Prospects for climate adaptation finance for Africa: A glass less than half full

Financing for climate adaptation action in Africa needs to increase seven to eightfold. Climate adaptation finance flows in Africa, according to the State and Trends in Adaptation 2023 report from the Global Center for Adaptation (GCA), reached only $11 billion annually in 2019-2020, and $13.9 billion in 2021-2022.¹ Africa may need more than $100 billion per year for adaptation.²

The end of 2024 brought some positive news and prospects regarding possible increases to climate adaptation finance for Africa: The commitment to triple climate finance at COP29 in Baku,³ and the announcement to replenish the funds of the World Bank’s International Development Association (IDA) to $100 billion, are encouraging signs.⁴ Unfortunately, when these numbers are looked at more closely, it is clear that they will not close the gap for climate adaptation action in Africa.

The agreement to increase climate finance at the COP29 meeting (the New Collective Quantified Goal on Climate Finance) was a welcome step forward, though not without controversy. This agreement sets a goal for developed countries to mobilize at least $300 billion per year by 2035 for developing countries’ climate action from a wide variety of sources—public and private, bilateral and multilateral—and for both mitigation and adaptation.⁵

Many stakeholders were dissatisfied with this agreement for four reasons. First, the developing countries were looking for much higher levels of commitment, well beyond $1 trillion per year, based on the rapidly growing adaptation needs estimates.⁶ The agreement has only one concrete action item ensuring an increase in climate financing, called the Baku to Belem Roadmap to 1.3T initiative, although a specific number or method for upscaling was not finalized.⁷ Second, the developed countries had hoped to bring into the contribution commitment some of the high-middle-income economies, such as China.⁸ The final agreement only encourages them to make contributions, including through South-South cooperation, on a voluntary basis. Third, the developing countries were hoping for an increase and a clear target in grant funding, especially for adaptation.⁹ Fourth, the agreement recognizes the need to dramatically scale up adaptation finance, but it does not set a target for the allocation between mitigation and adaptation. The latest calculations on global climate finance show that adaptation receives around 5% of total climate finance flows ($76 billion out of $1.5 trillion).¹⁰

While the COP29 commitment promises to triple climate finance flows, it will be disbursed over 10 years. Unless the percentage of climate finance directed to adaptation and the portion of climate finance that comes to Africa are substantially scaled up, the $300 billion target of COP29 will be insufficient. The glass is less than half full.

Climate impacts and debt are compounding the burden on Africa. According to the African Development Bank, Africa will spend $163 billion on debt service payments in 2024, far exceeding the $61 billion spent in 2010.¹¹ This is a substantial weight on Africa’s prospects for development. While Africa’s historical and current contributions to greenhouse gas emissions have been very small, receiving any adaptation financing requires paying back loans with interest. More than half of the adaptation finance flows are channeled through debt.¹² The grant component for adaptation actions in important sectors for Africa’s growth, like energy and transport, is as low as 15%.¹³ Even for adaptation in agriculture, the grant component is only about half.¹⁴ Africa needs more grants for climate adaptation action.

Positive news from the World Bank was recently announced with their agreement to the largest yet replenishment of IDA funds. Total donor commitments for the upcoming three-year cycle reached $24 billion that will generate about $100 billion, an increase of about $7 billion over the last IDA cycle. This is important and welcome news as the majority of the IDA resources go through Africa, and globally, 44% of their lending goes toward climate finance, with a goal of parity between mitigation and adaptation.¹⁵ Multilateral development financial institutions provide about 53% of climate adaptation finance to Africa.¹⁶ The increase in IDA resources will certainly help, but the magnitude of the climate crisis requires even more resources.

What can Africa do? First, more financial resources require better institutions, planning, and execution of adaptation programs. According to the Global Center on Adaptation, only seven African countries have all the key strategic and planning elements to absorb larger adaptation finance.¹⁷ There are important opportunities to learn and replicate lessons from these countries across the region. Second, the private sector in Africa is not yet engaged in adaptation actions. Nations, communities, and businesses need a vibrant ecosystem of enterprises that provide adaptation solutions, goods, and services to strengthen their resilience to climate shocks. Third, African countries should see adaptation not as a sunk cost but as an economic opportunity. With benefit-to-cost ratios of 4:1 and beyond for adaptation investments, the gap in adaptation finance for the region will imply foregone economic benefits due to missed adaptation investments of as much as $6 trillion by 2035 in Africa.¹⁸ The region cannot afford to miss this opportunity.