News Type: News

African tech start-ups rise up to combat climate change

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AfricArena’s much-anticipated annual report says climate-tech can be grouped into three broad sectors of impact: directly mitigating or removing emissions, helping us to adapt to the impacts of climate change, and enhancing our understanding of the climate.

These products or services usually fall within sectors such as agri-technology, afforestation, carbon capture, trade and reporting, geo-engineering, bio-technology, built environments, and nature-based solutions.

In 2021, investments in climate-tech surged globally to $87.5 billion dollars from a low of $28 billion in the second half of 2020, according to a report by PwC. The US climate-tech firms raised the largest share, followed by Europe and China. Most of the capital funding growth targeted climate-tech-based businesses that had impacts in cutting carbon emissions through renewable energy and electric vehicle products and services.

However, as the report states, there has been a decrease in the number of deals being signed off with climate-tech based start-ups due to the pressures of the global economy with risks of a suggested recession on the horizon.

Venture capital firms and investors have thus invested into the safety and stability of well-established climate-tech businesses in their growth stages of funding, such as Northvolt, TeraWatts, PerraPower, Climeworks, and EnergyX. According to HoloniQ’s Climate Tech 2022 report, 83 climate-tech-based unicorns took 80% of the funding.

Despite this, there are still many climate-tech start-ups in Africa that are bettering the world through sustainable technologies. One example is M-Kopa Solar, a Kenyan start-up that provides affordable and clean energy to people living off-grid. Another example is Solar Freeze, a Kenyan company that provides off-grid solar-powered refrigeration to smallholder farmers in Africa. These start-ups are helping to address the energy needs of people in rural areas, where electricity is often unreliable or unavailable.

SunCulture, a Kenyan company, produces solar-powered irrigation systems for smallholder farmers. These systems allow farmers to irrigate their crops more efficiently and effectively, reducing water usage and increasing crop yields. Sun Culture has also developed a financing model that allows farmers to pay for the systems over time, making them more affordable and accessible.

Another promising African climate-tech start-up is Ecoligo, a company that provides solar energy solutions to small and medium-sized enterprises (SMEs) in emerging markets. Ecoligo offers a financing model that allows SMEs to install solar energy systems with no upfront cost, paying for them over time through the savings generated by the system.

This makes solar energy more accessible and affordable for SMEs, which often struggle to secure financing for such projects.

Economic opportunities

These start-ups, and many others like them, are not only addressing the urgent need to address climate change but also creating economic opportunities in Africa. It is clear that climate technology has moved well beyond a proof of concept and offers investors significant financial returns and the opportunity for outsized environmental and social impact. Climate-tech is now an asset class that presents a major commercial opportunity.

However, it is important to note that there is still much work to be done to channel this investment appropriately. There is a need to ensure that climate-tech investment is channelled towards sustainable technologies that have a real impact on reducing emissions and mitigating climate change.

Moreover, there is a need to ensure that these technologies are accessible and affordable for people in developing countries, where the impacts of climate change are often felt most severely.

In conclusion, the State of Tech in Africa report on climate change provides valuable insights into the challenges and opportunities facing the continent in the fight against climate change. While Africa faces unique challenges due to its geography, socioeconomic factors, and limited technological infrastructure, the report highlights how technology can be leveraged to mitigate the impacts of climate change and build a more sustainable future.

It is clear that African governments, businesses, and individuals must work together to adopt and implement innovative solutions that address the complex issues related to climate change. The report emphasises the importance of investing in renewable energy, promoting sustainable agriculture, and creating resilient infrastructure to adapt to changing climate conditions.

As we move forward, it is essential to recognise that climate change is not just an environmental issue but also a social, economic, and political challenge. Therefore, we must prioritise collaboration and collective action to ensure a sustainable future for the continent.

The State of Tech in Africa 2023 report – and its specific analysis on climate change – serves as a wake-up call for all of us to take action and make a positive impact on the world. We must embrace the power of technology to drive innovation and create solutions that benefit both people and the planet. With the right mindset and a concerted effort, we can build a brighter future for Africa and the world as a whole.

