Ethiopia has 14 times less climate finance than it requires, according to research conducted by FSD Africa partnering with Climate Policy Initiative (CPI). An average of 1.7 billion dollars, which translates to seven percent of the 25.3 billion dollars Ethiopia's estimated needs were committed towards climate change-related activities three years ago. The figure is less than two percent of the country's GDP. This was disclosed at a knowledge series event hosted by FSD Ethiopia at Sheraton Addis Hotel two weeks ago. About 92pc of the climate finance landscape in Ethiopia is funded by international public financiers of which 70pc is gained through grants while the rest is covered by domestic and international private investors. Based on the findings, the paper made policy and regulatory recommendations for the National Bank of Ethiopia to support the development of capital markets, address forex shortages, establish a favourable collateral policy for smallholder farmers and small and medium-sized enterprises (SMEs), offer favourable lending terms to microfinance institutions, and expand mobile banking services. Established in 2021, FSD Ethiopia is a market facilitator that supports and works with the government, the private sector and civil society organizations in the areas of financial inclusion, access to capital, and climate finance, to address the root causes of financial system failures.
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