Financial support for climate technology startups in Africa from the private sector is growing. Businesses have raised more than $3.4 billion since 2019. However, the continent requires $277 billion each year to achieve its climate goals for 2030.
Experts emphasize the need for African countries to address risks such as unexpected currency value changes to attract more funding. They also recommend that investors diversify into various climate sectors like flood protection, disaster management, and heat management while utilizing different funding methods.
Last year, climate tech startups in Africa raised $1.04 billion, marking a 9 percent increase from the previous year and a significant growth compared to 2019 figures. Despite the surge in funding, private sector financing in Africa only accounted for 14 percent of total climate finance from 2019 to 2020, according to a study by the Climate Policy Initiative.
Sandy Okoth from FSD Africa attributes the low financing to investors’ preference for familiar areas like renewable energy technology. Startups focusing on more complex climate adaptation technologies often struggle to attract adequate funds.
Wetility, a renewable energy startup based in South Africa, secured $48 million in funding last year mainly from private equity to expand its operations. The company offers solar panels for homes and businesses, along with an online service for remote power usage access, aiming to address energy access challenges in southern Africa.
Vincent Maposa, the CEO of Wetility, acknowledged the growth in private sector financing for African climate initiatives but stressed the need for further support. Maëlis Carraro, a partner at Catalyst Fund, called for a mix of private and public sector funding to unlock more financing and drive climate adaptation solutions.
Collaboration between the private and public sectors is essential to catalyze more financing for climate projects. The global effort to combat climate change hinges on mobilizing adequate resources to support innovative solutions in Africa and beyond.
