On 2 August, humanity had consumed all the natural resources that the Earth is capable of producing in a year. So says US NGO Global Footprint Network, which calculates what it calls the “Overshoot Day” each year.
This date comes earlier and earlier every year, a sign that humans are continuing to have a sustained impact on the ecosystems that surround them. People around the world are suffering the consequences of climate change – droughts, floods, epidemics, famines – and if these effects can’t be prevented, we must at least learn to adapt to them.
In this day-to-day negotiation with the elements, the African continent is particularly impacted, even though it accounts for only one per cent of the world’s greenhouse gas emissions. The major development finance institutions are trying to respond to the emergency, and are now urging all lenders and investors to put adaptation to climate change at the core of their strategies.
$100bn of investment
For some innovative companies, these challenges are turning into opportunities. The International Finance Corporation (IFC), a private sector member of the World Bank Group, estimates that “investment opportunities in climate change adaptation in Africa could reach $100 bn by 2040”.
According to Africa: The Big Deal’s database, out of the funds raised in African tech in 2022, $1.2bn was injected into start-ups developing solutions linked to energy, water, agriculture and waste management, which professionals in the sector group together under the label “climate tech”. This amount has doubled since the previous year.
“Today, all development banks are focusing on climate change adaptation issues,” says Maxime Bayen, co-founder of Africa: The Big Deal and partner at Catalyst Fund, an American-Kenyan investor which, since January, has chosen to concentrate all its investments on start-ups that contribute more or less directly to climate change adaptation.
Up until now, Catalyst Fund had been playing on two sides: fintech and climate. But for the French investor, it is clear that “it will not be able to continue financing only neo-banks”. In January, as part of its new $30m pre-seed fund, Catalyst Fund announced that it had invested $2m in 10 start-ups. The investor has since secured four further investments and should be able to add 10 more start-ups to this new portfolio by the end of the year.
“We have more investment opportunities than a year ago,” says Bayen. Catalyst Fund has received 860 applications, which it is currently studying for this second round, 129 of which correspond to the investment thesis of the new fund.
Insurance, recycling and plastic bricks
Its portfolio includes companies that, at first glance, seem off-topic. For example, the Assuraf insurance platform which aggregates and distributes the offerings of major insurers such as Axa and Allianz in West Africa. “All insurance providers have a climate resilience component,” says Bayen. “One out of every two health incidents is linked to climate change, and epidemics such as ebola and malaria are strongly influenced by these phenomena.”
A study published in 2019 in the journal Nature & Communication argues that, by 2070, climate change will create ideal conditions for the expansion of virus-carrying animal populations such as bats and some monkeys. Consequently, according to the investor, accelerating the penetration of health insurance will make populations more resilient in the face of these new epidemic risks.
Other models have a more visible impact on the environment. In Morocco, Sand To Green, a start-up financed in part by Catalyst Fund, is developing technology that will enable the development of agroforestry farms in arid environments. The company, founded by agronomic engineer Wissal Ben Moussa and two French partners, Benjamin Rombault and Gautier de Carcouët, earns its income from farm production, as well as from carbon credits and the sale of biodiesel.
In Kenya, Amini, the company launched by Kate Kallot in 2023, has already raised $2m from five investors. It uses artificial intelligence and satellite imagery to build up a reliable database on the continent’s soils to improve agricultural yields and anticipate risks (pests, drought, high humidity).
Also in Nairobi, Kubik recovers used plastics and transforms them into building bricks. The company, which also operates in Ethiopia, has raised $3.4m since its creation. According to the company, the production of these bricks emits five times less CO2, for a finished product that costs 40% less.
A developing ecosystem
In Abidjan, Coliba is already a success story. The start-up was founded in 2015 by Genesis Ehimegbe and Yaya Bruno Koné and is supported by the start-up accelerator of the GSMA, the international telecoms lobby. It specialises in the collection and recycling of plastic waste, which is converted into granules and then resold to various industries. By March, it had secured $6m out of a total Series A target of $11.5m.
The scope of climate tech is vast and constantly evolving, from aquaculture to mastering the cold chain and food storage. “The three main pillars are: fintech solutions to improve people’s resilience (insurance, carbon credit, emergency payments, risk pricing); solutions linked to developing sustainable means of subsistence (precision agriculture, soil restoration); and essential services such as storage, logistics, healthcare, waste and water management,” says Bayen.
More and more funds are specialising in financing these projects, including Novastar, CommerzVentures, Equator, Ambo Ventures, Katapult and RaliCap. In September, this ecosystem gathered in Nairobi to discuss investment opportunities. Initiated by AfricArena in partnership with Catalyst Fund, the Climate Tech Festival was the first event of its kind to highlight the need for financial support for African entrepreneurs building resilience to future climate challenges.
Understand Africa’s tomorrow… today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.