As official development assistance falls and climate action becomes harder for developing economies, Africa is coming to terms with a new reality. With COP31 taking place in Antalya (Türkiye) this month, it is increasingly clear that the continent’s biggest challenge is not lack of capital but means to unlock it in its physical, natural, and social forms.
The numbers tell a stark story. Globally, official development assistance fell 23.1% in 2025, the steepest annual drop on record. Sovereign debt burdens remain high across the region. While annual investment to Africa topped $50 billion for the first time in 2022, that covered only 23% of the roughly $190 billion a year that the continent needs through 2030 to implement its countries’ climate pledges. While international sources continue to supply 87% of Africa’s tracked climate finance, there is a need to catalyze national sources. Noting multilateral development finance institutions provided 43% of Africa’s aid flows, or $19 billion, as much as 51% came as debt, split evenly between low-cost and market-rate lending. However, non-grant instruments add further strain where debt sustainability is already a concern.
Yet the capital exists. Africans hold around $2.4 trillion in assets under management at domestic banks, insurers, and pension funds. That has not been translated into larger scale investment in climate action. The good news is that climate finance passed the $2 trillion mark for the first time in 2024 but its growth has slowed sharply, from 30% in 2021 to 6% in 2024 and a preliminary 2.5% in 2025. A funding pool that is barely growing leaves little room for regions already at the back of the queue. Governments accounted for only about $1 billion in flows vis-à-vis private finance almost doubling to $8 billion. Climate adaptation drew 32% of Africa’s climate finance, below the targeted 50% mark but above the 1% to 14% seen in other regions.
Like with any region, Africa’s geographic finance distribution compounds the imbalance. Ten countries received half of Africa’s climate finance, with South Africa, Egypt, and Nigeria together absorbing half of all private flows. By contrast, the ten most climate-vulnerable countries received just 11%, as money flows to countries with institutions able to prepare and implement projects, rather than where the scale of need and thus impact is greatest.
Three solutions underway across Africa can potentially break this cycle. The first is blended finance. Used strategically, concessional capital can absorb the risks commercial investors will not, crowding private money into everything from clean energy grids to climate-smart agriculture. Multilateral climate funds can expand their use of first-loss equity, guarantees, and subordinated debt to lower the cost of capital, and structure sustainable public-private partnerships along Africa’s power and logistics corridors.
The second is readiness, so capability grows and stays in-country. For instance, embedding local expert support keeps project origination and oversight continuous and preserves institutional knowledge when staff move on. Faster accreditation and operational readiness, including in ministries of finance and national and regional financial institutions, goes a long way in letting countries take direct ownership of their pipeline creation and portfolio implementation.
The third is tying climate finance to local value addition, if the focus on job creation and industrialization remains. Climate investment cannot be separated from economic policy. For Africa, clean energy deployment and critical mineral extraction requires anchoring domestic processing and local employment through business ecosystems. This not only earns a social license to operate but also drives national and regional community development. Aligning multilateral climate funds investment with continental priorities, such as the African Continental Free Trade Area and the Africa Credit Rating Agency launched in Mauritius last October, and with the African Union’s G20 agenda, would help ensure that low-carbon and climate resilient infrastructure, priced on a fair reading of risk, powers regional manufacturing and trade.
As negotiators gather in Antalya, multilateral climate funds should deploy their full funding envelopes and pair capital with capacity built inside countries. Without that, climate finance will keep concentrating where institutions are the strongest rather than where vulnerabilities are the highest and opportunities for real impact are the greatest.
Raul Alfaro-Pelico is a Non-Resident Fellow at ORF America.