Disparities in Climate Investments
By Carolyne Tomno
A recent report by the African Venture Philanthropy Alliance (AVPA), supported by The Lemelson Foundation, sheds light on a significant preference among impact investors for digital applications and solar power solutions to address carbon emissions in East Africa. This emphasis, however, raises concerns as crucial technologies combating the immediate effects of the escalating climate crisis, such as water scarcity and rising temperatures, are receiving insufficient attention and funding.
Released just ahead of the COP 28 Climate Conference, the report, a collaborative effort with AVPA, Weber Shandwick, and Geopoll, underscores that private investors are primarily concentrating on initiatives aimed at reducing Africa’s carbon footprint. In contrast, endeavors focused on mitigating adverse climate change effects seem to rely largely on fragmented philanthropic funding, exposing a notable gap in systematic investment for climate adaptation in Africa.
Frank Aswani, CEO of AVPA, expressed the urgency for investors to broaden their focus, stating, “Renewable energy is a known path for investors, offering relatively swift and certain returns. Yet technologies to protect Africans from erratic water supplies, heat spikes, and elevated pests and diseases are set to become mainstream necessities.”
The study zooms in on vulnerable developing countries such as Kenya, Uganda, and Ethiopia, highlighting their susceptibility to climate change and financial distress that impedes their ability to pursue adaptation measures.
Despite Africa’s annual climate finance needs reaching $277 billion, surpassing the total aid spending of the world’s official donors at $204 billion, the report notes that public finance covers less than a tenth of Africa’s climate costs, with private finance contributing just 1.5%. This emphasizes the potential of impact investors to play a pivotal role in advancing climate protection technologies and financial models.
Maggie Flanagan, Programme Officer at The Lemelson Foundation, stressed the need for audacious leadership, stating, “Africa’s rising temperatures and erratic seasons demand engagement and audacious leadership from impact investors.”
To identify innovative technologies addressing the region’s challenges, researchers conducted over 40 interviews and polled 5,000 East Africans in Ethiopia, Kenya, and Uganda. Agriculture, health, and infrastructure emerged as the most impacted sectors. The study recommended high-impact technologies such as low-cost nets capturing permanent free water supplies, new soil additives retaining long-term soil moisture, road surfaces made from recycled plastic wastes, and paints reducing heat in homes and urban areas, mitigating air pollution. The report coincides with the launch of the Africa Climate Investment Forum, aiming to create a climate adaptation investment ecosystem through investor co-creation, knowledge sharing, and immersion programs. Allan Kamau, Managing Director of Weber Shandwick East Africa, emphasized the importance of communication and knowledge sharing in accelerating widespread engagement with climate solutions across Africa
