In addressing climate change, capital must follow Africa’s lead.
Georgia Levinson Kewan: CEO of the Soros Economic Development Fund and host of the podcast “Capital for Good” at Columbia Business School. She is the author of the book “Capital and the Common Good: How Creative Finance Can Tackles Our Most Pressing Global Problems” (Columbia University Press, 2016) and the book “Social Entrepreneurship in the 21st Century: Innovation Across Nonprofit, Private, and Public Sectors” (McGraw Hill, 2012).
The global development system that has prevailed since the post-war era has undergone significant changes, a topic that has sparked discussions and alarm at last week’s United Nations General Assembly and meetings on climate change.
Currently, multilateral development banks are shouldering more than they can handle, while major donors such as the United States and the European Union are slashing their foreign aid budgets.
The resource shortage is particularly evident when it comes to supporting sustainable development and the green transition in emerging markets; African countries alone face a funding gap of $2.8 trillion to support their goals—and our shared climate objectives.
Despite this downturn, African leaders are writing the next chapter in climate action: entrepreneurs in Nairobi, fund managers in Lagos, grassroots innovators, public and private investors, and political reformers across the continent are mobilizing their efforts to build a green economy.
With its abundant natural resources and rapidly growing workforce, Africa has the potential to achieve the clean energy transformation that underpins sustainable and inclusive growth. However, the loss of traditional development funding makes supporting the green revolution in the region more urgent than ever for investors, charities, and other private sector actors. To this end, the Soros Economic Development Fund (SEDF) is doubling down on efforts to support Africa-led solutions as engines of sustainable economic growth and broad-based prosperity.
Clean energy is at the heart of these efforts. Today, nearly 600 million people across Africa still lack electricity, a major barrier to fostering resilient economies that can create opportunities—jobs and social mobility—for millions of African youths entering the workforce each year.
What is encouraging is that we know what could lead to success. Expanding the deployment of proven technologies such as off-grid solar power and climate-resilient infrastructure can stimulate what James Mwangi from Africa Climate Ventures calls “positive climate growth.” However, the widespread deployment of these and other renewable energy technologies remains painfully slow. For example, while Africa is home to 60% of the world’s solar resources, it accounts for only 1% of installed solar capacity and 2% of global clean energy investments.
These gaps largely stem from real and perceived risks that have dissuaded both public and private investors from allocating capital to the region. At the Sustainable Development Fund for Africa, we believe that inaction is the greatest risk. Despite contributing only 2-3% of global carbon emissions, Africa is the most vulnerable continent to the impacts of climate change. By 2030, up to 118 million people among its poorest—those living on less than $1.90 a day—could be exposed to droughts, floods, and extreme heat.
With forecasts indicating that Africa’s population could nearly double to 2.5 billion by 2050 and the pace of urbanization accelerating, energy demand will surge. In the absence of clean energy and climate-adaptive infrastructure, this demographic boom could turn into a carbon disaster. As we’ve seen in countries around the world, governments that fail to achieve economic resilience and shared prosperity become prone to instability, migration pressures, and political unrest—all systemic risks that threaten democracy and open society.
This is precisely why we are compelled to invest—not in spite of the risks, but because of them. To date, the Soros Economic Development Fund has committed $55 million to initiatives primarily led by African investors and entrepreneurs, with additional commitments to follow. In some transactions, we take on first-loss positions in blended capital packages to encourage more commercial partners to join us.
In all cases, we hope that demonstrating impact and financial returns over time will attract a broader range of investors, thereby unlocking more capital to support green growth in Africa. With every investment, we seek to bolster the local foundational capital market structure through innovative and enduring partnerships, such as the recently announced Alliance for Green Infrastructure in Africa and Acumen’s “Most Difficult to Reach” initiative. It is critical that this model works effectively, especially in light of the increasing demand for critical minerals and rare earth elements on the continent, and the opportunity to translate these mineral wealth into broad-based prosperity.
In short, we are betting on a future where inclusive growth that supports climate action led by Africa benefits us all.
