Thriving on a Changing Planet
Investing in East Africa’s cleaner future
Lexi Lei, Analyst, African Renaissance Ventures
Climate scientist Benjamin Hamlington minced no words after losing his house in the Los Angeles fire. “We are not thriving on our changing planet. And we will not thrive on our changing planet in the coming decades. But I’m not filled with despair or fatigue or ready to give up trying to help.”[1]
Africans are certainly not giving up. The continent with the world’s fastest-growing population needs to thrive, and doing so requires energy. During the 2023 IMF/World Bank Annual Meetings, Dr. Akinwumi Adesina, President of the African Development Bank, said, “No economy can grow, industrialize, or be competitive in the dark.” Yet 600 million people still lack reliable access to electricity, and one billion lack access to clean cooking, demonstrating the staggering human and environmental cost of energy poverty. By tapping its vast potential for renewable energy and cleantech innovation, Africa can close those energy deficits as cleanly as possible. It can continue to drive growth while minimizing the impact on climate change that made the California fires so damaging.[2]
There is hope and signs of change. Driving around Kigali, former petrol stations now host charging station startups such as Kabisa or EV Plugin or a battery swapping station from the e-mobility startup Ampersand. Motorcycle riders can be seen quickly exchanging their discharged batteries with fully charged ones. These companies were launched commercially in the last five years, and their innovations are making economic sense. Ampersand’s former Silicon Valley CTO did extensive user testing while developing their product; riders prefer electric bikes to their petrol-fueled alternatives and report 30-40% cost savings. Governments are introducing supportive regulations and tax incentives. Ethiopia was the first country to ban the import of non-electric vehicles.
East Africa has emerged as a regional leader in cleantech – technology products and services contributing to environmental sustainability. Between 2019 and 2024, cleantech accounted for 35% of the total deals in Tanzania, Uganda, Rwanda, and Ethiopia, making Cleantech the highest-funded sector after fintech. Such growth isn’t mere coincidence. According to the International Energy Agency (IEA), Africa has 60% of the world's best solar resources. Solar abundance creates the platform for cost-effective PV today and more innovation as the cost of solar power and storage declines further.
As Plato said, necessity is the mother of invention. Around half of East Africans are not connected to electrical grids. Connecting them is critical but will take time. Startups are innovating to meet that unserved need. M-KOPA popularized solar power for home use. This Kenyan fintech is consistently among the Financial Times'top 100 fastest-growing companies in Africa. Today, off-grid solar is integrated into human development through solar-enabled schools and clinics, particularly in rural areas. Rwanda is piloting solar power and Starlink to connect rural clinics with national digital health networks.
East Africa is demonstrating why it is home to some of the fastest-growing national economies in Africa. Agriculture, energy, and water account for about 70% of all cleantech deals and present a massive opportunity for growth and impact. Imagine the transformational effect of solar-powered irrigation systems, decentralized energy grids for remote villages, water purification technologies that leverage renewable energy, and solar-powered cooling to reduce post-harvest losses. These examples of renewable solutions throughout the food ecosystem exist today and have the potential to revolutionize food systems and make them more resilient.
Financing has not met the scale of the opportunity. Over the past five years, Cleantech in Africa has attracted some $3.4 billion, a mere 0.2% of global Cleantech investment. This glaring disparity is a missed opportunity for Africa, for international investors seeking the next frontier of sustainable development, and for the planet. To give some context, an estimated $25 billion is needed annually to achieve universal electricity access in Africa by 2030. This transformational goal is not insurmountable. It represents just 1% of global energy investment, a negligible portion of the $130 trillion financial institutions pledged as part of the Glasgow Financial Alliance for Net Zero.
To reach these goals, private capital must be unlocked. Private investors have started to notice, but not yet at the required scale. Private investment accounts for only 14% of Africa’s climate finance. While public funds and grants have historically been essential – accounting for 37% of regional transactions – they are not enough to close the climate finance gap. Private investment must take center stage. To get there – given that the perception of African risk is greater than the reality – some of that public capital should be used to reduce risk.
Governments and philanthropy should lean in with innovations, such as sustainability-linked bonds, long-term advanced purchase agreements, first-loss facilities, and greater standardization in blended finance and carbon finance instruments. Moving from bespoke, targeted solutions to more standardized scalable solutions is still needed.
While cleantech in East Africa is ripe with potential, most startups are still in the early stages of development. Of the 70 cleantech deals between 2019 and 2024 in the four countries mentioned, 29 were early-stage venture rounds. With its time horizons and return expectations, Pure venture capital will only finance the most exceptional projects. The others can be unlocked through a combination of commercial and patient capital. This is why Octavia Carbon, a Kenyan deep tech startup, is about to bring direct air carbon capture and storage to the global south for the first time.
Cleantech offers investors a unique opportunity to drive sustainable growth, alleviate poverty, and combat climate change simultaneously. Cleantech is a proven, fast-growing industry that can, in the words of Ben Hamlington, help Africans thrive on a changing planet.
[1] I’m a climate scientist and my house in LA burned down. My work has never been more real
Benjamin Hamlington, Op-Ed, The Guardian, Jan 15, 2025.
[2] California Air Resources Board
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