Africa and Climate Change: Climate Funds and The Path to Green Energy

Introduction

Climate change cases are not limited to the African continent, but rather it is a global issue. In line with this matter, numerous studies, conferences, seminars, and research work have been held at various periods. However, this issue is still hot and very crucial, particularly for many Africans so far. Some studies highlight the huge vulnerability of Africa due to climate change by citing Ethiopia as the best example a decade ago. Ethiopia is also currently promoting its Green Legacy Initiative, which aims to plant a target of approximately 40 billion seedlings nationwide. This is perhaps a good lesson for other African countries as well as worldwide. Not only through the Green Legacy initiative, but Ethiopia also leads the way by hosting the second Africa Climate Summit from 8-10 September 2025 in Addis Ababa, Ethiopia. According to some official resources, the participants of this second Africa Climate Summit are estimated to be 25,000 individuals from different continents, including state heads, ministry-level officials, representatives from the private sector, and any interested individuals on climate matters. On the other hand, major resources revealed that Africa contributes the least to the problem yet pays among the highest costs. The continent accounts for roughly 3–4% of global CO₂ emissions from fuel combustion, despite being home to about 17% of the world’s population.

This insight focuses on the impact of climate change on Africa and the climate funds promised by developed countries that have yet to be funded, and the way out of these issues in the light of green energy-based solutions.

The  Burden: İmpacts Across Society, Economies, and Politics

Warming and extreme weather are intensifying across Africa, with heatwaves, heavy rains or rainfall behavior change, floods, cyclones, and prolonged droughts now recurring. The World Meteorological Organization (WMO) estimates that climate-related impacts result in average annual losses of 2–5% of GDP for African countries. The WMO reports illustrated that the crisis of climate change forced various governments to allocate approximately 9% of their budgets to manage these climate issues. Additionally, economic analyses show that during drought years, insufficient rainfall leads to significant declines in the agricultural sector, as seen in Ethiopia. Such consequences create a lot of multiple effects, such as food-security problems, poor public health facilities, a lack of sufficient infrastructure across various sectors, and cross-border migration, among others. So far, as a result, climate risk has shifted from being merely a development issue to a significant national security and governance challenge.

The socio-economic effects are devastating. “Agriculture, which is the mainstay of Africa’s livelihoods and national economies, supports more than 55% of the labor force,” is at high risk nowadays. Studies revealed that, since 1961, productivity has declined by 34% as a consequence of climate change. As a result, agriculture, on which a vast portion of Africans depend, nowadays faces unpredictable rainfall and pest outbreaks that are leading to a decline in yields and revenue each year. On the other hand, sometimes the increased frequency of high, unexpected rainfall due to climate change has also caused urban flooding, which damages the lives of residents and transportation flows, causes an increase in the price of food products, fuels, and disrupts employment in public and private sectors as well.

Consequently, in Africa, over 600 million people still lack access to reliable electricity, heightening their vulnerability. This affects essential services such as cooling during heatwaves, maintaining the cold chain for vaccines, and fostering digital or industrial growth, all of which are severely hindered, leading to low quality standards of life for vast portions of the African nations. These effects not only create socio-economic gaps but also lead to political shocks, strain fiscal resources, heighten public dissatisfaction, and can spark conflicts over land and water resources.

One of the key objectives of Agenda 2063 for Africa is to develop modern agriculture that enhances productivity and production, to end hunger, achieve food security, improve nutrition, and promote sustainable agricultural practices. Thus, to achieve this goal, addressing the climate change issue seriously and resolving it as soon as possible is crucial for Africans.

What it’s Costing—Funds, Lives, and Lost Opportunities

While exact continent-wide mortality figures fluctuate depending on the event and data source, the economic impacts are already evident. Analyses by the WMO and UN indicated that sub-Saharan Africa requires between US$30–50 billion annually for adaptation efforts. This fund has been utilized for climate-sensitive sector projects supporting initiatives such as early warning systems, resilient infrastructure, climate-smart agriculture, and effective water management, among others. According to different reports, actual adaptation financing for developing countries fell to approximately US$21 billion in 2021; however, this resulted in a global adaptation finance shortfall budget estimated at US$194–366 billion per year, with Africa being one of the most underfunded regions.

As a strategy and policy constraint in African governments, public sector budgets are very limited, and private financing remains idle, particularly for adaptation efforts at large. The costs associated with loss and damage—impacts that cannot be mitigated—are increasing. Although the new Fund for Responding to Loss and Damage has been established, pledges had only reached around US$768 million as of April 7, 2025. While symbolically significant, this amount remains far below the needs of the continent. According to the Paris Agreement, Africa will require around USD 2.8 trillion from 2020 to 2030 to fulfill its NDCs. Additional sources, including the African Development Bank, indicate a rising trend in climate-directed resources (estimated at US$3.6–5.8 billion in recent years) and estimate a need of US$2.6–2.8 trillion by 2030 to accomplish Africa's climate commitments—figures that highlight the substantial concessional finance needed to prevent debt stress.

