Green finance in Africa in 2024

The year 2024 marked a significant milestone for Africa in the adoption of green finance to support sustainable development. Green bonds, sustainability-linked loans, and other environmentally conscious financial instruments have fueled projects that address climate change, reduce carbon footprints, and foster social development. Across the continent, these innovative financing mechanisms have catalyzed transformative projects in renewable energy, urban infrastructure, and agriculture, demonstrating Africa’s commitment to a greener future. 

Green bonds, a prominent tool in sustainable financing, gained considerable traction this year. South Africa led the charge with its municipalities and private sector issuing green bonds to fund renewable energy and public transportation projects. For instance, Johannesburg allocated funds from green bonds to expand its Bus Rapid Transit (BRT) system, integrating cleaner energy sources and reducing emissions in one of Africa’s busiest cities. Similarly, Kenya’s energy sector saw significant investments backed by green bonds. Geothermal Development Company (GDC) launched a new initiative to harness geothermal energy, a move expected to reduce the country’s reliance on fossil fuels and provide a clean energy source for millions. 

Read also: The power of green Bonds, climate funds, and private sector investment

Sustainability-linked loans (SLLs) also played a vital role in driving corporate responsibility toward environmental and social targets. Moroccan agribusiness firms leveraged SLLs to implement sustainable irrigation techniques, improving water conservation in one of the continent’s most water-scarce regions. These loans, tied to performance metrics such as reducing water usage and enhancing soil health, not only secured funding for the businesses but also ensured accountability in achieving sustainability goals. In Nigeria, sustainability-linked loans supported banks in creating financial products tailored to small-scale farmers adopting climate-resilient agricultural practices. These efforts align with broader goals to ensure food security in the face of unpredictable weather patterns. 

Notably, private-public partnerships (PPPs) fueled by green finance have emerged as a cornerstone for large-scale infrastructure projects. In Rwanda, the government partnered with international investors to develop Kigali Green City, a pioneering urban development project. With funding sourced from sustainability bonds, the initiative integrates eco-friendly housing, green transport systems, and renewable energy, offering a model for sustainable urbanization in Africa. In Ethiopia, wind power projects funded through green financing mechanisms contributed to the country’s renewable energy capacity, underscoring the potential of partnerships in achieving energy security while reducing environmental impacts. 

Despite these successes, challenges remain. Access to green finance is uneven across the continent, with smaller economies struggling to attract sustainable investments due to perceived risks and limited capacity to implement projects. However, regional cooperation and capacity-building programs supported by international organizations have sought to address these barriers. Initiatives such as the African Development Bank’s Green Finance Facility have been instrumental in bridging funding gaps and supporting smaller nations in accessing green capital. 

As the effects of climate change intensify, Africa’s embrace of green finance in 2024 underscores its resilience and forward-thinking approach to development. The projects funded this year reflect the continent’s ability to harness innovative financial instruments to drive sustainability while addressing pressing socio-economic challenges. With continued investments and collaborations, green finance is poised to remain a transformative force in shaping Africa’s sustainable future.