Waking up to the news about an earthquake that rocked Turkey and Syria on Monday, the 6th day of February, is heart-wrenching. Two days later, at about 12 noon, the combined death toll in both countries had risen to over 11,200 with thousands of displaced people. Earthquakes are among the most deadly natural disasters. They strike without warning, leaving many dead and others displaced and badly injured. Scientists understand that earthquakes can be triggered or deterred by changes in the amount of stress on a fault. But a recent report by PreventionWeb indicates that climate change could trigger more earthquakes than we know.
According to Dr Lorna Strachan, a senior lecturer in sedimentology at the University of Auckland, “recent studies have proposed a causal link between rising sea-level during periods of a warming climate and increased frequency of volcanic eruptions and earthquakes.” Ultimately, there is a direct connection between climate change and rising sea levels.
As the climate warms up, thermal expansion causes sea levels to rise, melting snow, glaciers and ice caps. This then increases the volume of water in the oceans, contributing to the possibility of an earthquake or landslides in regions prone to it. As rescue workers and residents searched for survivors under the rubble of crushed buildings in multiple cities across Turkey and Syria, the incident reinforces the need for more climate action and climate startup financing.
“African climate startups need more local patient capital because foreign capital requirements can be arduous and almost impossible to meet unless one has crossed a certain traction or threshold in terms of the development stage as a startup. Most funding opportunities available are like peanuts and can’t help make a significant impact.”- Chibunna Ogbonna, Co-Founder & CEO of Kiru.
When we talk about climate startups (Greentech or Cleantech) we refer to businesses that focus on helping the world or a specific region attain its net zero emissions. That is startups and technologies that aim to improve environmental sustainability to avert the chances of natural disasters. The African continent is the hardest hit by climate change globally. While some West African countries experienced severe flooding, some regions in Southern Africa experienced landslides while East Africa battled severe drought. Yet climate startups are not well funded. And this could be because building and running a climate startup could be capital and requires a lot of patience from investors- which they may not have.
“Some climate innovations take time and money to research, develop, deploy and scale. More so, it takes patience and a long-term view to thrive in the climate space as a startup,” said Chibunna Ogbonna, Co-Founder & CEO of Kiru, a Lagos-based Greentech Startup. “So, African Climate startups need more local patient capital because foreign capital requirements can be arduous and almost impossible to meet unless one has crossed a certain traction or threshold in terms of the development stage as a startup. Most funding opportunities available are like peanuts and can’t help make a significant impact.”
Despite the devastating impacts of climate change on the African continent, the climate startup ecosystem remains underfunded. Compared to the fintech ecosystem, the climate startup economy is struggling. Last year, the African tech economy attracted $6.5 billion (a combination of equity and debt deals), Tech Crunch reported. Fintechs raised 39% of the total equity volume and 45% of the total debt volume. Meanwhile, Cleantech accounted for only 18%. With little funding coming into the green tech ecosystem, how sustainable is it to run a climate startup in Africa?
Currently, it requires so much on the part of founders to run a climate startup. Incentives are low, government policies are not flexible and investors are laid back. “Application of climate innovations needs to be localised and supported with government incentives, private sector patronage and partnerships,” said Ogbonna. “Ease of doing business needs to improve, a number of licenses and time of regulatory procedures need to be cut down so founders can focus on delivering solutions.”
Again, the infrastructure gaps on the continent are critical problems for climate startups- from financial services to good road networks, distribution, literacy rates and security. These problems hinder the smooth pace of project execution. “Most climate innovations require a robust supply chain of materials and components. Getting them fast, cheap and with free import duties will go a long way to support the ecosystem,” he pointed out. “In as much as capacity building is critical for Climate startup founders, we need a safe landing spot to experiment on what we have learnt, to fail and to grow with the assurance of future success.”
Amid a limited capital investment in the Climatetech ecosystem, Ogbonna encourages climate startup founders to generate funds for their businesses through innovative business models. “Founders must be realistic enough to make plans for building a sustainable business. It shouldn’t be a focus on funds raised or awards won. We need work to be done for real. Founders have to find a way to make money for their business without depending on external funding through business model innovations, pivoting and persistence.”
Climate financing for Africa
Last November, during the Conference of Parties 27th edition (COP27) in Egypt, major commitments were made towards climate financing in emerging economies, including those in Africa, the continent hardest hit by climate change.
On the sidelines of the conference, Germany committed €40 million to the African Development Bank (AFDB) Group’s Climate Action Window, to support climate adaptation in fragile African states. The Climate Action Window is mobilising up to $13 billion for climate adaptation for some 37 low-income and fragile states, the worst hit by climate change. But with the huge amounts of capital commitments made since the conclusion of the conference, not much has been of the news regarding climate startup financing in Africa.