Africa’s contribution to global emissions is around 2% of the total. Despite this, it is one of the regions most adversely affected by climate change. Climate resilience and people’s ability to live amid a climate disaster are at the centre of climate tech efforts. But, the solutions must be tailored to the local environment, which means they must be produced locally to allow for speedier and simpler integration into the current market and economy. This is one of the results of the “Adapt, Mitigate, and Grow” assessment on the condition of the climate tech ecosystem recently published by EIT Climate-KIC and research company Briter Bridges.
Climate technology can aid in the move away from reliance on high-polluting sectors associated with economic development, towards the adoption of renewable sources, and the promotion of an energy transition consistent with the 1.5-degree target. The climate tech business in Africa is fast expanding, drawing more start-ups and investment, yet there are several impediments to the climate tech ecosystem flourishing. The most significant hurdle is a lack of financial resources.
Systems that are highly technical, expensive, or hardware-intensive are thus considerably more difficult to create, and even if they do start-up, their potential to expand and scale is hampered by a lack of access to funding. Furthermore, because the ecosystem has historically concentrated on finance, the bulk of programmes handled by entrepreneur support organisations in Africa are not structured to satisfy the requirements of climate-oriented entrepreneurs.
One encouraging indicator is that Africa is increasing its investment in climate technology, with renewable ideas, particularly solar energy, leading the way. Waste management and sanitation enterprises are steadily gaining popularity, as are solutions that minimise inefficiencies in the utilisation of natural resources and agriculture. But there are only a limited number of solutions at the growth-stage that capture the bulk of funding volumes.
The report highlights the importance of blended finance and patient capital as key instruments to tackle the investment gap in costly hardware and capital-intensive solutions. Finally, there is a need for creating more efficient partnerships with stakeholders that can align on missions and leverage their strengths. The private sector, the support landscape, governments, and consumers are four key stakeholders that are central to the development of the climate tech landscape in Africa. These groups must align on needs and priorities for the ecosystem to thrive.
Key figures
- Between 2014 and Q1 2022, climate tech start-ups in Africa cumulatively raised just over $2.1 billion in disclosed funding, accounting for 14.7 per cent of the total investments raised by digital- and technology-driven start-ups in the same period.
- In 2021 alone, record funding into climate tech companies reached at least $440 million, demonstrating the growth of climate-focused start-ups and the increased number of active investors.
- Within climate tech, renewables emerged as the top-funded in terms of deal volumes between 2014-2022, receiving 75 per cent of the disclosed funding.
Source: climate-kic
