Africa is currently facing critical challenges due to climate change, with rising vulnerability to extreme weather conditions. In South Africa, key environmental issues include water scarcity, severe weather events, and the transition to sustainable energy sources.
Coastal erosion from rising sea levels and storms is impacting the Western Cape and KwaZulu-Natal regions, posing threats to properties, ecosystems, and infrastructure. This situation highlights the urgent need for better coastal management and climate adaptation strategies.
“The need for innovative climate solutions is urgent, and climate tech offers a path towards resilience and sustainability. The South African government has recognised this need, and there is a growing focus on fostering innovation in climate technology to address the adverse effects of climate change. For example, Cyclone Eloise, which affected Mozambique, brought heavy rains and strong winds to parts of Limpopo and Mpumalanga in January 2021, resulting in flooding, infrastructure damage, and disrupted agriculture,” says Buntu Majaja, CEO of the SA Innovation Summit.
“Innovative climate tech solutions are essential to mitigate these effects, and startups in the climate tech sector can increase public awareness about climate change and the importance of sustainability. Blended finance, which combines public, private, and philanthropic capital, is a powerful tool in achieving the Sustainable Development Goals, particularly those related to climate action (SDG 13), affordable and clean energy (SDG 7), and industry, innovation, and infrastructure (SDG 9). By leveraging different funding sources, blended finance structures can unlock significant opportunities for scaling climate tech innovations,” says Josh Romisher, Holocene – CEO.
Building a climate tech business in Africa is challenging, mainly due to financial constraints. The continent’s emerging venture capital market limits access to funds for early-stage startups. Additional challenges include unreliable power supply, poor internet connectivity, and inefficient transportation networks.
Investors perceive African markets as high-risk, influenced by political instability, regulatory uncertainty, and economic volatility. These factors, combined with high borrowing costs and a fragmented regulatory landscape, hinder cross-border operations and scaling strategies.
“Successful cleantech solutions require local tailoring, raising costs and complexity. Entrepreneurs and investors must consider collaborative strategies like blended finance models, local partnerships, and innovative financing mechanisms to empower local start-ups to innovate. At a regulatory level, engaging with policymakers to advocate for supportive regulations and incentives can create a more favourable environment for cleantech businesses,” adds Majaja.
Blended finance strategies, which integrate public, private, and philanthropic funds, help mitigate investment risks in climate tech. Partnerships with governments and communities, along with crowdfunding, green bonds, and impact investing, can attract additional funding.
Blended finance has mobilized significant capital for tech startups. According to an OECD report, such transactions attracted over $140 billion in private sector capital for development projects between 2012 and 2018. In Africa, these initiatives are helping to bridge the funding gap for startups. For example, the African Development Bank (AfDB) aims to leverage $100 billion in private sector capital by 2030 through various partnerships.
“Providing funding to climate tech startups is essential for quickly addressing critical gaps and driving measurable impact. It helps overcome shortages in R&D facilities, local STEM talent, and fosters a supportive ecosystem through education and training,” concludes Majaja.
Success Stories
Zimi Charge: This Cape Town-based electric vehicle (EV) startup is pivotal in South Africa’s transition to a greener economy by providing accessible EV charging solutions. With over 350 charging stations nationwide, Zimi Charge allows EV owners to locate, charge, and pay via a mobile app, offering up to 90% reduction in fuel costs and boosting market differentiation through sustainability.
Plentify: Focused on smart energy management, Plentify’s flagship product, “HotBot,” integrates with the electrical grid to optimize energy consumption. It helps customers reduce peak energy usage by 40% and monthly demand by 50%, while advanced leak detection minimizes insurance claims by identifying over 99% of geyser leaks.
Blended finance has facilitated rapid expansion for both startups, with Zimi Charge extending its network across South Africa and Plentify deploying its energy management systems more broadly to reduce carbon emissions and promote sustainable energy use.