Climate finance needs innovation to close funding gaps

With climate change accelerating and climate-linked disasters increasing, countries around the world are racing to build resilient infrastructure. However, African countries, already facing debt crises, are only able to attract a fraction of the financing they require. 

Speakers at a roundtable discussion on the sidelines of the ECA’s COM2025 said that Africa could utilise some innovative funding instruments to access the required investments. 

Joseph Intsiful, Senior Climate Information and Early Warning Systems Specialist at the Green Climate Fund, said green bonds and sustainability-linked bonds are gaining traction as viable instruments to drive climate investment. 

Ntsiful pointed to successful examples across the continent, such as South Africa’s first sovereign green bond launched in 2023. “The government used $200 million in green bonds to finance renewable energy and climate-resilient projects,” he noted. 

Similarly, Morocco’s green bond initiative has bolstered the Noor Ouarzazate solar complex, one of the largest in the world. 

Beyond green bonds, public-private partnerships are playing a crucial role in mobilizing climate finance and risk-sharing. “Public service sector partnerships are critical in terms of mobilizing climate finance and enabling other parties, particularly the private sector, to participate in this very important resource mobilization,” Ntsiful explained.

Reflecting on the role of debt swaps, Jean-Paul Adam, Director for Policy, Monitoring and Advocacy in the Office of the Special Advisor on Africa to the United Nations Secretary General, cautioned that while they provide some relief, they are not a substitute for full debt restructuring in cases where countries are in financial distress. 

However, debt swaps do hold promise for creating fiscal space, particularly in African nations struggling with high debt servicing costs. 

“The opportunity to improve your fiscal space is key because the cost of servicing debt, particularly in African countries, whether they are middle-income or low-income, has dramatically increased in recent years. And this is linked to the problem of the cost of capital,” he said. 

Adam stressed that for debt swaps to be truly effective, they must benefit vulnerable communities rather than serving narrow interests.