After COP29, Will Africa’s Resource-Rich Countries Secure Fair Financing for a Just Transition?

The COP29 climate conference, dubbed the “finance COP,” concluded last weekend with mixed outcomes, leaving Africa’s transition finance goals unmet. The New Collective Quantified Goal (NCQG) emphasizes the urgent need to align financial flows with low-emission and climate-resilient development. However, the parties to the UN Climate Convention failed to achieve the target of mobilizing $1.3 trillion annually for developing countries, including many in Africa.

The conference outcomes highlight several critical issues. First, there is a significant gap between the scale of climate finance required and the current flow to developing countries.  Second, the parties did not agree on a concrete pathway to address the structural barriers and reforms in multilateral financial systems.  Third, although the NCQG supports grants and non-debt instruments, it fails to provide sufficient guarantees for the use of these instruments. It also heavily relies on multilateral development bank financing, which often undermines efforts to alleviate Africa’s debt burden and limits the continent's capacity to invest in climate resilience.

These shortcomings reinforce the need for multilateral development banks to align their instruments to the climate and poverty challenges in the global South. A just global transition depends on the G7 and other wealthy nations in the global North honoring their commitments by stepping up to address these gaps.

Their intervention must reflect a nuanced understanding of Africa’s diversity. Attempting to combine the continent’s 54 distinct realities into a single solution would undermine the uniqueness of each country. Each African nation, especially those rich in oil, gas, and transition minerals, requires tailored approaches to transition finance. This is crucial given the risks that the energy transition poses to fossil fuel-dependent economies.

Recognizing these complexities, NRGI recently convened an African regional dialogue that brought together government representatives and experts from resource-rich countries, including the Democratic Republic of the Congo, Ghana, Senegal, Uganda and Zambia, along with development partners, to explore customized financial solutions. In this blog post, we share key lessons from this exchange on just transition financing for Africa’s resource-producing countries.

Limited financing hinders Africa’s transition potential

Transition financing—the capital needed to facilitate a shift to net-zero economies—remains a loosely defined concept predominantly shaped by actors in the global North. The lack of a clear consensus on eligible activities and complex financing mechanisms, ranging from debt and equity to grants and knowledge transfer, remains a challenge across various sectors beyond energy, including transport and industry.

Despite the global shift toward sustainable technologies, Africa receives just three percent of global investments in renewable energy. While investments in global renewable energy are set to quadruple, they remain concentrated in a few countries like Egypt and South Africa, leaving much of the continent struggling with high financing costs and increased perceptions of risk.

Africa needs an estimated $277 billion to achieve carbon neutrality by 2030. Yet, fragmented financing mechanisms and inconsistent eligibility criteria make it difficult to access funds. For example, while the Green, Social, Sustainability and Sustainability-linked Bonds (GSSSB) market reached $1 trillion in 2024, Africa’s share has been negligible, constituting less than 0.2 percent between 2012 and 2023. Much of the available finance flows through private rather than government channels, highlighting the need to address the high debt burden in many African nations.

Wealthier nations and multilateral development banks (MDBs) must take the lead in ensuring accessible and equitable transition financing for African countries. This includes reforming financing frameworks to prioritize the unique challenges and opportunities of developing nations. African governments must develop transparent, science-based plans with clear emission reduction goals and effective fund utilization to maximize the impact of financing. They must equally reform fossil fuel subsidies to redirect resources toward cleaner energy., while regional bodies like the African Union should champion unified strategies and foster regional cooperation to attract investments and reduce reliance on polluting energy sources. Leveraging the continent's mineral wealth, alongside the establishment of innovative mechanisms like an African Energy Bank, can support equitable resource distribution and ensure long-term sustainability.

Governments and financial institutions must address equity and justice in the energy transition

Resource-rich countries like Angola, Cameroon, Gabon and Mozambique rank poorly on the Energy Transition Index due to economic reliance on hydrocarbons and limited diversification. This leaves them vulnerable to global shifts toward sustainable technologies. Meanwhile, Africa as a whole faces significant energy challenges, with over 600 million people lacking access to electricity. To meet Sustainable Development Goal 7, which calls for universal access to affordable, reliable, sustainable, and modern energy for all, electricity production on the continent needs to triple, requiring annual investments of $190 billion, 70 percent of which would be earmarked for renewables.

