Climate finance report shows 50% surge in financing into Africa

African countries are experiencing a surge in climate finance with a 50 per cent increase from two years ago, as revealed by a recent report from FSD Africa. The report highlights that the total climate financing in Africa has reached $45 billion, demonstrating considerable progress in efforts to address climate change on the continent. However, despite this positive growth, challenges persist in attracting more climate funding and mobilizing domestic resources to build climate resilience. CNBC Africa spoke with Mark Napier, CEO of FSD Africa, to delve deeper into the findings of the report and explore the future of climate finance in Africa. The report compared the current state of climate finance in Africa to data from two years ago, revealing a substantial increase to about $44 billion. While this marks a significant milestone, it falls short of the amount needed to effectively tackle the impacts of climate change. Napier emphasized the importance of leveraging private capital to bridge the funding gap and highlighted the necessity of enhancing domestic financial systems to attract more investments. One of the key findings of the report was that a small number of countries in Africa receive the majority of climate finance, with just 10 countries accounting for 50 per cent of the total funding. Larger economies like South Africa, Egypt, and Nigeria attract more private climate finance due to their robust financial systems and larger transactions. This concentration raises concerns about the equitable distribution of funding across the continent, especially for smaller countries with less developed financial markets. Napier also addressed the limited contribution of African governments to climate finance, with only 10 per cent of funding originating from domestic sources. The majority of climate finance comes from international donors and multilateral development banks, indicating a need for African countries to enhance their domestic financing capabilities. He stressed the importance of mobilizing private sector investments and developing domestic capital markets to facilitate greater flows of funding towards climate-resilient projects. Looking ahead, Napier outlined several interventions and strategies to accelerate climate finance in Africa. These include the establishment of guarantee companies to de-risk investments in green infrastructure, creating innovative financial instruments to attract private capital, and fostering carbon market development to leverage additional funding. He emphasized the interconnectedness of development finance and climate finance, highlighting the need to align efforts in mobilizing resources for sustainable economic growth and climate resilience. In the context of geopolitical shifts and uncertainties impacting global funding priorities, Napier urged African leaders to rethink their approach to tapping into development finance. While international support remains crucial, he emphasized the importance of building local capacity and leveraging domestic resources to drive economic resilience and sustainability. By prioritizing the mobilization of private capital and creating conducive environments for investment, African countries can strengthen their resilience to climate change and drive sustainable development in the years to come.