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African Startups to Receive $385,000 to Develop Solutions for the Blue Economy

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Triggering Exponential Climate Action (TECA) has announced the selection of seven startups that would benefit from the $385,000 startup grant, with each receiving $55,000 in funding to advance their solutions for the blue economy in Africa.

The startup founders were selected following their participation in TECA’s fellowship program, where they were supported to create ideas for companies in the blue economy, build teams, and form companies.

Each startup will receive $27,500 in seed capital and $27,500 in hands-on venture building support to progress financial and tech-enabled solutions that bolster the climate resilience of communities and ecosystems in and around the oceans, lakes, and rivers across the Eastern region of Africa.

Announcing the grant, Chairman and Chief Innovation Officer at BFA Global, David del Ser, said: “Through the TECA program, we are proud to support and accelerate the development of innovative solutions that will protect and sustain the environment and vulnerable communities in the Eastern coast of Africa. These seven startups represent the forefront of the blue economy in Africa, and we look forward to seeing the impact of their financial and tech-enabled solutions on communities and ecosystems.”

Digital Economy Director at FSD Africa, Juliet Munro, said: “The ventures that have been formed through the TECA program are an inspiration. They represent young Africans – including women – coming forward with great ideas and solutions to climate-related challenges, in this case, in the blue economy. I’m proud that FSD Africa is supporting this initiative, which leverages finance and technology to help build resilience and create opportunity in the context of climate adversity. Through our partnership with BFA Global, we plan to roll out TECA beyond the blue economy to also solve for other challenges and geographies across Africa.”

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Guarantee companies unlock African infrastructure finance

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Nigeria may be Africa’s largest economy — its powerhouse, even — but power cuts remain a frequent occurrence. The country’s grid has only half the capacity required to serve its 210mn inhabitants reliably.

Fixing that will require massive investment — which president Muhammadu Buhari, whose tenure ends in May, has sought through multilateral financing and Chinese-backed loans denominated in US dollars. But, for now, that still leaves many businesses reliant on expensive, dirty diesel generators for back-up power.

A similar story of inadequate infrastructure is repeated throughout Africa and across multiple sectors: transport, agriculture, water distribution and waste management. So, too, is the story of seeking overseas money — and of producing equally disappointing results.

Now, though, a new generation of finance initiatives is starting to tap domestic sources of capital, by using a mix of government money and overseas development funding to create local currency guarantee companies.

Shareholders, including governments and private sector financial institutions, back these companies to provide a guarantee that money loaned to projects will be repaid. Guarantors charge borrowers a fee for taking on this risk — some aim to turn a profit for their shareholders; others aim primarily to achieve policy objectives while preserving capital.

Proponents argue that such schemes can unlock lending from local pension funds, insurance companies, and the like, for projects that commercial banks are reluctant to finance. And this may be particularly beneficial for environmental, social and governance-oriented projects — such as renewable energy infrastructure.

Because the guarantees are expressed in local currency, a significant source of risk is removed. In recent years, the weakness of Nigeria’s naira against the dollar, coupled with the country’s multiple exchange rate windows, has made it harder to repay foreign debt.

Multiple electric wires against a Lagos streetscape
Gridlock: electric wires in Lagos, Nigeria, where power cuts are a persistent problem © Akintunde Akinleye/Reuters

Some advocates are impatient for wider usage of this mechanism. “Can we please stop fixating on cross-border financing and start looking at domestic savings as a potential source — in local currency — to fund infrastructure assets?” says Philippe Valahu, chief executive of the Private Infrastructure Development Group, a finance organisation.

PIDG — which describes its goal as “high development impact” — is one of the backers of InfraCredit Nigeria, an infrastructure guarantee facility established in 2017. Since then, InfraCredit has provided N128bn ($278mn) worth of local currency guarantees across several portfolio projects, including green bonds for hydro power.

InfraCredit is also funded by the Nigeria Sovereign Investment Authority, Nigeria’s sovereign wealth fund, and InfraCo Africa — a finance vehicle backed by the UK, the Netherlands, and Switzerland — which became the third investor in 2020, pouring in $27mn.

Nigeria is not the only country to benefit from such schemes. In November 2022, InfraCo Africa announced that it would invest $15mn in a new guarantee facility in Kenya, alongside $5mn from Cardano Development, a finance company incubator and fund manager.