Despite holding 40 percent of global solar potential, Africa contributes only 1 percent of solar panel output, with renewable capacity concentrated in five countries. Barriers to scaling green investment include high-risk perceptions, rigid financing criteria, unfavorable lending conditions, and inconsistent regulatory frameworks. Limited access to global climate finance and weak African representation in financial governance structures further exacerbate financing gaps.

To avoid deepening social inequalities, multilateral development banks, climate finance institutions, and national governments must prioritize inclusivity in transition financing by ensuring the involvement of marginalized communities and supporting decentralized, locally managed energy projects. A just energy transition requires collaboration between national governments, regional bodies, multilateral development banks, private investors, and local communities to maximize resource use while fostering sustainability.

African government and regional bodies should strengthen regional approaches for an effective transition financing

Effective energy transition financing in Africa requires robust regional coordination and collaboration built on trust and transparency. This begins with national governments and regional bodies establishing a centralized platform where government, private, and civil society actors can access reliable data on transition projects. Such a platform would facilitate regular exchanges through communities of practice and interregional forums.

National governments, regional organizations like the African Union, and international partners should also ensure transparency in managing transition funds and rigorous monitoring mechanisms to prevent corruption risks. National strategies must align with regional frameworks, such as Agenda 2063 and the African Mining Vision (AMV), to ensure a coherent, continent-wide approach. Peer review mechanisms, like the African Peer Review Mechanism, can enhance accountability and governance.

Regional bodies like the African Union and sub-regional organizations such as ECOWAS and SADC must also harmonize financing criteria through regional green taxonomies. Drawing inspiration from initiatives in Kenya or Uganda, Africa can create a common foundation for cross-border investments. Equally important is the role of national governments, supported by multilateral development banks and international organizations, in strengthening local capacities for managing climate finance through dedicated training programs.

Governments must improve existing financing instruments to achieve equitable energy transition finance for Africa

Following COP29, African countries have an opportunity to build on discussions about navigating complex financing instruments for their energy transition. Stakeholders identified several priority areas within these key financing mechanisms, each offering significant potential for impact if effectively improved and implemented:

• Blended finance. African governments should leverage development finance to attract private and philanthropic investments, creating robust public-private partnerships (PPPs) and streamlined implementation processes.
• Debt sustainability frameworks. African producers burdened with debt can secure concessional financing for climate-related projects through debt-for-nature or debt-for-climate swaps. Clear debt management strategies are essential to balancing climate goals with debt obligations.
• International climate finance commitments. Unmet pledges by financing parties and inefficient use by beneficiary nations have slowed climate action. Developing robust accountability frameworks for tracking climate commitments can unlock more funding.
• Green bonds and sustainability-linked loans. Despite opportunities, limited access and lack of standardized criteria hinder the effectiveness of these instruments. Developing market infrastructure and defining clear sustainability criteria are key to unlocking these financing channels.
• Just Energy Transition Partnerships (JETP) models. Initial implementations have faced delays and misalignment with local priorities. For success, JETPs must emphasize local economic benefits, clear governance mechanisms, and alignment with just transition goals.
• Regulatory and policy frameworks. Existing policy structures often lack safeguards, leaving vulnerable communities at risk. Strengthening long-term commitments and integrating social considerations will provide clear investment signals.
• International development financing. Many models prioritize growth over environmental equity, potentially exacerbating debt burdens. Future negotiations should focus on integrating climate resilience with sustainable development.
• Philanthropic financing. Often short-term and narrowly focused, philanthropic financing needs to be adapted for long-term, collaborative efforts to support scalable projects.

After COP29, the focus now shifts to actionable steps for Africa to overcome substantial financial hurdles in its energy transition. Despite the continent's vast mineral and renewable energy potential, underfunding persists, deepening reliance on natural resources. Achieving a just transition requires international financial institutions, African governments, and regional organizations to implement tailored financial strategies that prioritize regional cooperation, transparency, and inclusivity. To advance these goals, African governments must continue advocating for multilateral platforms to pool resources and secure dedicated funding for just transition projects.