Pillar: Early-Stage Finance

FSD Africa invests in Holocene, a Climate Tech Start-up Venture Capital Provider

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FSD Africa’s Early-Stage Finance Pillar is investing US$150,000 in Holocene Ventures Fund (HVF), a climate tech start-up venture capital provider that seeks to raise an initial US$2 million to invest in 12 high impact climate businesses. HVF I will provide the track record and pipeline to raise a $30M pre-seed to series A climate tech fund in 2025.  The investment by FSD Africa comes alongside investments from other angel investors across Europe, USA and Africa.

Mary Kashangaki, Assistant Manager, Digital Innovations, FSD Africa said:

We need to think differently about how we finance Africa’s green transition. FSD Africa’s investment in Holocene offers an exciting opportunity to work with experts to build a new kind of venture capital fund that is flexible enough to meet the unique financing needs of early-stage climate ventures.

Holocene, based out of South Africa, has created an investment platform for climate conscious individual and institutional investors seeking climate positivity and venture capital returns. Holocene Venture Fund (HVF) will provide innovative pre-seed financing, combining both cash and venture building services, to climate tech start-ups, recognizing the need for diverse financial solutions to scale climate businesses. 

Josh Romisher, CEO, Holocene commented:

“Africa is incredibly important in the global climate conversation. Holocene is very eager to partner with innovative investors such as FSD to prove African climate tech can deliver measurable climate impact and VC returns.”

To date, Holocene has made 6 investments from its permanent capital vehicle as well as another 4 investments from HVF I. It aims to make 5 investments per year infusing them with a catalytic blend of financial & human capital with a focus on commercial outcomes. With concerted effort by diverse players to accelerate green growth in Africa, specialist climate focused investment funds like Holocene are expected to enhance capital flows and innovation in new climate technology led solutions across Africa.

 

Empowering the next wave of climate entrepreneurs

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Harnessing the immense power of Africa’s innovative young talent is critical for a successful green transition on the continent. Triggering Exponential Climate Action (TECA) hinges on directing this talent intentionally toward our generation’s most pressing challenges – climate change and biodiversity loss. Last year’s inaugural “TECA wave”, implemented by BFA Global and funded by FSD Africa, saw 30 Fellows supported to launch seven new ventures solving for challenges in the blue economy (used here to mean sustainable use of natural water resources for economic growth, improved livelihoods, and jobs while preserving the health of the environment).

This year, we and BFA Global have been joined by a powerhouse team of organisations resulting in the new Africa Blue Wave Coalition. IUCN, through a partnership with the Canadian Government, is co-financing the Africa Blue Wave alongside us, and Ocean Hub Africa (OHA) has come on board as blue economy venture building experts. Through this collaboration, TECA has recruited 44 new talented and energetic Fellows from 12 different African countries to take on the challenge of building climate solutions.

As has become the tradition, the new wave kicked off with the “huddle”, a 4-day in-person convening of TECA Fellows and venture builders, that took place in Watamu, Kenya, in March 2024. I had the pleasure of joining the Fellows for this unique opportunity to immerse ourselves into blue and green economy challenges as well as engage with and learn from one another at the very start of the TECA journey. Green economy, in this case, refers to the sustainable use of terrestrial landscapes for economic growth, improved livelihoods, and jobs while preserving the health of the environment and boosting biodiversity.

Watamu, a small coastal town in Kilifi County, Kenya, not only boasts a stunning coastline, but it is also home to Mida creek, one of the most productive mangrove ecosystems in the world, supporting livelihoods, marine-life and an impressive diversity of bird and animal species. This served as a perfect location for the TECA Fellows to gain a deeper understanding of the challenges faced by fisher folk, farmers, conservationists, and others whose livelihoods depend on this protected ecosystem.

Through the support of Kenya Marine & Fisheries Research Institute (KMFRI), we had the pleasure of visiting both green and blue economy players in the region. These included an aquaculture and conservation self-help group (Umoja) practicing sustainable marine fish farming and mangrove nursery establishment and rehabilitation; and beach management units (BMU) at landing sites in Takaungu as well as Kuruwitu, where we met with BMU officials and groups undertaking fishing, extraction of coconut oil, mangrove restoration, plastic recycling, and coral restoration, among other activities.