“We see various businesses here seeking to grow to serve domestic demand, but all facing the same problem that they cannot borrow in Kenyan shillings cost effectively or with a route to scale,” says Louis LaPaz, the Cardano Development representative responsible for the Kenyan facility. “Over the last few years, it’s been interesting to get cheap dollar debt — but, with the current environment of raising interest rates, that’s about to get a bit ugly.”

Kenyan infrastructure projects, including in green energy facilities, largely rely on US dollar-denominated loans from banks, which rarely offer the long maturities ideally required for successful developments, argue executives from InfraCo. They anticipate that, after three years of operations, they will have mobilised Ksh12.6bn ($100mn) of local currency guarantees for climate mitigation and adaptation projects, paving the way for further expansion.

A worker passes an electricity substation at the Olkaria Geothermal Complex
A geothermal power complex in Kenya. Guarantee schemes can help fund greener infrastructure © Patrick Meinhardt/Bloomberg

“Local currency guarantees will enable institutional investors such as pensions and insurance funds to invest into high-quality assets whilst also supporting businesses to secure the finance needed for them to deliver vital new infrastructure,” says Claire Jarrett, InfraCo Africa’s chief investment officer. According to OECD data from 2020, Kenyans hold about $13bn in pension funds, equivalent to just over 13 per cent of the country’s GDP.

Bertrand Ketchassi, the InfraCo Africa investment manager responsible for the Kenya facility, thinks it has the potential to benefit many kinds of business. “[For these guarantee schemes] the main difference between the Kenyan and Nigerian market is that the latter is solidly focused on infrastructure, while the former is much more diversified,” he says.

Kenya, which prides itself on a reputation for financial and technological innovation going back to its early adoption of mobile money, has numerous businesses trying to tap investors’ appetite for sustainability.

Construction company Acorn, for example, recently built student accommodation that was designed to meet the government’s green building standards and was financed through the Ksh4.3bn ($34.2mn) dual listing of a green bond in Nairobi and London. Fintech IMFact — which was incubated by Cardano — offers local-currency financing for small and medium-sized enterprises.

But there remains an issue of scale. The N128bn ($278mn) and prospective Ksh12.6bn ($100mn) that InfraCo has tapped in Nigeria and Kenya, respectively, can hardly provide enough loans needed to fuel growth and development. Still, it is unlocking potential.

“We can now embrace the necessary tools to address the lack of liquidity that some companies in all these different sectors are facing, because the Kenyan market, as many markets in Africa, doesn’t provide long-term capital,” Ketchassi says. “Lots of people are waking up to the need to access local liquidity.”

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Seven blue economy startups secure seed funding to enhance climate resilience in Africa

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ImpactAlpha, February 15 – Community-powered mangrove restoration. Restocking local fish supplies. A marketplace for seaweed farmers.

Triggering Exponential Climate Action, or TECA, invested $27,500 each in seven oceans and seafood enterprises in Kenya, Egypt, South Africa, Uganda, Zimbabwe and Tanzania.

The partnership between BFA Global and FSD Africa also provides the companies with hands-on support.

“We look forward to seeing the impact of their financial and tech-enabled solutions on communities and ecosystems,” said BFA Global’s David del Ser.

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TNFD Momentum Gathers After COP15

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Final beta version to follow on heels of agreement on Target 15 in new Global Biodiversity Framework. 

Following the adoption of the Global Biodiversity Framework (GBF) at Montreal’s COP15, the Taskforce on Nature-related Financial Disclosures (TNFD) said the release of its V0.4 beta framework in March would further assist firms in assessing and reporting on biodiversity and nature-related risks.

Speaking at the TNFD’s ‘Moving to Action After Montreal’ webinar,  David Craig, Co-chair of the TNFD, called the GBF an “ambitious framework” and highlighted its role in “halt[ing] the degradation of nature and biodiversity”. He also underlined the importance of the GBF in ensuring “harmony in nature” by addressing restoring natural ecosystems, which the TNFD’s disclosure framework aims to support.

The GBF featured 23 targets and four goals, but Target 15 is viewed as vital to private-sector management of biodiversity-related risks.

