The University of Cambridge Institute for Sustainability Leadership (CISL) Africa has released a new report’ “Beyond the illusion of innovative climate finance at scale in Africa: A market-informed blueprint for Kenya’s just and resilient climate transition,” setting out the structural reforms needed to attract and deploy climate finance at scale.
Kenya has positioned itself as a regional leader on climate ambition, renewable energy and financial inclusion. Yet climate finance continues to fall short of what is required to support adaptation, resilience and a just transition, particularly at the local and sectoral level.
Kenya requires more than US$40 billion by 2035 to meet its Nationally Determined Contribution (NDC), yet only around US$2.7 billion in climate finance can be clearly tracked as having been mobilised and committed over the past decade, leaving a financing gap of at least US$37.6 billion.
The report examines why climate finance has struggled to scale in Kenya and what this means for policymakers and development partners across East Africa.
Rather than focusing on aggregate financing gaps, the report analyses the institutional and market realities shaping climate finance delivery. Drawing on engagement with Kenyan banks, credit unions, insurers and other stakeholders, it finds that climate finance constraints are driven by misaligned incentives, conservative risk frameworks, elevated macroeconomic risk pricing and weak coordination across government, regulators, financial institutions and development partners.
The report cautions against over reliance on concessional capital, digital financial innovation and disclosure-led regulation as standalone solutions. While each has an important role, the analysis shows that they are insufficient to unlock scale without deeper reforms to incentives, risk sharing and institutional coordination.
For Kenyan policymakers, the findings point to the importance of transformational leadership and nationally anchored coordination mechanisms, such as a country investment platform, to translate climate strategies into credible, investable pipelines. For the wider East African region, the report offers lessons on how domestic financial systems can be mobilised more effectively to support climate and development goals under increasingly constrained fiscal conditions.
By grounding climate finance reform in market realities, the report provides practical guidance for governments, regulators and development partners seeking to move from ambition to delivery and to strengthen climate finance systems across East Africa.
Dr Sibusiso Nkomo, Programme Director, CISL Africa:
"Kenya stands at a decisive moment in its climate and development journey, with the foundations to lead a just transition in Africa -—yet ambition continues to outpace delivery. This latest report from CISL Africa shows that the climate finance gap is not simply about a lack of capital, but about structural and institutional failures that keep money from reaching those who need it most. Climate finance remains peripheral to banking strategy, adaptation is largely invisible to mainstream credit markets, and volatile carbon revenues cannot yet anchor investment, while unclear policy signals further erode confidence. The message is clear: Kenya must move from aspiration to execution. A nationally coordinated country investment platform, —rooted in strong political leadership and co-governed with domestic financial institutions— is urgently needed to redesign risk, align incentives and turn climate commitments into investable pipelines. With the right architecture, Kenya can once again prove that when systems are intentionally aligned, systemic transformation is possible —and adaptation finance can finally reach the frontline of climate vulnerability".
Arthur Oginga, Group Chief Executive Officer, Old Mutual Holdings PLC:
“From an insurance perspective, this new report from CISL Africa brings much-needed clarity to how climate risks are being understood, priced, and managed across the financial system. While the analysis clearly highlights the gaps that continue to constrain the development of viable risk transfer solutions, particularly for adaptation and resilience, it also reinforces the opportunity for insurers to step forward. Through innovation, improved risk data, and closer alignment amongst financial institutions, we see a critical role for the insurance sector in unlocking scalable and sustainable climate finance in Kenya."
John Gachora, Group Managing Director, NCBA Group/ former Chairperson Kenya Bankers Association:
“This report from CISL Africa provides a timely and practical lens on why climate finance has yet to deliver at scale in Kenya, shifting the conversation from capital gaps to the structural realities shaping investment decisions. This type of discourse, that is grounded in the lived realities of local financial institutions, will lead to climate finance solutions that are practical, inclusive, and truly responsive to Kenya’s market needs. While this is centred on Kenya, the lessons apply equally to most African countries with a welcome challenge to governments, regulators and private financing players to rethink both real value of and approach to climate finance.”
Kellen Kariuki, Chairperson Board of Directors, Standard Chartered Kenya:
“This latest report from CISL Africa reframes the climate finance agenda by grounding it in real market dynamics offering a clear-eyed view of the barriers that have limited impact to date. Critically, it reinforces the role of local leadership and national coordination in translating ambition into tangible investment outcomes for the growth of Kenya’s green economy”