Pioneering a Climate Finance Instrument in Africa: Lessons from Two Years of the Green Outcomes Fund

The Green Outcomes Fund (GOF) is a pioneering climate finance instrument in South Africa that uses an outcomes-based payment model to de-risk investments in green SMMEs. By providing grant funding to Catalytic Finance Partners (CFPs) upon the verification of specific green outcomes—primarily permanent job creation—the GOF aims to bridge the investment gap for high-potential green businesses. The pilot phase, launched in January 2020 with a total facility size of ZAR 488.1 million, has demonstrated that such incentives can encourage fund managers to invest in sectors they previously avoided due to perceived risk. Key findings highlight the necessity of business development support for SMMEs and the importance of deep sector expertise for fund managers. While the fund has successfully created green jobs and diverted waste, it has faced challenges with slow drawdown of funds due to a prevalence of low-skilled jobs and the disruptive impact of COVID-19. The GOF is now exploring scaling strategies, including expanding its model within South Africa and extending its reach to other African countries such as Rwanda, Ethiopia, and Uganda.

• The GOF pilot operates as an outcomes-based payment model where Catalytic Finance Partners (CFPs) deploy their own capital upfront and are reimbursed via grants only after verified green outcomes are achieved.
• The fund has successfully incentivised CFPs to invest in green SMMEs they would have otherwise avoided due to high risk or lack of experience, with some CFPs reporting that outcomes payments fundamentally changed their approach to deal-making.
• The total facility size of the pilot is ZAR 488.1 million, consisting of ZAR 92.6 million in grant funding matched by ZAR 395.5 million in committed private sector investment from local fund managers.
• Demonstrated impacts as of September 30, 2021, include 7 investments in urban and rural businesses, the creation of 43 permanent direct and 67 indirect jobs, the saving of 7,826 kWh/day of energy, and the diversion of 6,746.101 tonnes of waste.
• There is a significant skills gap in green SMMEs, particularly in financial management, communications, marketing, and sales, making business development support and technical assistance essential for their growth.
• The drawdown of outcomes funding has been slower than expected because the jobs created have been skewed toward low- and semi-skilled positions, which trigger lower payment amounts than high-skilled jobs.
• COVID-19 negatively impacted the SMME pipeline and the ability of CFPs to conduct due diligence, though grant relief funding provided to 12 SMMEs helped retain 760 jobs and create 41 new ones.
• The GOF is exploring regional scaling into Africa, with an initial feasibility study focusing on Rwanda, Ethiopia, and Uganda as first-tier countries, followed by Cote d’ivoire, Senegal, Ghana, and Nigeria as second-tier.

APA

GreenCape (n.d.). Pioneering a Climate Finance Instrument in Africa: Lessons from Two Years of the Green Outcomes Fund. https://greencape.co.za/assets/5220_GOF_KnowledgePDF_Final.pdf

Chicago

GreenCape. Pioneering a Climate Finance Instrument in Africa: Lessons from Two Years of the Green Outcomes Fund. n.d. https://greencape.co.za/assets/5220_GOF_KnowledgePDF_Final.pdf.

Wikipedia

{{cite report |author=GreenCape |title=Pioneering a Climate Finance Instrument in Africa: Lessons from Two Years of the Green Outcomes Fund |url=https://greencape.co.za/assets/5220_GOF_KnowledgePDF_Final.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{greencapendpioneering, author = {{GreenCape}}, title = {{Pioneering a Climate Finance Instrument in Africa: Lessons from Two Years of the Green Outcomes Fund}}, institution = {GreenCape}, url = {https://greencape.co.za/assets/5220_GOF_KnowledgePDF_Final.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }