TLDR:
- Funding for climate tech start-ups in Africa is growing, with businesses raising over $3.4 billion since 2019.
- African countries need to address risks like currency instability, while investors need to expand their scope of interest to more climate sectors.
Ademola Adesina founded a start-up, Rensource Energy, to provide solar and battery-based power subscription packages in Nigeria in 2015, facing challenges in raising capital initially. However, the ecosystem has since evolved, and Rensource Energy has raised about $30 million over the years. While funding for climate tech start-ups in Africa is increasing, with businesses raising more than $3.4 billion since 2019, there is still a significant funding gap, as the continent requires $277 billion annually to meet its climate goals for 2030.
Experts suggest that to unlock financing and bridge this gap, African countries need to tackle risks like currency instability that diminish investor appetite. Investors are also encouraged to broaden their interests to include various climate sectors like flood protection, disaster management, and heat management, and to utilize diverse funding methods.
While private sector financing in African climate initiatives, including renewable energy technology, is on the rise, it still lags behind public financing. The low contribution from private investors is attributed to their familiarity with areas like renewable energy technology, leading to less funding for more diverse initiatives. The role of public financing should be to de-risk the private sector and attract more private capital. Overall, there is a visible growth in private sector financing for African climate initiatives, with investors beginning to understand the economic benefits of adaptation solutions.