The decision to focus this second TECA wave on both green and blue economy solutions was validated by the clear complementarity in the spectrum of opportunities for innovation identified by the fellows. This was further highlighted when we had the opportunity to visit a Fellow from the first TECA wave. Fardosa Mustafa launched Registree in 2023 with a goal to empower mangrove conservation communities in the coastal region through digital tracking of mangroves and carbon accounting. So passionate about this work, Fardosa moved from her home in Nairobi to Watamu after her time in the TECA programme to focus on better understanding the needs of the communities she was supporting. In doing so, she has gained a deeper understanding of their needs and pivoted her business model to supporting sustainable agricultural practices in the coast; an exciting shift from blue to green within the same region.

Despite having completed the TECA process, the team at BFA keep a close eye on Registree and others who have launched their start-ups through the programme, providing input and support where needed. Dr. Mathew Egessa, another TECA graduate, joined the team in Watamu to speak with the current cohort of fellows about his journey building Vua Solutions. He also had to opportunity to check in with venture builders and gain input into challenges he faced in the business highlighting the importance of ongoing relationships and expertise that the TECA process provides.

Fardosa and Mathew’s stories exemplified for me the importance of the kind of high touch support provided by the TECA team. To adequately support these entrepreneurs requires time, patience, adaptability, and inevitably capital investment. It requires for all players within the climate space – educators, entrepreneurs, regulators, venture builders, experts, and investors – to think differently about how we support innovation.

The huddle left me with the feeling that, although there is still a lot of work to be done in building solutions that address the needs of communities in Africa at the same time as mitigating the impact of climate change, there is hope. The 44 TECA Fellows I met in Watamu were passionate about building these solutions and incredibly energised about the opportunity to work with experts who were ready to provide the support needed.

As FSD Africa, we are excited to be joined on this journey by IUCN and OHA, recognising the importance of partnership and collaboration towards Africa’s green transition.

Bridging the gap of financial inclusion in DRC

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In the heart of sub-Saharan Africa lies the Democratic Republic of Congo (DRC) – the largest country in the continent, full of potential, but plagued with high poverty levels with an estimated 62% of the population living on less than $2 a day. This reality of financial exclusion where only about 30% of adults have access to formal financial services, not only perpetuates cycles of poverty but also hinders progress towards achieving several of the UN Sustainable Development Goals (SDGs), including eradicating poverty, promoting economic growth and ensuring inclusive societies.

Hindered by factors like underdeveloped infrastructure, lack of identification documentation and low levels of trust in the financial system, millions of Congolese struggle to access basic financial services essential for economic empowerment and social development. In 2019, FSD Africa joined forces with Equity BCDC, to roll out a programme that leverages an innovative agency banking model to reshape the financial landscape for improved access to financial services in rural and peri-urban communities and households across 18 out of DRC’s 26 provinces.

 How it started

Progress was slow in the beginning with consideration being made for which internal systems would best serve the needs of DRC’s unique infrastructure, as well as developing the right internal capacity necessary to onboard agents and clients alike. Equity BCDC developed a unique ‘Master Agency’ strategy, branded Equity BCDC Express, which allowed them to successfully address the KYC issues caused by lack of identification and supporting documentation. Through the establishment of a network of over 5,000 agents spread across the country, they were able to open over 650,000 new accounts in rural and peri-urban areas, enabling savings for these new clients.

By partnering with private sector players, Equity BCDC provided internet connectivity and renewable power sources to agents in the rural areas to facilitate account opening via their web-based internet solution. The bank also developed a micro-loan scoring tool and are piloting group lending for their clients to allow them to access crucial capital.

 

The journey

On a recent trip to DRC, we witnessed the tangible and transformative impact of this initiative firsthand. We interacted with the agents who were once struggling, found renewed hope as their livelihoods improved; and clients who were long excluded from formal financial systems, experience a overpowering shift in self-worth and social standing, as they embrace the opportunity to save and transact securely.

