Impact Investors are favoring digital applications and solar power solutions to reduce carbon emissions in East Africa over crucial water and temperature technologies that could protect East Africans from the effects of the escalating climate crisis, a report released today by the African Venture Philanthropy Alliance (AVPA), supported by The Lemelson Foundation reveals.
Unveiled as the world prepares for the COP 28 Climate Conference that has pledged to address adaptation funding for Africa, the joint research with AVPA, Weber Shandwick, and Geopoll found private investors remained predominantly focused on initiatives aimed at reducing Africa’s carbon footprint. In comparison, innovations aiming to mitigate adverse climate change effects such as rising temperatures, water scarcity, and extreme weather conditions are primarily reliant on piecemeal funding from philanthropists, highlighting a gap in systematic investment towards climate adaptation in Africa.
“With public finance covering less than a tenth of Africa’s climate costs, and private finance just 1.5%, Africa’s rising temperatures and erratic seasons demand engagement and audacious leadership from impact investors who have the opportunity to advance climate protection technologies and financial models,” said Maggie Flanagan, Program Officer, The Lemelson Foundation.
Last year, Africa’s annual $277bn climate finance needs dwarfed the world’s official donors’ total aid spending of $204bn. Whereas, foreign direct investment into developing countries topped $1.4 trillion, demonstrating the capacity of private investment to deliver a future-changing boost to climate finance.
The report’s authors, who polled 2,000 Kenyans, reported that agriculture, health, and infrastructure were the sectors most affected by climate change. Temperatures have already risen by 2℃ in some areas of the country, drying out soils and accelerating the growth of pests and the spread of diseases. Land degradation is reducing water retention and water supplies, while heat spikes are damaging roads, and increasing human heat stress and air pollution.
The report identified ideal high-impact technologies to limit these impacts, including low-cost nets capturing permanent free water supplies from the air, new soil additives that retain long-term soil moisture, road surfaces made from recycled plastic wastes that stop roads breaking up, and paints and surfaces that reduce heat in homes, urban heat islands, and air pollution.
Researchers also analyzed the support available to Kenyan climate entrepreneurs, finding a rich entrepreneurial investment ecosystem in place, but little focus on climate adaptation initiatives, with investments dominated by digital and emission-reduction businesses. This limited climate protection investment has prompted the launch, alongside the report, of a new Africa Climate Investment Forum to create a climate adaptation investment ecosystem through investor co-creation, knowledge sharing, and immersion programs.
“We aim to equip investors to draw on new impact assessment models and expanded financial tools to fund entrepreneurial climate change businesses,” said Frank Aswani, CEO of AVPA.
The launch of the forum follows findings that the majority of Kenyans are already being affected by climate change, through crop losses, floods, and droughts, but knowledge about climate change protection technologies and business opportunities remained very low, including among local investors.
“It was clear throughout our research for this report that investment opportunities and tools exist in climate protection, but that communication and knowledge sharing are critical to accelerate their widespread uptake in entrepreneurial support systems,“ said Allan Kamau, Managing Director of Weber Shandwick East Africa.
