Unlocking Adaptation & Resilience (A&R) Debt Financing in Africa
Insights from Roundtable Hosted by GCA
Recently, the Global Center on Adaptation (GCA) convened a co-creative roundtable with financial sector leaders representing a range of institutions. This discussion focused on unlocking Adaptation & Resilience (A&R) debt financing in Africa and took place under the umbrella of the recently launched GCA–WEF Africa Business Adaptation Platform (“The Platform”). Participants included private asset managers, insurers, guarantee providers, banks, non-bank financial institutions (NBFIs), large non-profits, and foundations.
This blog shares key insights and reflections, particularly from an institutional investor’s perspective. While A&R is widely recognized as essential for sustainable economic development—helping protect income-earning populations, supply chains, infrastructure, and businesses—there is still much to explore on how to integrate A&R specifically into capital allocation and transactions. Below are several opportunities and challenges identified during the roundtable that highlight how private institutional investors can help unlock A&R financing in Africa’s capital markets.
1. Domestic A&R Institutional Debt Must Compete with “Safe” Sovereign Securities
In markets like Kenya, local institutional investors (including some foreign offshore investors) are heavily exposed to just a few types of securities—primarily local sovereign bonds and cash markets. Diversification options are limited, and this high concentration risk creates an opportunity for new investment avenues, particularly those related to climate resilience and adaptation.
However, any A&R-focused investment opportunities must match or exceed the risk-return-liquidity profile of the so-called “risk-free” option of buying sovereign bonds. Initiatives such as the Kenya Pension Fund Investment Consortium (KEPFIC)[1] have long championed the need for alternative, long-term investments for institutional investors to help manage their assets and liabilities more effectively. Now there’s a growing chance to embed A&R criteria into these pursuits, offering both financial returns and climate resilience
2. Tailored De-Risking Mechanisms Are Essential to Unlock Domestic Institutional Capital
Many “blended finance” conversations stay at a broad level. Popular de-risking tools—like guarantees or credit enhancements—are often denominated in hard currency, slow to activate, or not fully irrevocable. As a result, they’ve had limited traction with local institutional investors or banks.
Domestic pioneers such as InfraCredit in Nigeria and Dhamana Guarantee Co in Kenya are addressing these issues at their core. Through shareholder partnerships with bilateral donors, development finance institutions (DFIs), and local pension funds, they’re in a strong position to consistently integrate A&R components into their financial instruments. These models not only make it easier to incorporate climate resilience, but also help build awareness and acceptance among local institutional investors.
3. Innovative Structures Like Listed Infrastructure Trusts Can Increase Liquidity for A&R
In addition to de-risking tools, roundtable participants highlighted innovative structures—such as a listed infrastructure unit trust model—pioneered by Spearhead Africa in Kenya. This approach offers higher liquidity and tradability from day one, coupled with competitive returns. For local pension funds and other institutions with tight liquidity constraints, this is a major benefit.
Such structures could also help investors diversify into new asset classes uncorrelated with sovereign bonds and equities, particularly across sectors like renewables, agri-food, e-mobility, and water/waste management. Each of these areas presents significant opportunities for embedding A&R solutions within finance-ready projects.
4. Agri SMEs Are Vital for A&R Financing—But Need Aggregation for Scale
“Agri SMEs” can refer to a huge variety of enterprises within the agri-food system. Many are profitable, customer-facing businesses that deliver products and services critical for local communities and economies. Over the past decade, there has been a surge in financing and capacity-building for these businesses, especially when it comes to climate adaptation measures.
Yet scaling up to attract institutional lending requires smart aggregation mechanisms. Tools like asset financing, climate risk assessments, advanced credit modeling, and insurance “risk pooling” could all benefit from aggregator intermediaries[2]. By bundling investments and coordinating with banks, these aggregators can lower transaction costs and open the door for more institutional capital to flow toward A&R initiatives in agriculture.
5. Capacity Building Must Extend to Regulators, Rating Agencies, and Financial Institutions
It’s almost impossible to discuss A&R finance—or broader development finance—without mentioning capacity building. Traditionally, capacity-building efforts have focused on development finance actors. However, there’s a real need to educate regulators, rating agencies, and mainstream financial institutions (banks, pension funds, etc.) about local A&R risks, opportunities, and best practices.
For example, in Kenya, regulatory requirements limit pension fund exposure to unlisted or alternative investments, making it harder for new climate-aligned deals to gain traction. At the international level, the EU’s TCFD reporting requirements and Taxonomy remain very EU-centric, which can make it challenging for African projects to “fit” into these frameworks—like the first Kenyan green bond for low-carbon student housing that listed in London but did not cleanly match the relevant EU taxonomy categories.
Organizations like FSD Africa have already done extensive work to deepen capital markets across Africa. With further coordination, these programs can expand their scope to raise A&R awareness across the entire financial ecosystem.
6. Mindset Shifts: Climate Risk Assessment as a Day-to-Day Tool, Not a Box-Ticking Exercise
Finally, building a real understanding of A&R within large institutions requires more than mandates and technical trainings. It calls for organizational behavior change so that climate risk assessments become active, data-rich decision-making tools rather than an add-on compliance requirement.
Fortunately, many data-driven platforms and digital tools built through development finance initiatives already exist in the market. For the agri-food sector, for instance, there are numerous data platforms that banks and aggregators can tap into. The next step is coordinating across ecosystems to make these tools more widely known and used for specific A&R use cases.
Unlocking debt financing for Adaptation & Resilience in Africa requires the combined efforts of domestic institutional investors, regulators, rating agencies, development finance institutions, and innovative market players. By offering competitive returns, tailoring de-risking mechanisms to local markets, creating liquid investment structures, and supporting necessary capacity building, A&R can move from abstract concept to on-the-ground reality. In turn, this promises to deliver greater stability, diversification, and resilience in African financial markets—benefiting businesses, communities, and investors alike.
Disclaimer: This blog was developed based on insights shared by diverse stakeholders at a GCA roundtable. It aims to highlight emerging themes and is not a comprehensive analysis of all market conditions.
[1] Kenya Pension Funds Investment Consortium (KEPFIC) is a consortium of prominent Kenyan retirement funds working together to collectively make long-term infrastructure and alternative asset investments in the region. Similarly other such initiatives exists.
[2] Noteworthy interventions include the FASA FoF program, Mercycorps AgriFin Program, Aceli Africa among others.
[3] Some examples include: Nithio, Adopes, ADAPTA, Offgrid.Finance (non-exhaustive).
The ideas presented in this article aim to inspire adaptation action – they are the views of the author and do not necessarily reflect those of the Global Center on Adaptation.