Also speaking on the webinar, Emily McKensie, Technical Director at the TNFD, said there were “key points of conceptual alignment” between the finalised GBF – including Target 15 – and the TNFD framework.

Harmony in nature 

Target 15 requires governments to encourage companies and financial institutions disclose their risks, dependencies and impacts on biodiversity along their operations, supply and value chains, and portfolios.

“Target 15 means that disclosures on nature impacts, dependencies and risk are coming and we’re seeing more and more activity to support these,” said Craig. “The TNFD is a framework and a tool to support Target 15.”

McKensie underlined the momentum the TNFD could offer the GBF and Target 15, through its focus on helping firms and investors to disclose and risk manage nature-related impacts and dependencies.

She also highlighted the TNFD framework’s ability to help “operationalise” which organisations will regularly monitor, assess and disclose nature risks, dependencies and impacts, resulting in a “clear connection” to Target 15.

However, the GBF was accused of being “watered down” by a number of observers due the word ‘mandatory’ being excluded from the framework.

Maelle Pelisson, Advocacy Director at Business for Nature, who was privy to the behind-the-scenes negotiations at COP15, admitted that mandatory disclosures would have helped in “levelling the playing field” and demonstrating urgency.

Speaking on the webinar, Pelisson told onlookers the GBF would still help businesses to access data required to accelerate action on reducing negative impacts on nature. Pelisson also welcomed the engagement of businesses at COP15, as well as the rapid growth in momentum surrounding biodiversity and nature.

“We’ve seen this momentum growing so fast from March to December last year,” she said. “We can only expect that it will continue growing now that [the GBF] been adopted.”

September launch and beyond 

According to Craig, disclosures are important because they “demonstrate accountability”, but he stressed that they are “meaningless” unless companies take action.

“What’s really important is that companies have invested the time the talent, the knowledge and the skills,” he said. “Don’t underestimate the urgency of the crisis, but also the urgency of the movement,” he added. “The GBF agreement is ambitious [but] it’s real targets will be set by governments and businesses who will see growing pressure and action to align on these targets.”

The TNFD framework builds on the four core pillars of the Taskforce on Climate-related Financial Disclosures (TCFD) for corporates and investors, and is expected to be incorporated into the disclosure standards of existing sustainability standards bodies and national laws.

Alexis Gazzo, Europe West Sustainability Co-leader at EY, told attendees on the webinar that implementation of TNFD guidance will be much faster than TCFD due to the framework “building on the foundations that have been set up for climate”.

The TNFD will run a formal consultation where market participants can submit responses to a full draft of the beta framework from March until 1 June. The pilot testing of the framework, which has been running since 1 July 2022, will also finish on the same day.

The final beta framework is expected to provide additional guidance on disclosure metrics, measurement of impacts, dependencies and risks across supply chains, and the sector-specific reporting requirements, including agriculture, aquaculture and mining.

TNFD’s framework will then be finalised in September 2023.

The next UN Biodiversity Conference (COP16) is scheduled to take place in Turkey in 2024. It will likely see countries providing updates and reviews of their national biodiversity plans targets. Countries will also be expected to develop their national financial plans as a part of their resource mobilisation for implementation.

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7 African Startups To Receive $385k In Developing Solutions For Blue Economy

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Today, climate resilience venture launcher Triggering Exponential Climate Action (TECA) has announced the selection of seven startups to each receive $55,000 in funding to advance their solutions for the blue economy in Africa.

The startup founders were selected following their participation in TECA’s fellowship program, where they were supported to create ideas for companies in the blue economy, build teams, and form companies.

The TECA program, managed by BFA Global and supported by FSD Africa, was created to accelerate the development of climate-resilient solutions to protect and sustain the environment and

vulnerable communities. Each startup will receive $27,500 in seed capital and $27,500 in hands-on venture building support to progress financial and tech-enabled solutions that bolster the climate resilience of communities and ecosystems in and around the oceans, lakes, and rivers across the Eastern region of Africa.

“Through the TECA program, we are proud to support and accelerate the development of innovative solutions that will protect and sustain the environment and vulnerable communities in the Eastern coast of Africa. These seven startups represent the forefront of the blue economy in Africa, and we look forward to seeing the impact of their financial and tech-enabled solutions on communities and ecosystems,” said David del Ser, Chairman and Chief Innovation Officer at BFA Global.

