Africa’s banking sector is integrating green finance from within, using existing institutions to bypass the cost and complexity of standalone green banks. The result is a strategic, locally grounded model tackling the continent’s climate finance shortfall.
African banks increasingly integrate green finance instruments into their operations—an early but strategic step toward building green banks and addressing the continent’s climate finance shortfall.
A recent report — “Sustainable Banking Assessment for Africa (SUSBA)” — published by the World Wide Fund for Nature on April 30th, evaluated this trend.
The authors found that “most banks in Africa are increasingly embracing regulatory and industry guidelines and hiring more ESG professionals to embed sustainable finance practices and drive a green development and transition.”
The assessment reviewed 25 banks across eight countries: Cameroon, Gabon, Kenya, Namibia, South Africa, Tanzania, the Democratic Republic of Congo, and Zambia.
Only 11% of these banks scored above 50% in green finance readiness. South Africa (50.1%) and Kenya (43.7%) lead the continent, supported by active regulatory frameworks. Nigeria (30%), Tanzania (37.7%), and Ghana (28%) also show progress, driven by national sustainable banking initiatives and frameworks.
Countries like Namibia (21.1%) and Zambia (19.3%) lag, mainly due to weaker regulatory foundations, although individual banks such as Stanbic Zambia and Ecobank Senegal are taking voluntary steps in ESG reporting and risk assessment.
The report also highlights systemic weaknesses across Africa’s banking sector. While 72% of banks reference sustainability in their strategies, only 52% demonstrate this through leadership commitment to responsible lending.
Only 32% have adopted standardised environmental and social (E&S) due diligence frameworks, and 8% have policies tailored to high-risk sectors like mining, agriculture, or energy.
Transparency remains a challenge, with less than 24% of banks disclosing how E&S responsibilities are assigned internally and only 20% subjecting their ESG disclosures to external assurance.
Still, development finance institutions are showing what is possible. Tanzania’s Cooperative Rural Development Bank (CRDB) and Namibia’s Development Bank (DBN) lead by example, integrating sustainable practices into long-term project financing — a model commercial banks are encouraged to follow.
Notably, though still in the early stages, according to the report, these institutions play a pivotal role. Unlike developed markets, which promote standalone green banks, Africa is charting its path through hybrid models, integrating green finance into existing banks.
This approach leverages established trust, networks, and infrastructure to accelerate the green transition in a contextually relevant and scalable way.
The ‘2025 State of Green Banks’ report confirms that integrating green instruments into existing banks enables African countries to “sidestep the high upfront costs and regulatory hurdles typically associated with launching dedicated green banks.”
“Africa is not lagging behind; it’s adapting green banking to its realities,” the report, released in April by the Climate Policy Initiative, notes.
Based on a 2024 survey of 32 green finance institutions, the report highlights a global uptick in green finance, with 50% of institutions describing their involvement as substantial and 33% operating exclusively in the space.
In emerging markets like Africa, public revenue is the dominant source of capital, cited by 88% of institutions, marking a shift away from private capital. Currently, all instruments are debt-based, with the increasing use of credit enhancements and guarantees to de-risk investments and crowd out private sector participation.
Key focus sectors include commercial and residential solar (78–89%), energy efficiency (78%), and low-emission transport (78%, up from 44% in 2020). However, sectors like sustainable agriculture, forestry, and water infrastructure remain underfunded.
The continent currently hosts just three dedicated green banks: the Rwanda Green Fund (FONERWA), South Africa’s Development Bank of Southern Africa (DBSA), and a nascent initiative at the West African Development Bank (BOAD).
For instance, DBSA’s portfolio includes Kenya’s Menengai geothermal project and South Africa’s Water Reuse Programme to enhance water security. BOAD supports climate-resilient agricultural projects in Niger and rural solar electrification in Senegal and Mali.
FONERWA made headlines last year with a RWF 300 million (more than US$220 thousand) grant to IZI, a Rwandan e-mobility provider, to deploy five electric buses in Kigali. In April, IZI announced the launch of Impala E30—an electric Toyota Coaster powered by CATL’s high-efficiency, fast-charging BC5 battery system (the market’s latest).
The urgency is apparent. According to the Climate Policy Initiative, Africa attracts just US$30 billion annually in climate finance, and only 12% of the US$277 billion is required yearly to meet 2030 climate targets. That leaves a staggering US$247 billion annual shortfall. Public actors currently provide 86% of this funding.
Moreover, only 39% of tracked funds support adaptation, despite the continent’s acute vulnerability to climate shocks. Countries like Mozambique, Somalia, and Sudan face escalating climate disasters with limited financing.
As donor fatigue sets in, in-country green finance systems are becoming critical tools for resilience and self-reliance. Many mainstream banks are now visibly driving this shift.
The 2025 African Banker Awards’ shortlist for “Sustainable Bank of the Year” reflects this transformation, featuring institutions like Commercial International Bank Egypt (CIB), CRDB Bank Plc, Kenya Commercial Bank (KCB Group Plc), Nedbank, and Trade and Development Bank Group (TDB).
KCB screened US$4.7 billion—15.5% of its loan book—for environmental risk and issued US$163 million in green loans in 2023. It also secured a US$95 million facility from Proparco for climate projects.
CRDB Bank in Tanzania issued a US$68.3 million green bond in October 2023, which was 429% oversubscribed. Accredited by the Green Climate Fund (GCF), CRDB can access up to US$100 million in concessional finance. A US$50 million facility from Proparco, co-financed with US$75 million, will support climate—and gender-focused lending.
In South Africa, Nedbank has led the way, issuing over US$136 million in renewable energy bonds in late 2023, alongside R14.5 billion (over US$800 million) in sustainability-linked bonds over two years. Its financing supports 1,355 MW of clean energy and more than 5,700 affordable housing loans.
CIB in Egypt developed a US$130 million sustainable finance portfolio under the country’s first corporate green bond while integrating ESG governance at the board level.TDB Group, also GCF-accredited, has mobilised over US$250 million in concessional finance and launched a US$150 million facility to support climate-smart transport and health infrastructure across member states.
The awards, an initiative of African Banker magazine, have attracted notable sponsors this year, including the African Development Bank (AfdB), Afreximbank, and the African Guarantee Fund.
The 2025 Awards Ceremony will be held in Abidjan, Côte d’Ivoire, on Wednesday, 28th May, during the African Development Bank’s Annual Meetings.
The African Development Bank (AfdB) projects that for Africa to close Africa’s climate financing gap by 2030, the private sector must mobilise US$213.4 billion annually to complement the already limited public resources.
Credit: Bonface Orucho, Bird Story Agency
