Africa’s climate-tech sector is entering a new phase, with investors increasingly looking beyond promising technologies to businesses that can generate revenue, attract customers and scale sustainably. This shift signals growing commercial confidence in climate innovation. Yet, while investment is rising, access to capital remains uneven, particularly for early-stage ventures and businesses serving underserved communities.
According to TechCabal Insights, African climate-tech startups raised $1.18 billion in 2025, a 57 per cent increase from the previous year, even as the number of deals declined for the third consecutive year. The trend suggests that investors are concentrating larger sums in fewer companies, favouring businesses with established operations and clearer revenue prospects.
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Debt financing accounted for approximately 54 per cent of the funding raised, highlighting the growing role of capital directed towards companies with assets or predictable cash flows. However, this shift also exposes a financing gap for smaller ventures that lack the track record or collateral required to secure commercial loans.
The concentration is evident among the sector’s largest players. Sun King, d.light, M-KOPA and Spiro have collectively raised substantial funding, much of it through debt. Meanwhile, Briter’s State of ClimateTech in Africa 2.0 report highlights the dominance of a relatively small group of companies in the continent’s investment landscape.
Funding is also geographically concentrated. Kenya attracted approximately 51.3 per cent of African climate-tech investment between 2016 and 2025, followed by Nigeria at 12.9 per cent and South Africa at 12 per cent. Energy solutions accounted for the largest share of funding, while mobility and transportation also attracted significant investment.
Although these figures demonstrate the sector’s potential, they reveal a challenge: promising businesses in less-established markets may struggle to secure the resources needed to develop and expand their solutions.
Another concern is the imbalance between climate mitigation and adaptation. Briter estimates that mitigation technologies accounted for approximately 84 per cent of climate-tech funding, compared with 16 per cent for adaptation-focused businesses. Yet adaptation is particularly important for African economies exposed to droughts, floods, extreme heat and other climate-related risks.
Africa receives only a small share of global climate finance, while the resources required to meet national climate commitments remain substantial. Bridging this gap will require financing mechanisms that support both emissions reduction and resilience, including projects that may not generate the immediate returns commercial investors typically seek.
Blended finance offers one potential solution. By combining commercial investment with concessional funding, public resources, guarantees or risk-sharing arrangements, it can help reduce the risks associated with projects that struggle to attract private capital independently. Properly structured, these arrangements can help promising businesses progress from pilot projects to commercially viable operations.
The Global Electronics Management (GEM) programme, launched in Manila on 7 October 2026, illustrates another area where coordinated investment can support climate-related development. Funded by the Global Environment Facility and led by the United Nations Industrial Development Organisation in partnership with the African Development Bank, the $60 million initiative covers 16 countries, including nine in Africa.
The programme promotes more sustainable electronics production and consumption through repair, reuse, recycling and responsible recovery of valuable materials. Its wider objectives include strengthening national policies, improving access to finance and technology, and building partnerships that support circular-economy businesses.
The need is considerable. The Global E-waste Monitor 2024 estimates that the world generated 62 million tonnes of electronic waste in 2022, of which only 22.3 per cent was documented as formally collected and recycled in an environmentally sound manner. Global e-waste generation is projected to reach 82 million tonnes by 2030.
Africa generates millions of tonnes of electronic waste annually, yet formal collection and safe recycling remain limited. Expanding responsible recovery systems could reduce environmental harm while creating opportunities for local enterprises, technical employment and material reuse.
Solar irrigation offers another example of a climate solution with commercial potential. For smallholder farmers, however, the upfront cost of pumps, solar panels and installation can be prohibitive. Pay-as-you-go financing allows farmers to spread payments over time while enabling providers to earn recurring revenue.
The model’s success depends on more than flexible payment arrangements. Farmers must be able to generate sufficient income to meet their obligations, equipment must remain reliable, and water extraction must be managed responsibly. In areas with limited groundwater, poorly regulated solar pumping can accelerate depletion rather than strengthen long-term resilience.
These challenges are unfolding alongside persistent energy poverty. The Energy Progress Report 2026 indicates that hundreds of millions of people remain without electricity, with sub-Saharan Africa accounting for most of the global access deficit. Mini-grids, solar home systems and other distributed energy solutions can expand access, but their deployment requires financing suited to local incomes, infrastructure constraints and market conditions.
For blended finance to make a meaningful difference, public support must be transparent, linked to measurable outcomes and designed to mobilise additional private investment.