What began as a dream evolved into an evident reality—a reality where farmers in Nsele can send money to their children in Kinshasa with a simple USSD code effortlessly without enduring long commutes. Where garbage collectors in Masina can reinvest their earnings to build a better future and inspire their community. Where women in Bunkeya  foster empowerment and begin to see beyond traditional barriers, recognising the opportunities that access to finance affords.

Transactions to transformation

In collaboration with EBCDC, at the recent project closeout event held in April 2024, we brought together government officials, private sector leaders and stakeholders to celebrate milestones, share insights and mark a shared commitment to continue the drive for a more inclusive future.

It was demonstrable that for those once marginalised, a bank account is not just a means to save money; it’s a symbol of hope and belonging. With each success story, the case for financial inclusion in DRC grows stronger, igniting a ripple effect of change across the region. As the project comes to a close after 4 years, we reflect on the lessons learned that resonate deeply.

Such initiatives will help address the financial needs of 73% of the financially excluded population in DRC and are crucial in building resilience for themselves and their households, enabling them to tackle the challenges of survival with renewed tenacity. While challenges still exist, Equity BCDC’s experience shows that they are not insurmountable, and we will continue to support the bank’s journey in doing so.

Find out more about our work with Equity BCDC here.

 

Watch the feature story below.

Nairobi Climate Network announces the launch of the Carbon Markets Association of Kenya

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The Nairobi Climate Network (NCN), a thriving community of professionals propelling climate action in Kenya, is pleased to announce the upcoming launch of the Carbon Markets Association of Kenya (CAMAK) at a networking reception during the Kenya Carbon Markets Conference 2024.

This networking launch event is co-hosted by the Climate Impact Partners and supported by FSD Africa and Bowmans Law. It will bring together government officials, private sector leaders, financial institutions, and carbon markets experts to mark the establishment of this groundbreaking association. The partners congratulate the Kenyan government on the progress made to the forthcoming regulations and look forward to seeing Kenya leverage the potential of carbon markets for the benefit of its population and the planet.

The Carbon Markets Association of Kenya, incubated by the Nairobi Climate Network (NCN), represents a pivotal step in Kenya’s journey towards building a collaborative and enabling environment for high-quality and inclusive carbon projects. CAMAK’s vision is for Kenya to lead the world in generating high-quality carbon credits that bring tangible benefits to communities and the planet. Its mission is to unite carbon market practitioners and stakeholders, providing a collective voice for the industry in Kenya, while upholding the values of integrity, collaboration, and innovation.

CAMAK’s initial activities will focus on representing industry players, advocating for carbon market developments, and facilitating the sharing of best practices within the sector. Membership requirements include being registered in Kenya and actively engaging in project development or contributing to carbon market finance, research, or advisory. Fees will consist of an admission fee and an annual membership fee, with discounted rates for small-scale developers. During its setup phase, CAMAK will be incubated within the Nairobi Climate Network (NCN) with an interim governing council, which includes prominent industry figures such as Mahlon Walo, Bryan Adkins, Héloïse Zimmermann, Tarn Breedveld, Olivia Adhiambo, Molly Brown, and Charles Waweru.

“We congratulate the Kenyan government on the progress made in carbon market regulations and are proud to have played a role in supporting these developments. We are delighted to transform our carbon markets working group into a formal industry association for the advancement of carbon markets in Kenya.” Héloïse Zimmermann, Co-Founder, Nairobi Climate Network

“The launch of CAMAK demonstrates another significant step towards harnessing the potential of carbon markets for Kenya, and strengthening Kenya’s pathway to climate-positive growth. We look forward to engaging with the Association to continue the dialogue with industry players and ensure the development of high quality, inclusive carbon projects for Kenya.” Ali Mohammed, Special Envoy for Climate Change, Executive Office of the President of Kenya

“As developers of high-quality carbon projects, Climate Impact Partners is proud to support the establishment of CAMAK. This initiative reflects our shared commitment to advancing carbon markets in Kenya whilst unlocking new opportunities for sustainable development.” Faith Temba, Sourcing Manager, Climate Impact Partners

