Private Funding Surges for Climate-Tech Startups in Nigeria

Climate technology in Africa has seen a significant shift in funding, with venture capital and private equity firms increasingly funding climate-tech startups. Since 2019, businesses have raised over $3.4 billion, with Resource Energy benefiting from the recent increase in private funding. The continent requires $277 billion annually to meet its climate goals for 2030, and investors are being urged to expand their scope of interest to other climate-related sectors like flood protection, disaster management, and heat management.

Financial backers were initially hard to find, but early investors believed that the solar industry would become more sustainable and affordable. However, the continent still needs $277 billion annually to meet its climate goals for 2030. To unlock financing and fill this gap, African countries need to address risks like currency instability, which deters investors.

Investors are now urged to expand their scope of interest to other climate-related industry sectors like flood protection, disaster management, and heat management, and to use diverse funding methods. Last year, climate tech startups on the continent raised $1.04 billion, a 9% increase from the previous year and triple what they raised in 2019. This is important because climate tech requires experimentation and VC funding allows startups to take on risk.

However, private sector financing in Africa lags behind public financing, which includes funds from governments, multilaterals, and development finance institutions. From 2019 to 2020, private sector financing represented only 14% of all of Africa’s climate finance, much lower than in regions such as East Asia and Pacific and Latin America and the Caribbean.