Africa and Latin America Are Central to the Next Phase of Climate Finance

Frankfurt, 10 July 2026 – Emerging markets in Africa and Latin America remain significantly under-allocated by institutional capital despite offering some of the world’s most important opportunities for climate investment. “The global climate transition cannot succeed without emerging markets,” said Melanie Aimer, Chief Commercial Officer of Finance in Motion, commenting on discussions at London Climate Action Week 2026. “The conversation has moved beyond whether capital is interested in climate investment. The more important question now is how governments, investors, insurers, banks and development institutions can create the conditions for capital to reach the real economy in ways that are resilient, commercially credible and capable of scale.”

Africa: energy access and a financing gap
According to the IEA’s World Energy Investment 2025 analysis, around 600 million people in Africa still lack access to electricity, and more than 1 billion lack access to clean cooking. At the same time, climate finance flows to the continent rose 48%, from US$29.5 billion in 2019/20 to US$43.7 billion in 2021/22, crossing US$50 billion annually for the first time in 2022, according to the 2024 report Landscape of Climate Finance in Africa, published by the analysis and advisory organization Climate Policy Initiative. Despite this growth, only 23% of Africa’s estimated climate finance needs are currently being met, with just 18% of annual mitigation needs and 20% of adaptation needs covered in 2021/22.

The same report found that 87% of Africa’s tracked climate finance originates from international sources, while the continent holds an estimated US$2.4 trillion in bank, insurance and pension assets under management. This points to significant untapped potential for domestic capital mobilization. “Africa does not lack need, nor does it lack opportunity,” said Aimer. “The central issue is how to convert that opportunity into investable pipelines with appropriate risk-sharing, local partnerships, capacity building, and long-term capital structures.”

Latin America: clean energy growth constrained by structural barriers
In Latin America and the Caribbean, clean energy investment grew nearly 25% over the past decade to reach US$70 billion in 2025, per the IEA. Chile, Colombia and Costa Rica saw renewable investment double, while Brazil’s Future Fuel Law, enacted in 2024, supported growth in solar and bioenergy. Still, the region accounts for only 5% of privately financed global clean energy investment, with the IEA citing high interest rates, limited long-term finance and rising debt-servicing costs as key constraints. The region has also attracted US$45 billion in greenfield mining investment for copper and lithium since 2015, with Chile, Brazil, Argentina, Peru, Panama and Ecuador identified as main recipients.

From capital availability to investability
“If the challenge were simply a shortage of capital, the answer would be fundraising. But if the challenge is investability, the solution becomes more strategic,” said Aimer. “It requires local origination, stronger financial intermediaries, better data, credible impact measurement, risk-sharing mechanisms, insurance solutions, guarantees, blended finance structures and careful consideration of local currency exposure.”

Looking ahead
“The task now is to move from recognizing the importance of emerging markets to building the structures that make climate investment in these regions scalable, disciplined, and investable,” said Aimer. “The future of climate finance will not be determined only in the markets where capital is raised. It will be determined in the markets where resilience, transition and growth must be financed. Increasingly, that points to Africa and Latin America.”