Over the past decade, climate finance has grown into one of the most prominent pillars of global development discourse. Multilateral funds have expanded, new financing instruments have emerged, and commitments from advanced economies continue to be reiterated at global forums.
On paper, the trajectory is clear: more capital, more urgency, more ambition. According to the Climate Policy Initiative, global climate finance flows reached over USD 1 trillion annually in recent years, reflecting a significant scaling of capital committed to climate-related activities.
Yet, when viewed from the perspective of project developers and practitioners across Africa, a different reality emerges.
Deal flow remains thin.
Projects struggle to move from concept to funding.
And many initiatives stall long before capital is deployed.
This disconnect raises an uncomfortable question:
If climate finance is expanding, why is it not translating into sustained, scalable investment across African economies?
The Structural Problem: How Climate Finance Is Designed
A large part of the answer lies in how climate finance is currently structured.
Most major climate finance mechanisms, including facilities such as the Green Climate Fund and the Adaptation Fund, are built around risk management frameworks designed outside of Africa.
These frameworks prioritise:
- fiduciary control
- compliance and reporting requirements
- risk mitigation over risk-taking
- institutional track records
While these are rational from a capital preservation perspective, they create a system where:
only a narrow category of projects can pass through the filter
Evidence from the African Development Bank and other development finance institutions consistently highlights the challenges African countries face in accessing and deploying climate finance effectively, despite growing commitments.
The Missing Middle: Where Most Projects Sit
Across the continent, a significant number of climate and just transition initiatives sit in what can be described as the “missing middle.”
This phenomenon has been widely recognised in development finance literature, including analyses by the OECD, which highlight persistent gaps in financing for early-stage and locally embedded projects in developing economies.
These projects are often:
- too complex for small grants
- too early-stage for commercial finance
- too locally embedded for standardised funding templates
They reflect the real economy of Africa, yet struggle to meet the expectations of large climate finance facilities.
A Slow Pipeline, Not a Lack of Ideas
It is often suggested that Africa faces a “pipeline problem.”
This diagnosis is incomplete.
The United Nations Environment Programme has repeatedly emphasised that developing countries face significant challenges in project preparation capacity, rather than a lack of viable ideas.
The issue is not the absence of ideas.
It is the misalignment between how projects are structured locally and how capital is structured globally.
Why It Will Take Time for Africa to Fully Benefit
Even as climate finance commitments continue to grow, it will likely take considerable time before African economies experience the full benefits.
According to the United Nations Economic Commission for Africa, Africa receives only a small share of global climate finance flows, despite being among the most climate-vulnerable regions globally.
This reflects:
- institutional inertia
- reliance on intermediated funding models
- uneven capacity to structure fundable projects
As a result, capital continues to move cautiously and selectively.
The Strategic Imperative: Look Inward
If Africa’s development trajectory is tied solely to external climate finance flows, progress will remain constrained.
A more resilient pathway lies in strengthening intra-African economic systems, particularly through frameworks such as the African Continental Free Trade Area.
AfCFTA has the potential to:
- deepen regional value chains
- expand intra-African trade
- create demand for locally produced goods
Green Industrialisation as a Pathway
Africa’s long-term prosperity will depend on its ability to move beyond raw material exports and develop green industrial capacity.
The United Nations Industrial Development Organization has emphasised the importance of industrialisation aligned with sustainability goals as a pathway for inclusive growth.
This includes:
- agro-processing
- renewable energy value chains
- circular economy industries
- sustainable manufacturing
Reframing the Role of Climate Finance
This does not mean climate finance is irrelevant.
Rather, its role should be reframed as:
a catalytic layer that supports broader economic transformation
This perspective is increasingly reflected in discussions within institutions such as the World Bank, which emphasise the need to align climate finance with development and economic priorities.
A Practitioner Conversation
These dynamics are not abstract. They are shaping how climate and just transition initiatives are designed and assessed across the continent.
For practitioners, the challenge is to translate these shifts into practical approaches to project design and positioning.
As part of ongoing work in this area, the African Centre for a Green Economy, through the Green Economy Leadership Academy (GELA), is convening a small practitioner session focused on the design of fundable climate projects in the current funding environment.
Further details are available here:
www.africancentre.org/gela