“The ventures that have been formed through the TECA program are an inspiration. They represent young Africans – including women – coming forward with great ideas and solutions to climate-related challenges, in this case, in the blue economy. I’m proud that FSD Africa is supporting this initiative, which leverages finance and technology to help build resilience and create opportunity in the context of climate adversity. Through our partnership with BFA Global, we plan to roll out TECA beyond the blue economy to also solve for other challenges and geographies across Africa.” said Juliet Munro,

Digital Economy Director at FSD Africa.

Founders of the seven startups selected in the current cohort originate from six countries in Africa—Kenya, Egypt, South Africa, Uganda, Zimbabwe and Tanzania—with ideas focusing on bridging existing gaps in: aquaculture; ecotourism; measurement, reporting, and verification (MRV) in conservation; seaweed value chain; mangrove restoration and protection; and financial services for fisher folk. The startup companies and their solutions are:

  • AquaTrack: a data-driven solution for sustainable aquaculture production. They aim to provide a water quality monitoring device for fish farmers seeking to increase production and efficiency in their farms.
  • Carboni Bank: a community-centred platform for tourists to offset their carbon emissions and support local climate initiatives.
  • ConserVate: utilizing innovative digital technology to build local capacity for monitoring reporting and credible verification (MRV) of conservation impact for both funders and implementers to reverse the effects of climate change.
  • Mwani Blu: building a seaweed marketplace with high-level traceability, providing women smallholder farmers with dignified and stable incomes.
  • RegisTree: empowering coastal communities to be agents of climate change mitigation by facilitating their role in mangrove restoration and protection.
  • Vua Solutions: a fintech company seeking to provide affordable and responsible financial services to people working in the blue economy.
  • Wezesha Aqua Farms: seeking to address the dwindling wild capture fisheries stocks that negatively impact the livelihoods and socioeconomic status of local fishing communities around the great lakes region in Eastern Africa.

To further invest in the success of these startups, TECA will provide comprehensive venture building support that includes mentorship, capacity building, business model refinement, and support launching their products and services in the market.

Startups working on climate resilience solutions are encouraged to apply for the next TECA cohort.

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Africa getting little of $382m renewable energy projects cash

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Renewable energy projects attracted investments worth $382 billion globally in 2021, according to the International Energy Agency, but only $13 billion, or three percent of that, funded projects in Africa, highlighting a major funding gap foiling green transition and energy access on the continent.

With only 48 percent of African population having access to electricity, experts say investment in the continent’s renewable energy sector could both leapfrog the green transition efforts and connect more people to the grid.

Despite this, it has been established that investors with the capacity to invest in this sector shy away from the African market, a problem which brought together several stakeholders in the energy sector in Nairobi this week, attempting to change the narrative.

At a forum convened by the World Resources Institute (WRI) and the Children’s Investment Fund Foundation, participants drawn from the private sector, government, civil society organisations from Kenya and beyond deliberated on how investors can be mobilised to support Africa’s green transition through investments.

Reluctant to invest

Rebekah Shirley, WRI’s deputy regional director told the forum that private sector players are reluctant to invest in this sector, creating a funding gap of billions of dollars every year, despite the wide access gap.

“Even in other regions of the world where energy access is still a challenge like the Southeast Asia, we don’t see funding gaps of this magnitude, why Africa?” she posed.

Alex Wachira, principal secretary for the state department of energy, said that there is a list of challenges contributing to the energy gap, even in Kenya, which slow down economic growth in the country.

“We (the Ministry of Energy) are aware of the many challenges attributed to this, including limited incentives to attract private sector investors,” he said in a speech read by a representative.

Lack of political will

Another challenge identified is the lack of political will for appropriate legislation and implementation of policies to incentivise private sector investment in renewable energy projects, especially in rural areas.

For instance, only two of Kenya’s 47 counties have drafted energy plans that would give way to appropriate energy policies, deprioritising renewable energy projects at the local governments.

This, according to Eva Sawe – a senior programmes officer at the Council of Governors, is because lawmakers have not been sensitised on why renewable energy projects should be a priority.

