Landscape of Climate Finance in Ethiopia

This report by the Climate Policy Initiative analyzes the landscape of climate finance in Ethiopia from 2019 to 2023. It finds that while climate finance has increased, it remains heavily dependent on international public grants and is significantly below the levels required to meet the country's NDC 3.0 targets, particularly for mitigation and private sector investment.

• Climate finance in Ethiopia has seen a gradual increase, averaging USD 2.3 billion annually in 2022/23 (approximately 1.7% of GDP), which is an 11% rise from the 2020/21 average of USD 2.1 billion. However, this is far below the estimated annual requirement of USD 10.6 billion under the NDC 3.0 (2025–2035), meaning finance must increase by at least fourfold.
• Ethiopia is heavily reliant on international public funding, which accounted for 93% of tracked flows in 2022/23. Public actors committed roughly USD 2.2 billion annually, with 80% provided as grants and 14% as concessional debt, primarily from donor governments and multilateral development finance institutions.
• Private climate finance is minimal, contributing only USD 113 million annually in 2022/23 (less than 5% of total flows). This low level of investment is attributed to regulatory uncertainty, shallow capital markets, currency constraints, and macroeconomic risk, with existing private flows concentrated in small-scale energy and agriculture, forestry, and other land use (AFOLU).
• Adaptation finance dominates climate flows, representing 59% of tracked finance in 2022/23 (USD 1.4 billion annually), though it remains below the estimated USD 4 billion annual need. Mitigation finance is significantly more underfunded, averaging USD 500 million annually against an estimated requirement of USD 6.6 billion under NDC 3.0, with a notable structural imbalance as the AFOLU sector receives a small share of mitigation funds despite being a large emissions source.
• Despite institutional momentum—including fuel subsidy reform, the establishment of the Ethiopian Securities Exchange, and the National Bank of Ethiopia's greening initiatives—delivery is hindered by fragmented governance, limited project preparation capacity, and constrained fiscal space, including debt servicing that consumes 13% of revenue.

APA

Climate Policy Initiative (2026). Landscape of Climate Finance in Ethiopia. https://www.climatepolicyinitiative.org/publication/landscape-of-climate-finance-in-ethiopia-2/

Chicago

Climate Policy Initiative. Landscape of Climate Finance in Ethiopia. 2026. https://www.climatepolicyinitiative.org/publication/landscape-of-climate-finance-in-ethiopia-2/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Landscape of Climate Finance in Ethiopia |date=7 April 2026 |url=https://www.climatepolicyinitiative.org/publication/landscape-of-climate-finance-in-ethiopia-2/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2026landscape, author = {{Climate Policy Initiative}}, title = {{Landscape of Climate Finance in Ethiopia}}, institution = {Climate Policy Initiative}, year = {2026}, month = apr, url = {https://www.climatepolicyinitiative.org/publication/landscape-of-climate-finance-in-ethiopia-2/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }