Ghana’s National Determined Contributions (NDCs) have been instrumental in outlining a framework for climate action, yet the resources required to implement these ambitious goals remain a critical concern. Ghana’s efforts to access climate finance are confronted with the added constraint of a complex local financial landscape marked by debt vulnerabilities. The opportunity to mobilise additional climate finance is crucial not just for achieving climate goals, but also meeting Ghana’s development needs and paving the way for a sustainable future.

An analysis of climate finance flows in Ghana shows that an annual average of USD 830 million was tracked in 2019 and 2020. This is a meagre 5-9% of its required investment — estimated between USD 9.3-15.5 billion — highlighting the pressing need to bolster climate finance to achieve Ghana’s NDCs (UNFCCC, 2021). This gap is likely to be wider as countries often underestimate their financial needs due to a lack of capacity and guidance to make accurate assessments, especially on adaptation and a lack of data from subnational governments and vulnerable communities.

This brief examines the lifecycle of climate finance and provides key insights into who is providing what type of finance and through which instruments to enable the identification of key gaps, opportunities, and areas of collaboration among capital providers based on available information.

Key findings

• Public actors accounted for 87% of climate finance in Ghana (USD 722 million). Public climate finance emanated mainly from domestic budgets (USD 271 million) and Multilateral Development Financial Institutions (USD 248 million) in the form of grants and low-cost project debt.
  
  
• Private finance remains largely elusive in Ghana, accounting for only 13% of overall climate finance (USD 106 million). Private finance was almost equally split between equity (45%) and debt (47%), with commercial FIs and corporations accounting for most private flows. In line with observed global trends, 88% of Ghana’s private climate finance was invested in energy systems equally through debt and equity. International private finance constituted around 7% of overall private climate finance in 2019/2020, highlighting the opportunity for higher international climate-based investments in Ghana.
  
  
• 45% of climate finance flows were disseminated through grants (USD 376 million) and 35% through concessional debt (294 million), cumulatively amounting to over USD 660 million (80%). While public sector debt dependence is a current concern in Ghana due to its high risk of debt distress according to IMF’s Debt Sustainability Analysis (World Bank, 2020), private sector debt and equity instruments remain a miniscule fraction of finance flows. This also underscores the importance of exploring the role of International Financial Institutions (IFIs) and Multilateral Development Banks (MDBs) in enhancing debt sustainability, contributing to a comprehensive strategy that ensures financial resilience and long-term sustainable development for African nations, such as Ghana.
  
  
• There was a nearly equal allocation of climate finance towards mitigation and adaptation activities in Ghana. Given Ghana’s vulnerability to climate change, due to the heavy reliance of the majority of Ghanaian households on rainfed agriculture, the importance of adaptation measures is reflected in its climate finance flows. Adaptation finance accounted for 49% (USD 403 million), primarily funded by public actors, followed by mitigation finance at 47% (USD 386 million). In terms of sectoral split, adaptation finance was channelled mainly to AFOLU (32%), other & cross-sectoral (30%), and water & wastewater (28%). Mitigation finance was concentrated in the energy sector, accounting for 51% of total mitigation finance (USD 197 million), followed by AFOLU (USD 86 million), and other & cross-sectoral (USD 63 million).
  
  
• The two largest contributors to GHG emissions in Ghana — the AFOLU and energy sectors — accounted for more than 53% of total climate finance in Ghana. While largely public investment driven, the AFOLU sector received 28% (USD 235 million) of total climate finance investment, the highest amount for any sector, over half of which was dedicated for adaptation, with mitigation receiving 37% of funds. Given that the agriculture sector employs over 50% of Ghana’s population, and accounts for 20% of its GDP and 50% of exports, focusing on adaptation-centric investment is crucial due to the sector’s vulnerability to climate change (World Bank, 2021).

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