Climate change poses significant challenges for Africa, underscoring the need for substantial investment in innovative solutions across various sectors to mitigate its effects. Fortunately, funding for climate tech startups in Africa has seen remarkable growth recently. The sector has not only increased in total investment but also in its proportion of overall funding, soaring from 20% in 2019 to 60% in 2023, with more than $3.4 billion invested since 2019.
Today, climate tech is the second-most funded sector in Africa, behind only fintech. In 2023, a third of all startup investment in Africa was directed towards climate tech, totaling over $1 billion. While agritech leads the early-stage investment pipeline, accounting for 40%, energy and water startups have garnered nearly 75% of climate tech funding in 2022. Other sectors, including food waste, insurtech, waste management, and carbon credits, make up the remaining 25% of the funding.
Despite the growing investment in climate tech, the financing still falls short of what African countries need to achieve their 2030 climate goals. To meet both mitigation and adaptation requirements, overall climate financing must increase from the current $30 billion a year to nearly $300 billion, with contributions from both private and public sectors. Yet, private sector contributions are minimal, standing at only 14% of total climate finance. Employing blended finance approaches could enhance private funding to the sector, de-risking the journey for both entrepreneurs and investors.