“Kenya has made impressive progress with its revised carbon markets regulations and is now in a strong position to leverage the potential of carbon markets for the benefit of its population and the planet. By bringing together industry players and stakeholders, CAMAK will play a crucial role in advancing carbon markets and climate finance, helping to accelerate climate action in Kenya” Mark Napier, CEO, FSD Africa

“Bowmans Law is pleased to see proactive engagement by the Kenyan government on the recent legislative developments, that will enable Kenya to realise the opportunities from carbon markets. We are proud to support the launch of CAMAK and see collective action from industry players helping to create a more enabling environment for carbon projects and leading to direct benefits for communities in Kenya.” Christina Nduba-Banja, Partner, Bowmans Law

Democratising Access to Voluntary Carbon Markets: The CAVEX Story

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The Carbon Value Exchange (Cavex) is an innovative initiative that has recently secured seed funding from FSD Africa Investments (FSDAi) and E3, investors committed to driving change in the climate and broader sustainability sector. This investment is a follow-up to grants received from FSD Africa and the Shell Foundation, supported by the UK government (FCDO). This blog aims to shed light to why Cavex exists and the challenges it seeks to address.

The Context

Multinational intergovernmental agreements, most notably the Kyoto Protocol and Paris Agreement, established through the Conference of Parties (COP) process, have recognised Voluntary Carbon Markets (VCMs) as one of the key contributors to curb global warming. Unlike compliance markets, which are government-regulated, VCMs seek to mobilise funding from organisations and individuals who are eager to offset their carbon emissions. Although not mandated or fully defined by regulatory frameworks, projects in VCMs that reduce or remove GreenHouse Gas (GHG) emissions are generally guided by principles originally defined by the Clean Development Mechanism (CDM)[1].

Due to their voluntary nature, VCMs largely operate without regulation, depending heavily on the trust of those seeking to offset their carbon footprints. To foster trust, various organisations have developed “standards” that assure buyers on the legitimacy of the carbon reductions or removals represented by their purchased carbon credits. However, these standards come with their costs and involve processes that must be met by participating projects:

  • Certification fees,
  • Third-party audit costs (Validation and Verification Bodies)
  • Broker commissions
  • Internal monitoring, reporting and verification (MRV) expenses

Furthermore, VCMs face challenges relating to the accuracy and transparency (and therefore trustworthiness) of carbon offset projects and carbon credit pricing. The absence of unified regulation or standards in VCMs leads to fragmented MRV methods, potential inaccuracies, and the risk of mis-selling. For instance:

  • Manual MRV processes might be prone to human error, and often covering only a subset of devices and/or project areas.
  • While intermediaries facilitate access to carbon financing, they can also contribute to pricing opacity between buyers and sellers.

Recently, international organisations and stakeholders, from governments to private sector players, have recognised the imperative to refine carbon markets if they are to significantly contribute to addressing the impending climate change challenges. Initiatives like the development of Core Carbon Principles seek to drive more integrity and fairness into the sector.

Enter Cavex

Cavex is designed to both mitigate these challenges and enhance the integrity of VCMs by:

  • Lowering costs for micro-small projects to generate and sell carbon credits internationally, thus opening doors to the long tail of small-medium sized projects.
  • Utilising digital-MRV tools for real-time monitoring through connected devices or satellite imagery, to accurately assess their carbon emission impacts.
  • Streamlining micropayment processes for carbon credits sales, ensuring capital flows to the most relevant project participants efficiently.
  • Offering a transparent marketplace for carbon credit transactions.
  • Ensuring a greater portion of credit sales revenue reaches the projects on the ground.

Leveraging Digital Monitoring, Reporting and Verification Tools (D-MRV)

Cavex will employ D-MRV tools, like remote monitoring technologies for device-based projects (e.g., solar water pumps, electric cookstoves) and satellite imagery for nature-based projects (e.g., reforestation), ensuring transparency and integrity:

  • For device-based initiatives, digital monitoring hardware/software will collect accurate activity data, such as power usage to calculate CO2e offsets.
  • For nature-based projects, combining on-the-ground data with satellite imagery will monitor project land areas, aiding the validation process of forest growth or loss and above-ground biomass.

