What is Africa Missing in the Low-Carbon Transition & Green Economy Movement?

Africa is at a critical juncture in its climate journey. While the continent contributes the least to global greenhouse gas emissions, it bears the heaviest burden of climate impacts, manifesting in prolonged droughts, devastating floods, and food insecurity. The transition to a low-carbon economy is not merely an environmental necessity; it is a socio-economic imperative. Women and youth, who dominate Africa’s informal economy and account for nearly 90% of women’s employment, are central to this transformation. They are innovators in renewable energy, climate-smart agriculture, and waste management yet systemic barriers in climate finance continue to marginalize these groups, threatening Africa’s ability to achieve inclusive green growth. This blog explores the barriers that hinder access to climate financing in Africa, which remains largely donor-driven and the risks Africa faces with underdeveloped domestic mechanisms  poorly aligned with grassroots realities.

The blog is based on empirical evidence drawn from 30 key informant interviews conducted in July 2025 through research funded by Canada's International Development Research Centre (IDRC). While innovative funding programs have made progress, their reach remains narrow, particularly for women and youth-led micro, small, and medium enterprises (MSMEs) that form the backbone of Africa’s economy.

Kenya: A Microcosm of Africa’s Challenge

Kenya illustrates both the promise and the pitfalls of Africa’s green transition. The country has committed to reducing greenhouse gas emissions by30% by 2030, a goal that requires an estimated KES 6.7 trillion (equivalent to USD 65 billion) in climate finance. MSMEs contribute 33.8% of Kenya’s GDP and employ 83%  of the workforce, yet only 7% of women-owned green MSMEs have formal access to finance. High collateral requirements, limited credit history, and bureaucratic registration processes force many entrepreneurs to rely on informal savings groups and microfinance institutions. These structural barriers mirror continental trends, where adaptation projects which are often led by women and youth receive far less funding than mitigation projects such as energy infrastructure. Without deliberate interventions, the low-carbon transition risks deepening gender and youth inequities.

Findings from the Research

Empirical evidence drawn from the 30 key informant interviews and policy analysis paints a nuanced picture of progress and persistent gaps. Digital finance has emerged as a game-changer- mobile money has reduced Kenya’s gender gap in financial access to just 1.6 percent, and digital loans have increased women’s incomes by 50%. Models such as M-Kopa Solar have enabled over one million households to access clean energy through pay-as-you-go systems, demonstrating the power of technology to democratize access. Microfinance programs, such as those offered by Fortune Credit, have supported clean energy and climate-smart agriculture, but literacy barriers and registration requirements restrict their reach. Blended finance and guarantee schemes remain underutilized, largely because they are poorly publicized and inaccessible to small enterprises. While Kenya boasts strong policy frameworks including the Climate Change Act of 2016 and the National Climate Change Action Plan, these instruments lack gender-responsive financing mechanisms at scale. The research underscores that opportunities for scaling exist through gender-lens investing, youth-focused climate funds, and fintech innovations that can unlock private capital and democratize access.

Structural Challenges Undermining Inclusivity

The research also identified deeply entrenched systemic barriers that hinder equitable access to climate finance.

• Governance fragmentation remains a major obstacle, with overlapping mandates among ministries and weak coordination between national and county governments diluting accountability.

• Data gaps exacerbate the problem- the absence of gender- and age-disaggregated data makes it impossible to track climate finance flows or measure impact.

• Financial instruments themselves are rigid, demanding high collateral and large ticket sizes that exclude small enterprises.

• Capacity deficits compound these challenges, as many women and youth lack the technical skills to develop bankable proposals or navigate complex financing processes.

• The digital divide further isolates rural entrepreneurs, limiting access to mobile money and fintech solutions that have proven transformative elsewhere. Exclusion from decision-making spaces means women and youth rarely influence policies or financing mechanisms that affect them directly.

• Finally, a persistent bias toward mitigation projects sidelines adaptation initiatives, which are critical for vulnerable communities where women and youth are most active.

Policy Pathways for Africa

Kenya’s experience offers valuable lessons for the continent. Strengthening governance and coordination is paramount, including establishing dedicated climate finance units in banks and harmonizing mandates across ministries. Financial instruments must be redesigned to reflect the realities of women and youth-led enterprises, introducing sustainability bonds, credit guarantees, and milestone-linked loans that reward gender and youth participation. Investments in data systems are critical to create national climate finance registries with gender- and age-disaggregated indicators. Scaling digital infrastructure will expand mobile connectivity and fintech innovations to rural areas, while inclusive decision-making will ensure women and youth representation in climate finance governance at all levels.

Conclusion

Africa’s low-carbon transition cannot succeed without women and youth at its core. These groups are not passive beneficiaries, they are innovators whose enterprises generate multiplier effects for livelihoods, equality, and climate resilience. By embedding inclusivity in climate finance architecture, Africa can transform structural inequities into opportunities for sustainable growth. Kenya’s journey underscores a continental imperative: Inclusive finance is not optional, it is essential for a just and resilient future.

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Author's Bio

Mercy Gakii Muthuuri is a globally-minded professional with over a decade of experience at the intersection of public policy, finance, investments, and climate action across Africa and Canada. She specializes in innovative financing models, climate finance mechanisms, carbon strategies, and inclusive sustainability policies. A strategic, systems-level thinker, Mercy brings deep expertise in international development and partnership management, with a strong commitment to advancing equitable and sustainable economic transformation. Her academic background includes a Master of Public Policy and Global Affairs from UBC and an MSc in Finance from the University of Nairobi, complemented by certifications in climate adaptation finance and investment analysis.