Will 2026 be decisive for Africa’s green economy and climate finance?

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“What many see as challenges in Africa, are in a manner of speaking,

Africa’s greatest strength for investments and growth“

— Ijeoma Uju, Partner at Templars, Nigeria

Africa’s green and nature-based economy is entering a decisive growth phase as climate finance, energy transition and biodiversity markets converge. Looking ahead to 2026, the most promising sectors and project types combine strong policy backing, scalable business models and rising investor interest.

Expanding green sector
“Africa’s green and nature-based economy is entering a critical scale-up phase,” says ESI Africa‘s Editor-in-Chief, Nicolette Pombo-van Zyl. She expands: “If Africa can improve the momentum towards stronger policy alignment during 2026, the resultant expanding climate and carbon markets and growing private-sector participation will expand the green economy sector exponentially. The most promising opportunities will be concentrated in countries that combine natural resources with improving regulatory frameworks and bankable project pipelines.”

AfDB: The need for innovative finance
At COP30 in Belém, Brazil, in late 2025, the African Development Bank (AfDB) and partners called for major, accelerated financing to scale up the Africa Adaptation Acceleration Program (AAAP) and the Great Green Wall initiative. They highlighted the need for innovative financing, including blended finance and carbon markets, to meet 2030 adaptation targets.

The AAAP, a partnership with the Global Center on Adaptation, aims to mobilise $25 billion over five years for African climate adaptation. The AfDB emphasises using the Climate Action Window and the Adaptation Benefits Mechanism (ABM) to attract private sector investment for adaptation.

Arab investments
Meanwhile, Gulf states are playing a growing role in financing renewable energy, natural capital and climate-resilient infrastructure. Just two weeks into 2026, the AfDB and the Arab Coordination Group (ACG) announced a new phase of their partnership aimed at scaling co-financing, mobilising private capital and accelerating Africa’s economic transformation.

In a statement, the parties emphasised their “common platform to move from fragmented cooperation toward programmatic, large-scale co-investment aligned with the continent’s economic development priorities” at a time when “Africa faces a widening development financing gap and an urgent need to mobilise capital at scale for energy access, climate resilience, food security, regional integration, and private-sector-led growth.”

Sectors and projects to watch in 2026 in Africa’s green and nature-based economy include the following:

Renewable energy and green power systems
Renewable energy remains the foundation of Africa’s green transition, with several countries emerging as regional leaders. In Morocco and Egypt, large-scale solar and wind parks linked to battery storage and grid upgrades are expanding rapidly, supported by long-term power purchase agreements. Namibia is positioning itself as a green hydrogen hub, with export-oriented pilot projects in the Tsau ǁKhaeb and Lüderitz regions aimed at supplying European and Asian markets. Kenya and South Africa continue to scale wind, geothermal and solar hybrid projects, while Nigeria, Senegal and Tanzania are becoming focal points for decentralised solar mini-grids and embedded generation projects targeting underserved communities and industrial clusters.

“A significant opportunity”
Mark Napier, CEO of FSD Africa, a specialist development agency working to strengthen financial infrastructure, promote sustainable finance and mobilise capital, says the continent’s energy sector remains popular among investors.

He explains: “The reason for that is simply that investors now know how to invest in renewable energy. It’s been an asset class for a couple of decades already. And so it is something that investors have come to appreciate. And also I think in the donor community there’s a real appreciation for the developmental benefit that comes from investing in renewable energy. So there is credit risk mitigation available for projects like that, and I think that’s a very significant opportunity.” [Read or watch the full interview here.]

Climate-smart and regenerative agriculture
Climate-smart agriculture is scaling fastest in countries with large smallholder populations and strong agribusiness ecosystems. In Kenya, Rwanda and Ethiopia, regenerative farming projects focused on soil health, agroforestry, and climate-resilient crops are increasingly linked to carbon revenue streams. Nigeria and Ghana are seeing rapid growth in solar-powered irrigation, cold storage, and food processing hubs that reduce post-harvest losses. In Zambia and Malawi, climate-resilient seed systems and conservation agriculture projects are being deployed at landscape scale, often supported by blended finance and development banks.

Nature-based solutions
Nature-based solutions are becoming investable at scale in countries with large forest, coastal, and savannah ecosystems. The DRC, Gabon and Republic of Congo are central to forest conservation and REDD+ programmes, with projects focused on avoiding deforestation and community forest management. In Kenya, Tanzania and Mozambique, mangrove restoration and blue carbon projects along the Indian Ocean coastline are attracting growing interest due to their high carbon sequestration potential and coastal resilience benefits. Savannah and grassland restoration projects are expanding in Ghana, Zambia and South Africa, while watershed and wetland restoration initiatives are emerging in Uganda and Rwanda to protect water supplies and hydropower assets.

Circular economy and waste management
Circular economy initiatives are scaling most rapidly in Africa’s major urban and industrial centres. In South Africa, large-scale plastic recycling, waste-to-energy and green construction material projects are expanding under strong regulatory frameworks. Nigeria, Kenya and Egypt are seeing rapid growth in plastic-to-value recycling plants, organic waste processing facilities producing biogas and biofertilisers as well as and sustainable packaging manufacturing. Ghana and Rwanda are emerging as leaders in ewaste recycling and circular innovation hubs, supported by policy incentives and private investment.

Exciting new approach
KULU Eco-Services is a company with a mission to transform liquid and organic waste into valuable resources such as biofuels and biogas, offering a sustainable alternative to landfills and operating across Africa.

Dr Pieter van Heyningen, CEO of Kulu Eco-Services: “We recently engaged in Nigeria to partner with organisations to start exporting difficult-to-treat liquid and organic wastes, which we transform into feedstocks for biofuels and biogas. Locally in Cape Town, we use our technology to transform these organic waste streams into feedstocks for biofuels and biogas. We believe in shared value, so we share a portion of our carbon credits with the waste generators themselves, which is an exciting new approach to doing business.” [Read or watch the full interview here.]

Other green sectors that are making inroads include the following:

– Africa’s green mineral sector is increasingly defined by sustainability and downstream ambition.

– Green manufacturing linked to low-carbon cement, bricks, and building materials is also growing in fast-urbanising markets.

– Water security projects are becoming more strategic, particularly in arid and climate-vulnerable regions.

– Biodiversity and conservation finance is evolving most rapidly in countries with established protected areas and tourism sectors.

Cross-cutting trends
Finally, an exciting trend to watch this coming year in Africa’s green economy is the way it cuts across sectors and countries. Moreover, carbon markets are becoming more regulated and credible, with improved measurement and verification standards. Furthermore, blended finance structures are increasingly used to de-risk early-stage projects while digital tools, such as satellite monitoring, AI and fintech platforms, are improving transparency and scalability.

• This article first appeared in the Green Economy Express newsletter, published by Africa’s Green Economy Summit.