Data collected will undergo Data Quality Assurance (DQA) on the Cavex platform, utilising algorithms and random checks to detect anomalies that could misrepresent carbon reductions.

This digital approach reduces the need for costly and time-consuming field audits, allowing for direct platform-based verification. The system itself is audited thoroughly by an independent organisation, that will ensure that the correct (industry established) carbon calculation algorithms are applied to the data, and that the entire reporting processes and ledger systems used are accurate.

For example, in Kenya, a farmer named James reports usage data from his solar water pump directly to the Cavex platform (in either kwh and usage time consumed by the pump controller), translating into digital carbon credit value. These credits, once sold, help James finance his water pump or invest in his farm.

Moreover, Cavex’s digital tools will enable extensive data collection from devices enhancing the accuracy and integrity of the carbon credits generated. This will reduce the need for random selection of devices or plots of land (in nature-based projects) for manual verification, thereby improving the accuracy and integrity of the data underpinning the carbon credits.

A Transparent Digital Marketplace

Validated project data is converted into CO2e units, and eventually into carbon credits, recorded on a digital ledger. Each credit is linked to the project owner, with a traceable journey from creation to retirement. Project owners can list their credits in the marketplace, directly connecting with potential buyers and providing transparent pricing and project information.

Digital Payment Channels Guarantee Direct Benefits to Project Participants

Cavex proposes to integrate digital payment methods like mobile money to distribute proceeds from carbon credit sales directly to project stakeholders. This ensures that projects achieve their goals of GHG reduction or removal by directly benefiting the individuals and communities involved.

For instance, Mary, a small-scale caterer, who purchased an electric cookstove, contributes data that generate carbon credits by displacing traditional carbon-emitting fuels (often charcoal in sub-Saharan Africa). Along with other users, the majority of the proceeds from these credit sales are funnelled back to the cookstove project and its users, reducing costs and enhancing benefits.

Cavex stands at the forefront of democratising Voluntary Carbon Markets, with further trials underway to onboard more use cases, enabling small projects to contribute to climate change mitigation and mobilise finance for resilience.

Catalyst Fund invests $1.8 million in nine African climate startups

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Catalyst Fund, a pre-seed VC and accelerator, backs nine African early-stage climate tech startups with a $1.8 million investment to bolster their impact and growth trajectory.

The nine startups benefiting from the investment include Mazao Hub and Medikea from Tanzania, Earthbond, Zebra Cropbank, and Scrapays from Nigeria, Keep It Cool from Kenya, NoorNation from Egypt, Thola from South Africa, and Tolbi from Senegal.

In September 2023, Catalyst Fund achieved its first close, securing $8.6 million out of its $40 million target for investments in African climate startups. Notable investors include FSD Africa, FSDAi, Cisco Foundation, USAID Prosper Africa, and Andrew Bredenkamp.

The Catalyst Fund, established in 2016 and overseen by BFA Global, supports startups in accessing capital, talent, and market opportunities. This marks the fund’s second round of investments in African startups addressing climate change challenges.

In January 2023, Catalyst Fund allocated $2 million to ten startups focused on developing solutions for Africa’s climate-vulnerable communities.

As a result, this latest investment broadens Catalyst Fund’s portfolio to encompass 19 companies operating in eight diverse markets: Kenya, Egypt, Morocco, Nigeria, Senegal, South Africa, Tanzania, and Uganda. The Catalyst Fund team will offer comprehensive venture building support to these startups, effectively integrating them as extensions of their own teams.

These startups are actively addressing climate-related challenges within various sectors, including agriculture, healthcare, energy access, and waste management.

In 2023, a survey revealed that over 110 million Africans faced direct consequences from weather, climate, and water-related hazards in 2022, resulting in economic damages surpassing $8.5 billion.

In discussing the investment, Maelis Carraro, Managing Partner at Catalyst Fund, highlighted that the models utilized by the startups “empower farmers, healthcare providers, waste workers, and small and medium businesses to effectively adapt to the impacts of climate change, thus fostering economic growth with a positive climate impact.

