Landscape of climate finance in Ethiopia

The Landscape of Climate Finance in Ethiopia (2026) by the Climate Policy Initiative analyzes how climate finance is mobilized, allocated, and used in Ethiopia between 2019 and 2023. It situates climate finance within the country’s broader economic and policy context, highlighting Ethiopia’s high vulnerability to climate risks, particularly drought, despite contributing minimally to global emissions. The report examines flows across mitigation, adaptation, and cross-sectoral activities, tracking funding sources (domestic vs international), actors (public vs private), and financial instruments. It also evaluates Ethiopia’s evolving policy framework, including its NDC 3.0, and identifies structural challenges such as limited fiscal space, weak data systems, and underdeveloped private sector participation.

Climate finance in Ethiopia has increased slightly but remains far below what is needed, with about USD 2.3 billion annually compared to an estimated USD 10.6 billion required. The system is heavily dependent on international public funding (over 90%), while private investment remains extremely limited. Most funding is directed toward adaptation (around 59%), reflecting Ethiopia’s high exposure to climate risks like drought and floods, yet this is still insufficient to meet needs. The report highlights major gaps in mitigation finance, weak capital markets, and fragmented governance structures. At the same time, it emphasizes growing institutional momentum and the importance of scaling finance through stronger coordination, improved data tracking, and increased investment in resilience, cross-sectoral programs, and climate-smart development pathways.