Partners Group.

As the Africa Expert Panel noted in a recent report, investment platforms like JETPs provide a structured mechanism for identifying bankable projects and reducing the cost of capital. This can reduce debt-related pressures, while mobilising larger, more diversified sources of climate and development finance that would otherwise remain out of reach.

To be sure, important challenges still lie ahead. When both first-order (civil and political) and second-order (social, cultural, and economic) rights are at stake, no single program or platform can deliver inclusivity, not even one that, like the JETP, is designed to promote justice and equity. Instead, a more inclusive economy requires broader political and institutional reforms, supported by political, financial, and economic elites who adopt an enlightened, long-term perspective.

But JETPs can bolster this effort. Embedding social-justice considerations in investment frameworks, including project selection, evaluation, and management, would support gradual system-wide change. As such, JETPs represent a truly transformative model of climate financing, which is aligned with countries' needs and interests.

Although the climate-investment models African countries are embracing remain in the early stages of development, they are already opening up new modes of engagement that are firmly anchored in the real economy. As they mature, they promise to mobilise larger amounts of new and concessional capital, exactly what Africa needs to sustain investment and productive capacity, support economic resilience amid climate and macroeconomic shocks, and advance long-term development objectives.

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PUBLISHED ON Mar 14,2026 [ VOL 26 , NO 1350]

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