East African Banks Push Climate, Gender, and Green Finance

A farmer in Gampela uses solar panels and a water tank to irrigate crops during dry weather. Debates about innovative finance for climate-smart projects are under the spotlight at the Africa Climate Summit 2.

As climate shocks intensify across East Africa—from failed rains in Kenya’s arid north to devastating floods in Tanzania’s coastal belt—the region’s banks are emerging as unlikely but powerful players in the resilience race.

Ahead of the Conference of the Parties (COP30) and the Second Africa Climate Summit (ACS2) in Addis Ababa this September, financial institutions are mobilizing billions for renewable energy, sustainable agriculture, green housing, and gender-focused financing.

What was once a niche concern is now mainstream finance. Across the region, banks are embedding climate risk into their operations and creating innovative products—from Kenya’s first Eco-Home Loan to Rwanda’s sustainability-linked bond and Tanzania’s Jasiri gender bond. Yet the question remains: can these financial innovations reach smallholder farmers and vulnerable households on the climate frontlines?

Recently, Absa Bank Kenya published its 2024 Sustainability and Climate Report, highlighting how climate risks are now inseparable from banking. Among its flagship products is Kenya’s first Eco-Home Loan, enabling households to build energy-efficient homes with solar systems, rainwater harvesting, and eco-friendly insulation.

“This is about making climate-smart living accessible,” said Yusuf Omari, Absa Bank Group Chief Finance Officer.

Beyond housing, Absa is channeling capital into renewable energy ventures and climate-smart SMEs, bridging the gap between international investors and local solutions.

If Absa represents innovation in urban sustainability, Equity Bank Kenya illustrates scale in rural adaptation. In 2023 alone, Equity disbursed KES 24.7 billion (USD 185 million) in climate-related grants and loans, supporting climate adaptation, water and energy efficiency, renewable energy, and sustainable transport.

Bank disclosures show that six percent went to renewable energy, while the majority supported efficiency, water, and agriculture projects. By the end of 2023, Equity’s green balance sheet stood at KES 887.4 billion (USD 6.6 billion), showing that climate lending has become central to growth.

Dr. James Mwangi, Equity Group CEO, explained, “A significant amount of our balance sheet has gone towards green financing, specifically supporting small-scale farmers in adaptation and mitigation. We have blended finance, which has helped reduce costs and make it affordable while sustaining growth.”

Mwangi added, “We want to inspire people with our action as a financial institution.”

In Kenya’s highlands, this financing enables smallholders to invest in solar-powered irrigation, drought-tolerant seed varieties, and efficient post-harvest storage, improving resilience and cutting emissions. Equity also co-leads the Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) with IFAD, a USD 180 million facility targeting smallholder farmers in Kenya, Uganda, Rwanda, and Tanzania.

In 2023, the Rwanda Development Bank issued the country’s first sustainability-linked bond, raising capital tied to measurable climate targets, including reducing emissions and expanding renewable energy access. If the bank meets its climate milestones, investors are rewarded with better returns.

“These bonds show that African markets can innovate while building trust with investors,” said Dr. Faith Ngugi, a Nairobi-based sustainable finance analyst.

In Tanzania, NMB Bank has pioneered a dual approach, advancing gender equality while driving climate action. In March 2023, the bank issued the Jasiri Gender Bond, raising TZS 74 billion (USD 32 million) exclusively to support women-owned enterprises. The issuance was 197 percent oversubscribed.

“Driving inclusive growth through gender equality and economic empowerment of women is one of the core tenets guiding NMB Bank’s purpose and vision,” said NMB CEO Ruth Zaipuna.

Building on that momentum, NMB launched the Jamii Sustainability Bond in May 2024, later listing it on the London Stock Exchange’s Sustainable Bond Market. The three-year bond aims to channel long-term capital into renewable energy and climate-positive infrastructure.

“These instruments are not just about mobilizing money,” noted Ngugi. “They signal that African banks can compete globally—and deliver measurable impact.”

Beyond individual banks, multilateral lenders are shaping the landscape. The African Development Bank (AfDB), through its Sustainable Energy Fund for Africa (SEFA), has seeded off-grid solar projects across East Africa. Meanwhile, the International Finance Corporation (IFC) is scaling climate risk insurance, cushioning smallholders against droughts and floods.

In Kenya’s drylands, IFC-backed insurance allowed pastoralists to receive payouts after a severe drought in 2023, helping families restock livestock instead of falling into destitution.

The numbers are significant, but the real impact is seen in everyday lives.

In Nakuru County, the Julius Mwangi family built a modest three-bedroom eco-home using bank financing, installing efficient stoves and solar water heating.

“Before, our charcoal bill was eating into our income,” said Mary Mwangi. “Now we spend less, and the children’s health has improved.”

In Uganda’s Gulu region, ARCAFIM financing enabled farmer groups to purchase drip irrigation kits. “We now harvest twice a year, even when rains fail,” said farmer Richard Okello. “It keeps the youth from migrating to the city.”

The Second Africa Climate Summit (ACS2) in Addis Ababa will unfold against a USD 277 billion annual climate finance shortfall needed for Africa to meet its 2030 climate goals. Leaders are expected to push for green bonds, debt swaps, and climate reparations as tools to bridge the gap.

Civil society groups such as the Pan African Climate Justice Alliance (PACJA) caution that unless banks and governments design finance for inclusivity, the most vulnerable will remain excluded.

“At the heart of this is justice,” said PACJA Executive Director Mithika Mwenda. “Banks may be mobilizing billions, but if the farmer in Turkana or Karamoja cannot access affordable credit for water harvesting, then we are not solving the crisis.”

East Africa’s banks are showing that climate action is not just a government or NGO agenda; it is becoming a financial imperative. Absa’s Eco-Home Loan, Equity’s rural adaptation finance, Rwanda’s sustainability-linked bond, and Tanzania’s Jasiri and Jamii bonds illustrate a region experimenting with new models.

But innovation alone is not enough. The challenge is ensuring these instruments reach the most climate-vulnerable smallholders, pastoralists, and women-led households, rather than remaining confined to boardrooms and capital markets.

As delegates converge in Addis Ababa, the stakes could not be higher. For the Mwangi family in Nakuru or smallholder farmers across the region, the urgency is not abstract. The climate clock is ticking, and finance—green or otherwise—must keep pace.