Why Green Energy is Central to the Solution

Green energy and sustainable development-related projects get significant interest worldwide, even though the tangible action towards such initiatives is limited. From such initiatives, clean green energy and climate finance were a few of them. The 2nd Africa Climate Summit (ACS-2), which took place in Addis Ababa, Ethiopia, from September 8 to 10, 2025, was thoroughly discussed on these themes and among others. This conference aims to unite African leaders, scholars, policymakers, youth, and global partners, among others, to address African challenges with African solutions. Africa is abundant in natural resources, which are well-suited for nature-based solutions, renewable energy, and sustainable development. However, this potential can be fully realized through sound strategic policies and comprehensive plans that leverage indigenous knowledge and funding from both the government and society, as demonstrated by the GERD project in Ethiopia. Such an approach helps the African continent and African's to attain the AU goals of the “Africa takes full responsibility for financing her development Goals” agenda of 2063.

A just, pro-growth response hinges on clean energy. According to the report of the International Energy Agency (IEA), Africa’s energy and climate goals, annual energy investment is expected to increase to US$190 billion during 2026–2030, with two-thirds to clean energy. In 2024, total energy investment reached approximately US$110 billion, with the majority still directed towards fossil fuel supply and power generation. Bridging this investment gap presents numerous advantages: it will lead to increased job opportunities, promote industrialization, enhance resilience through initiatives such as modern-agro industry irrigation, power plants for cooling, digital financial technology, and reduce import expenses at most. This momentum is building in the sector, particularly with the acceleration of solar deployments; by 2030, Africa is expected to see a significant surge in imports of affordable solar panels within the intragovernment market. These methods enhance the impact of declining costs and favorable policy reforms, which are driving expansion across various scales and strengthening value-added program creation—from large utility-scale plants across continents, the northern, southern, western, to eastern regions, to off-grid and mini-grid systems. The investment relies on highly skilled and value chains financing based on the renewable energy, e-mobility sectors, and green growth has the potential to create millions of jobs by 2030.

What Must Happen Now: A Climate-Finance and Policy Package

Associated with a climate-finance and policy package currently it supposed to implement the following steps as much as possible;

1) In line with the African solution to Africa-problem approaches for finding solutions to fund itself and increasing the availability of predictable concessional finance and de-risking tools side by side as well. In addition, donors and multilateral funds should enhance grant and highly concessional flows aimed at adaptation and social protection.

2) To address the US$2.7 trillion by 2030 and the USD$278 billion per annual need, Africa and counterparties must utilize a balanced and sound strategic structure with a mix of funding sources. This should include a combination of sovereign funds, multilateral development banks (MDBs), philanthropic contributions, and private investments through FDI, among others, with a greater focus on adaptation and addressing loss and damage, beyond the current pledges. Additionally, we should align sovereign debt treatments, such as implementing climate-resilient debt clauses, to prevent fiscal crises that may be triggered by climate shocks.

3) Develop resilient infrastructure and early warning systems via focus on hydro-meteorological services, flood defenses, climate-smart agriculture, and water security—investments that have high benefit-cost ratios and save both lives and the economy too.

4) Accelerate the development of reliable and green electricity by combining utility-scale renewable energy sources with distributed solar and mini-grids to serve the over 600 million people who currently lack access. Focus on productive uses of electricity, such as irrigation, agro-processing, and cold chains, to convert energy into jobs and income.

5) Creating value chains and scaling up projects by standardizing PPAs and mini-grid regulations, strengthening off-taker creditworthiness, and implementing results-based finance and FX hedging to mitigate risk premia that currently deter investors.

6) Localize value-added chains and skills. Support training, certification, and local manufacturing or assembly where viable (e.g., balance-of-system components) so that clean energy buildout translates into quality jobs and durable political support.

Conclusion

Africa did not cause the climate crisis as developed countries do, yet its people are heavily impacted. As a consequence, the continent loses 2-5% of its GDP annually due to climate change while struggling with limited public funding for disaster responses. Although it needs about $277 billion yearly, it receives only $44-50 billion in support for loss and damage is still insufficient for development. A solution lies in financing green energy, along with strong adaptation measures and early warning systems. This can enhance resilience, reduce energy poverty, and create jobs. By increasing climate funding and implementing effective reforms, Africa can turn its climate challenges into opportunities for inclusive and sustainable growth.

Reference

Global Environmental Change 21 (2011) 227–237.

Africa suffers disproportionately from climate change. Please release, 04 Sep 2023: https://wmo.int/news/media-centre/africa-suffers-disproportionately-from-climate-change

The second Africa Climate Summit (ACS-2): https://unfccc.int/topics/climate-weeks/ethiopia-to-host-CW2-and-ACS2

Climate Policy Initiative. 2022. Landscape of Climate Finance in Africa: https://www.climatepolicyinitiative.org/wp-content/uploads/2022/09/Landscape-of-Climate-Finance-in-Africa.pdf

Maddison, David; Manley, Marita; Kurukulasuriya, Pradeep. 2007. The Impact of Climate Change on African Agriculture: A Ricardian Approach. Policy Research Working Paper; No. 4306. © World Bank. http://hdl.handle.net/10986/7510

WMO (State of the Climate in Africa 2023),

UNEP (Adaptation Gap 2023),

IEA (Africa Energy Outlook / World Energy Investment 2024),

CPI (Landscape of Climate Finance in Africa), AfDB, UNFCCC,

FT/Reuters reporting. 

World Meteorological Organization, UN Environment Programme, IEA, CPI, afdb.org