African countries committed to cutting emissions and adapting to climate change under the Paris Agreement, but the international financial system largely prevents meeting those goals, an economist says.
Carlos Lopes, who delivered a vice-chancellor’s conference at the University of the Witwatersrand on September 2, 2026, argues that the current approach to climate finance is failing Africa.
The continent received an average of $43.7 billion per year in 2021 and 2022, which represents only about 23% of its needs. For every dollar Africa currently receives, it needs roughly four dollars of climate finance.
The funds that do arrive are also distributed unevenly. The ten most climate-vulnerable African countries receive only 11% of the continent’s climate finance, while ten other countries attract 76% of private climate finance.
Current funding covers just 18% of planned mitigation projects and 20% of adaptation costs.
Lopes, an economist specialising in climate change and governance, contends that climate finance tends to flow toward countries where investors believe their money will be less exposed to risk and more likely to generate sufficient returns.
This means the countries most in need of help often receive the least funding, because investors judge them more likely to default on loans or produce inadequate returns.
The system makes finance more expensive and harder to obtain for countries whose vulnerability increases their needs.
He argues that Africa must negotiate affordable financing that allows it to develop its industries, energy systems, transport, cities and skills, rather than simply asking for more money labelled “climate finance.”
Climate finance should not be separated from development finance, he says. Investments in electricity, transport, cities, irrigation, technology, manufacturing and education are needed both to grow economies and to protect populations from climate change effects.
The transition will only be equitable if African countries transform their minerals and renewable energy into local jobs, higher-value products and stronger economies, rather than being forced to export the critical minerals that power the energy transition while taking on more expensive debt to adapt to climate damage caused by developed countries.
Lopes points to a history of unmet promises. In 2009, developed countries pledged to provide $100 billion annually to developing countries for climate finance, with funds expected to be available each year from 2020.
Calculations show that 2022 was the only year when more than $100 billion in climate finance reached developing countries – two years after the deadline.
He notes that the $100 billion target was never calculated based on the actual needs of developing countries. It was a figure negotiated by governments through a political process.
The next major climate finance pledge came at COP29 negotiations in Baku, Azerbaijan.
Governments agreed to provide developing countries with at least $300 billion per year by 2035, and set a more ambitious goal of $1.3 trillion per year from all sources by 2035.
Lopes highlights several concerns with this promise: the guaranteed target is $300 billion per year, the deadline is still a decade away, funds can come from a “wide variety of sources,” and the more ambitious $1.3 trillion goal depends on contributions from everyone – governments, private investors, international financial institutions and alternative sources.
The larger the announced amount, the less clear it is who is responsible for delivering it.
Announcements about climate finance do not match the funds countries can actually spend. Commitments are promises, financial engagements are formal obligations to provide funds, and only disbursements are actual payments.
Loans are not grants, private finance is not public money, and a promise of $1 trillion does not magically appear in African budgets.
For example, the Bridgetown Initiative of 2022 helped international development banks create about $400 billion in additional lending capacity over ten years. However, that money must serve many countries, not just those in Africa.
Governments and financial institutions have become skilled at designing plans to mobilise trillions, but those trillions themselves remain elusive.
The amount of climate finance is not the only issue – its cost matters too.
Financing large wind and solar projects costs at least two to three times more in Africa than in advanced economies and China, partly due to higher borrowing costs and the higher returns investors demand.
Since renewable energy projects require significant upfront investment, expensive financing drives up electricity prices. A reduction in average financing costs of one percentage point would cut wind and solar production costs by at least 8%.
Climate negotiations must therefore address interest rates, guarantees, currency risks and the extra costs charged when lenders consider certain countries risky. Africa represents about 20% of the world’s population but receives less than 3% of global energy spending.
The continent does not lack exploitable sunlight – it lacks affordable capital.
Countries most exposed to climate disasters are also considered riskier for lending, forcing them to pay more for climate finance. This means they cannot invest enough in building infrastructure that can withstand climate disasters.
When disasters strike, African countries risk having to pay even more for the loans they take out to repair the damage.
Climate diplomacy has become more difficult as climate policy is now closely tied to industrial and geopolitical competition.
Rich countries subsidise their own battery, electric vehicle, hydrogen and renewable energy industries, yet African countries are asked to attract private investors if they want to develop these industries.
Africa holds about 30% of global reserves of critical minerals, including 19% of those needed for electric vehicles.
The continent already participates in the just transition to green energy – the question is at what level of the value chain it operates: as an exporter of raw materials like lithium and cobalt, or as a manufacturer of batteries and other green products.
If Africa supplies the minerals while manufacturing, technology and highly productive jobs remain elsewhere, the green transition will only reproduce old economic inequalities.
African climate negotiations must therefore focus not only on finance but also on developing African industries, skills and economic power.
Lopes is not convinced that “climate finance” is the right guiding concept for Africa. It separates what is fundamentally a single development challenge.
Africa needs energy systems, electricity grids, transport, resilient cities, irrigation, digital infrastructure, manufacturing capacity and human capital. Together, these investments determine the continent’s development, resilience, productivity, industrialisation and future emissions.
Labelling some as “environmental” and others as “development” may make sense for international financial institutions, but it makes much less sense from the perspective of Africa’s structural transformation.
Africa has received only 23% of the climate finance it needs and attracts less than 3% of global energy investments, while representing about one-fifth of the world’s population. This reveals a problem broader than the climate finance gap alone.
Instead of constantly asking how Africa can become more attractive to international capital, Lopes argues, the question should be why capital is most expensive where development and climate needs are greatest.
Climate justice is not measured by the amount of money labelled “climate finance,” but by whether that money is accessible at a reasonable cost and helps Africa produce, trade and build its own productive economy.
Otherwise, the just transition will be nothing more than the old international division of labour powered by renewable energy.
African climate diplomacy should therefore use the global transition to redefine the terms under which the continent finances, produces, trades and transforms itself.
Source: The Conversation
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