Climate finance is the flows of funds to confront climate change by reducing emissions and protecting communities from its consequences is central to the country response as Ghana faces worsening climate risks affecting agriculture, water resources, coastal livelihoods, and public health. Even with a gradual progress in mainstreaming climate finance, Ghana still attracts considerable funding gaps for their climate targets.
State of Climate Finance in Ghana
Ghana’s architecture for climate finance combines domestic budgets, multilateral support and international climate funds to shore up its resilience and mitigation efforts:
Climate Finance Tracked in Ghana 9 Between 2019 and 2020, climate finance tracked in Ghana amounted to an average of USD 830 million per year, meaning that only around 5–9% of the estimated annual required investment needed to meet Ghana’s climate targets under the Paris Agreement was actually delivered. The vast majority of the tracked climate finance is currently originating from the public sector and there is still only limited involvement by the private sector.
To streamline resource mobilization, the Ministry of Finance Ghana (MoF) also created the Climate Financing Division to coordinate the collection and management of climate finance, harmonize national with global priorities on climate action as well as develop bankable projects that attract investors.
Climate Finance Providers and Instruments
Ghana accesses climate funds from multiple sources:
International Climate Funds
These are supplemented by grants and concessional finance for resilience projects from the Green Climate Fund (GCF). A USD 120 million GCF–UNEP programme, which will disburse about USD 70 million to Ghana, aims to strengthen agro-ecosystems’ adaptation and resilience, establish early warning systems and ensure access to water resources for vulnerable communities in the North East Region and Upper West regions. Moreover, the UNDP-assisted GCF Readiness Programme is helping Ghana develop climate investment plans and building institutions’ capacity for direct access to climate finance.
Carbon Markets
Ghana has become the first African country to issue Paris Agreement compliant carbon credits, with 11,733 tonnes of carbon offsets being transferred under Article 6. This progress encourages the flow of climate finance via carbon trade agreements.
Public–Private Partnerships
Recent partnerships, such as the one with Fidelity Bank Ghana and the Global Center on Adaptation, are designed to unlock private sector climate finance and mainstream climate risk frameworks into financial products and services.
Innovative Financial Tools
Ghana has obtained a sovereign disaster risk financing policy for drought under Africa Risk Capacity, offering quick funds in the advent of devastating drought and to protecting sensitive farming populations.
National Strategic Frameworks
The Ghana Climate Prosperity Plan (CPP), announced at COP29, is a long-term strategy which combines climate action with prosperity. It aims to mobilise around USD 75–76 billion by 2050 through investment in renewable energy, sustainable infrastructure development, blended finance and public-private partnerships.
Challenges in Climate Finance
Although much work has been done, there are still several challenges that continue to exist:
Funding gap: The tracked climate finance is just a drop in the ocean, especially when it comes to adaptation needs in Ghana.
Private sector engagement: Only a small proportion of climate finance is provided by private capital with limited scalability and innovation.
Policy and tax debates: More research-based financing mechanisms are favored by stakeholders, and they are worried about inefficient carbon taxes that could disproportionately affect disadvantaged communities.
Global responsibilities: Ghana, an emerging economy, along with many other developing countries is increasingly referring to the unmet “obligations” of developed countries in relation to climate finance when it comes to support.
Recent Advances and Future Prospects
So much so that based on its climate leadership, Ghana was elected as the incoming chair of the Climate Vulnerable Forum and the V20 group of finance ministers in recognition also for advancing fair financing towards an ambitious 1.5 degree Celsius world. A sharper focus on mobilising private sector climate finance – through activities such as Masterclasses and investor roundtables – suggests a strategic shift towards leveraging investment beyond the traditional territory of concessional and grant finance.
In the future, the scale of climate finance flows in Ghana requires strengthening institution‐ al capacity, involving private sector actors, and extending access to carbon markets as well as respecting international commitments.
References
Climate Policy Initiative. (2022). Climate finance in Ghana.https://www.climatepolicyinitiative.org/publication/climate-finance-in-ghana/
Ministry of Finance, Ghana. (2024, November 14). Ghana unveils climate prosperity plan at COP29: A blueprint for sustainable growth.https://www.mofep.gov.gh/news-and-events/2024-11-14/ghana-unveils-climate-prosperity-plan-at-cop29-a-blueprint-for-sustainable-growth
Ministry of Finance, Ghana. (2024, October 22). Climate Financing Division established in the Ministry of Finance.https://www.mofep.gov.gh/news-and-events/2024-10-22/climate-financing-division-established-in-the-ministry-of-finance
United Nations Development Programme (UNDP) Ghana. (2023). Ghana strengthens capacities to mobilize more resources for climate action.https://www.undp.org/ghana/press-releases/ghana-strengthens-capacities-mobilize-more-resources-climate-action
United Nations Ghana. (2024). Green Climate Fund and UNEP boost climate adaptation projects in Ghana.https://ghana.un.org/en/297323-green-climate-fund-and-unep-boost-climate-adaptation-usd-120-million-new-projects-ghana