Additionally, Maxime Bayen, Operating Partner at Catalyst Fund, emphasized that “with these latest investments, [Catalyst Fund] is committed to further diversifying its portfolio across various models, climate adaptation sectors, and geographic regions.

In 2022, Catalyst Fund secured a $3.5 million investment from FSD Africa to enhance its footprint and scalability across Africa. With this funding, its objective is to bolster 40 pre-seed impact ventures focused on developing solutions for marginalized climate-vulnerable communities in Africa, while also offering comprehensive venture-building assistance.

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Catalyst Fund has backed 6 African climate-tech startups in last 4 months

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Pre-seed venture capital (VC) fund and accelerator Catalyst Fund has made investments in six African climate-tech startups in the last four months, having announced a first close of its US$40 million fund in September.

Catalyst Fund is a pre-seed VC fund and accelerator backing high-impact tech startups that seek to improve the resilience of underserved, climate-vulnerable communities. It partners with mission-driven founders that share our vision of a world where every individual has the tools and opportunities they need to thrive.

Until a year ago, the organisation offered grant capital to selected startups, but in January 2023 it announced a US$2 million investment into 10 startups funded by a US$30 million fund anchored by financial sector development agency FSD Africa.

Focused on startups building solutions to improve the resilience of climate-vulnerable communities in Africa, Catalyst Fund in September of last year announced the successful first close of its targeted US$40 million fund, with over 20 per cent committed.

The fund, which offers US$100,000 of equity investments as well as US$100,000 of hands-on venture-building support, has since then announced six investments. In November, it announced investments in Tolbi, a pan-African climate-agtech startup using satellite imagery and AI to enable climate-smart agriculture practices on the continent with data; and NoorNation, an Egyptian startup providing decentralised solar energy and water solutions tailored for farming businesses and underserved communities.

In December, it backed South Africa’s Thola, which democratises access to certifications to liberate SMEs to catalyse climate resilience and food safety – transforming compliance from an obstacle into an opportunity.

Then, in January, it funded Nigeria’s Zebra CropBank, which provides climate-smart solutions tailored to overcome the interlinked challenges holding smallholder farmers back; and Nigeria’s Scrapays, a waste management startup that enables individuals and small businesses to launch mini-waste enterprises.

And just last week it announced an investment in Tanzania’s Medikea, which makes affordable preventative and primary care, diagnostics, and compliance support more accessible to overlooked Tanzanians, directly empowering vulnerable groups to safeguard their well-being in the face of growing threats.

Catalyst Fund’s climate-focused fund has garnered significant backing from investors including FSD Africa, FSDAi, Cisco Foundation, USAID Prosper Africa, and seasoned tech investor Andrew Bredenkamp.

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Letter: Current package of half measures can’t cure Africa’s debt crisis

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Moritz Kraemer’s Markets Insight piece (January 19) rejects the suggestion that the downgrading of African sovereign eurobonds is evidence of an anti-African bias. If anything, Kraemer argues, the credit rating agencies have been rating too generously, evidenced by figures showing the default ratio for B-rated African countries has historically been much higher than the global average.

But the data he presents to support this is patchy. African countries do not have a long history of ratings or even market access and in any case this fails to explain why African countries routinely have to pay more for their debt than Latin American countries with similar or riskier profiles.

Where he is right, however, is that criticising rating agencies will not help to solve the debt crisis affecting more than half the low-income economies in sub-Saharan Africa.

The seriousness of the situation cannot be overstated. These countries are paying an average of 31 per cent of revenues as debt service. This leaves little room for spending on development after recurrent expenditure is accounted for. As a consequence, gains on the poverty front are eroding quickly. The World Bank predicts that across sub-Saharan Africa, per capita gross domestic product, which has not increased since 2015, will drop at an annual average rate of 0.1 per cent over the 10 years to 2025, by when the number of people living in absolute poverty will have reached 472mn, or 37 per cent of the region’s population.

Addressing this situation will need more than the current package of half-measures which are aimed at addressing the liquidity problem for market access countries. Africa’s debt crisis is also a solvency one with developmental ramifications. What is needed is a comprehensive approach: the equivalent of the Heavily Indebted Poor Countries (HIPC) initiative, which the World Bank and IMF launched in 1996 to ensure that no poor country faced an unmanageable debt burden.

But safeguards should be put in place to address the moral hazard of debt forgiveness. There should also be much greater attention on reforming the Common Framework — the G20’s mechanism for dealing with insolvency and protracted liquidity problems — to facilitate orderly and quicker debt restructuring for those market access countries that would need to do so.

Evans Osano
Director, Capital Markets, FSD Africa

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Mark Napier: Africa’s leaders seize the climate initiative

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As international headlines chart the terrible suffering caused by flooding, earthquakes and wildfires, a less headline-grabbing, but nonetheless hugely significant, good news story has emerged from Nairobi, Kenya. The African Climate Summit, which concluded on September 6, was a huge success story for Africa and for Kenyan President William Ruto.

Pledges directed to African climate change adaptation and litigation amounting to $26bn have emerged from the summit. That’s not enough to solve Africa’s climate challenges, but even if only a fraction of this sum materialises, it will have a real impact on the ground.

Even more consequential in the long term is the consensus that emerged from the conference around the need for economic growth that delivers both prosperity and environmental benefits. The fact that a consensus was achieved is significant, because it strengthens Africa’s position for the forthcoming COP28 conference in Dubai in November. Furthermore, the admission of the African Union to the G20 means the African voice is getting louder and clearer on the world stage.

Importantly, the summit’s adoption of the Nairobi Declaration, which commits African countries to develop and implement “policies, regulations and incentives aimed at attracting local, regional and global investment in green growth and inclusive economies”, is also a signal that Africa will look for other strategies to support climate action, alongside the $100bn a year promised by developed nations in 2009.

Indeed, the summit was most of all an assertion of African self-determination and specifically the need to mobilise Africa’s domestic private capital in the continent’s climate efforts. Relying on international finance creates a dependency that Africa does not want. Put simply, Africa has determined that its own resources must be channelled, supported by a financial market architecture which ensures that states can absorb climate finance effectively, distributing it where it is most needed.

But if it is to do this, the current situation – in which less than 0.5% of domestic institutional assets under management are invested in alternative assets – cannot continue. As was argued powerfully at the launch of the Pan-African Fund Managers’ Association at the beginning of the summit, we need to think about how we can put in place not only the policy and regulatory incentives but also the instruments and the financial architecture to drive much more of the$1.4tn of institutional capital in Africa towards climate and nature-positive projects.

Crucially, this will mean more use of de-risking strategies such as credit guarantees to persuade pension funds to de-emphasise the easy but less safe option of government securities and to invest in green assets. It will also require sources of donor and philanthropic capital to step up their support for project development, for example through the use of challenge funds or by investing in intermediaries that are closer to the market as a way of reaching the more innovative start-ups and entrepreneurs who will drive the new green economy.

[Current] global prudential regulations can make it economically impossible for large institutional investors to allocate capital to African projects.

Moreover, the summit underlined an important issue that has seen Africa’s financing needs neglected, namely the need for reform of the global prudential regulations, which can make it economically impossible for large institutional investors to allocate capital to African projects. There should be a global review of these constraints, perhaps led by the G20.

Even with such reforms, African governments, many of which are battling with high levels of debt, will need to be both agile and visionary if they are to compete at a time when the world’s biggest economies are offering big incentives to attract green investment. Though deeply political, carbon taxes could be one way to go, but would need to be sensitively introduced. Other green fiscal incentives, balancing out tax breaks for green investment by removing subsidies for dirty industries, are also essential for governments to be able to direct their economies towards a greener future.

The UN Framework Convention on Climate Change has just released its first global stocktake report, highlighting yet again that, despite a major global effort, progress since the Paris Agreement has been inadequate. The report recommends greater commitment to transformation across all sectors and recognises the need for more access to climate finance for developing countries in line with the key recommendations from the Nairobi Summit.

If we get this right, the prize is very significant and the message from the summit is that Africa will not wait. Instead, it is determined to grab the opportunities of a new green growth pathway now, as are an increasing number of investors, and that has to be good for us all.