But even with the right policies and incentives to support private sector investment in renewable energy on the continent, investors said there is a still a shortage of talent in Africa limiting the production capacity of companies investing in the sector.

“If an investor is coming into the country to do any renewable energy project, the first hurdle they will face is the lack of skilled people,” said Andrew Amadi, the chief executive of Kenya Renewable Energy Association.

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FSD Africa Targets to Back $400 Million of Green Bonds This Year

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  • Africa needs about $300 billion in climate financing annually
  • Private funding for green projects in Africa is very low

FSD Africa is in talks with potential green-bond issuers across the continent to raise at least $400 million for climate-linked projects this year.

The agency backed by the UK’s Foreign, Commonwealth & Development Office will be a transaction adviser on the deals it expects to come from countries, including Tanzania, Zambia, Nigeria and Morocco. The amount to be raised will be about 70% higher than what FSD Africa said it helped to mobilize in climate- and gender-related financing in 2022. 

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7 start-ups get $385k to develop blue economy solutions

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Climate resilience venture launcher Triggering Exponential Climate Action (TECA) has announced the selection of seven startups to each receive $55 000 in funding to advance their solutions for the blue economy in Africa.

The startup founders were selected following their participation in TECA’s fellowship programme where they were supported to create ideas for companies in the blue economy, build teams, and form companies.

The TECA programme, managed by BFA Global and supported by FSD Africa, was created to accelerate the development of climate-resilient solutions to protect and sustain the environment and vulnerable communities.

Each startup will receive $27 500 in seed capital and $27 500 in hands-on venture building support to progress financial and tech-enabled solutions that bolster the climate resilience of communities and ecosystems in and around the oceans, lakes, and rivers across the Eastern region of Africa.

“Through the TECA programme, we are proud to support and accelerate the development of innovative solutions that will protect and sustain the environment and vulnerable communities in the Eastern coast of Africa. These seven startups represent the forefront of the blue economy in Africa, and we look forward to seeing the impact of their financial and tech-enabled solutions on communities and ecosystems,” said David del Ser, chairperson and chief innovation officer at BFA Global.

“The ventures that have been formed through the TECA program are an inspiration. They represent young Africans – including women – coming forward with great ideas and solutions to climate-related challenges, in this case, in the blue economy,” added Juliet Munro, digital economy director at FSD Africa.

“I’m proud that FSD Africa is supporting this initiative, which leverages finance and technology to help build resilience and create opportunity in the context of climate adversity. Through our partnership with BFA Global, we plan to roll out TECA beyond the blue economy to also solve for other challenges and geographies across Africa.”

Founders of the seven startups selected in the current cohort originate from six countries in Africa—Kenya, Egypt, South Africa, Uganda, Zimbabwe, and Tanzania—with ideas focusing on bridging existing gaps in: aquaculture; ecotourism; measurement, reporting, and verification (MRV) in conservation; seaweed value chain; mangrove restoration and protection; and financial services for fisher folk. The startup companies and their solutions are:

  • AquaTrack: a data-driven solution for sustainable aquaculture production. They aim to provide a water quality monitoring device for fish farmers seeking to increase production and efficiency in their farms.
  • Carboni Bank: a community-centered platform for tourists to offset their carbon emissions and support local climate initiatives.
  • ConserVate: utilizing innovative digital technology to build local capacity for monitoring reporting and credible verification (MRV) of conservation impact for both funders and implementers to reverse the effects of climate change.
  • Mwani Blu: building a seaweed marketplace with high-level traceability, providing women smallholder farmers with dignified and stable incomes.
  • RegisTree: empowering coastal communities to be agents of climate change mitigation by facilitating their role in mangrove restoration and protection.
  • Vua Solutions: a fintech company seeking to provide affordable and responsible financial services to people working in the blue economy.
  • Wezesha Aqua Farms: seeking to address the dwindling wild capture fisheries stocks that negatively impact the livelihoods and socioeconomic status of local fishing communities around the Great Lake region in Eastern Africa.

To further invest in the success of these startups, TECA will provide comprehensive venture building support that includes mentorship, capacity building, business model refinement, and support launching their products and services in the market.

Startups working on climate resilience solutions are encouraged to apply for the next TECA cohort. For more information, visit the TECA website.

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