Finance
Landscape of Climate Finance in Ethiopia – CPI
Macroeconomic reforms and escalating climate shocks are placing climate finance at the center of Ethiopia’s development trajectory. The country contributes 0.4% of global emissions but faces high climate risks, particularly due to its reliance on rain-fed agriculture and hydropower. At the same time, high inflation, foreign-exchange shortages, rising debt service obligations, and a recent sovereign default have constrained fiscal space and raised the cost of capital. Ethiopia must therefore rapidly scale up climate investment in line with its Nationally Determined Contribution (NDC 3.0), while navigating macroeconomic constraints and the declining predictability of international concessional and donor finance.
Ethiopia’s climate policy framework is increasingly investment-oriented, moving from ambition to action. Building on the Climate Resilient Green Economy (CRGE) Strategy (2011) and earlier NDCs, the country’s NDC 3.0 (2025–2035) shifts from high-level ambition toward defined sectoral pathways and financing needs. Parallel reforms signaling growing institutional readiness include greening the financial sector under the National Bank of Ethiopia, developing a national green taxonomy, capital market reforms linked to the Ethiopian Securities Exchange, and emerging carbon market frameworks. However, coordination challenges, fragmented mandates, and limited project preparation capacity continue to constrain delivery.
Tracking how climate finance is mobilized and deployed is critical to inform policy decisions, guiding development partner strategies, and identify opportunities to crowd in domestic and private capital. This second iteration of the Landscape of Climate Finance in Ethiopia provides an updated baseline of project-level climate finance commitments for 2019 to 2023, with a focus on the biennial average for 2022 and 2023. It tracks flows across mitigation, adaptation, and dual-benefit activities, mapping finance from domestic and international sources, through public and private actors, to instruments and end-use sectors.
This assessment draws on publicly available and proprietary datasets compiled on a best-effort basis. Data gaps remain material, especially for domestic public spending, given the absence of systematized climate budget tagging, and for certain private sector investments that are not consistently disclosed. As a result, some flows, particularly domestic public spending and difficult-to-track private investments, are likely underestimated.
Key findings
- Ethiopia’s climate finance has gradually increased but must rise by at least fourfold to meet identified needs. Tracked flows averaged USD 2.3 billion annually in 2022/23, equivalent to approximately 1.7% of GDP. This is an 11% increase from the annual average of USD 2.1 billion in 2020/21 but still well below the estimated USD 10.6 billion annual requirement under the NDC 3.0 (2025–2035).
- Ethiopia’s heavy reliance on international public sources exposes its climate agenda to the constraints of external concessional finance. In 2022/23, 93% of tracked flows originated from international public sources. Public actors committed approximately USD 2.2 billion annually, primarily through grants (80%) and concessional debt (14%). Multilateral development finance institutions and donor governments were the largest providers. This concentration underscores the urgency of mobilizing broader and more sustainable domestic and private funding sources.
- Ethiopia’s shallow capital markets and regulatory uncertainty have limited private climate finance. Private actors contributed USD 113 million annually in 2022/23, representing less than 5% of total flows. This is insufficient to signal a functioning market or provide any buffer against public finance volatility. Private flows were concentrated in agriculture, forestry, and other land use (AFOLU) and small-scale energy activities. Investments were influenced by guarantee-backed transactions and philanthropic grants. Macroeconomic risk, currency constraints, shallow capital markets, and regulatory uncertainty continue to deter private participation at scale.
- Adaptation finance accounts for the majority of Ethiopia’s climate flows, reflecting the country’s high vulnerability to drought, hydrological variability, and disaster risk. Adaptation represented 59% of tracked climate finance in 2022/23 (USD 1.4 billion annually), a slight rise from 56% in 2019/20. This finance was overwhelmingly grant-based (92%) and internationally sourced. While they exceed mitigation in volume, adaptation flows remain far below the estimated USD 4 billion annual need.
- Mitigation finance remains insufficient relative to emissions structure and targets and costed needs. These flows averaged approximately USD 500 million annually, compared to the estimated USD 6.6 billion requirement under NDC 3.0. Finance was concentrated in the energy sector and largely concessional in nature. Mitigation flows declined relative to 2020/21 due to project cycle effects. The AFOLU sector, a large source of emissions, received a small share of mitigation finance, highlighting a structural imbalance between emissions sources and investment patterns.
- Cross-sectoral and resilience-oriented programs feature prominently across both mitigation and adaptation. In 2022/23, adaptation investment averaged USD 644 million, mitigation investment USD 77 million, and dual-benefit projects received USD 306 million. These flows targeted initiatives such as disaster-risk management, food security, institutional capacity building, and policy support. This reflects Ethiopia’s integrated CRGE vision and climate–development nexus and requires strong coordination, monitoring, and financial management systems.
- Institutional reform momentum is building, but delivery constraints persist. Ethiopia has implemented several climate-related reforms, including fuel subsidy reform, electric mobility incentives, financial sector greening initiatives, carbon market readiness efforts, and capital market development. These reforms can help to mobilize domestic and private capital. Yet fragmented governance structures, limited project preparation capacity, incomplete climate finance tracking systems, and constrained fiscal space continue to limit the scale and predictability of flows.
Recommendations
Strengthening governance, institutional capacity, and monitoring systems can help align climate finance mandates, build investable pipelines, and improve investor confidence. Strategic use of concessional finance, supportive regulation, and appropriate financial instruments can help mobilize private capital over time. This report highlights six priority actions for scaling Ethiopia’s climate finance:
- Strengthen climate finance governance to accelerate implementation. Enhance the role of the Climate Resilient Green Economy (CRGE) strategy as an inter-ministerial coordination mechanism with clear mandates and decision rights. This should link NDC planning to budget allocation, including climate budget tagging, and be aligned with public financial management processes. TCRGE efforts can serve as a central platform for screening and prioritizing NDC-aligned projects, coordinating technical assistance, and structuring blended finance/PPP transactions.
- Build capacity for project preparation as well as institutional and subnational delivery to convert policy ambition into implementable pipelines. Improve technical capacity for feasibility studies, financial structuring, safeguards, risk allocation, and results-based planning across line ministries and subnational institutions, and establish standardized project preparation tools and targeted support for high-priority sectors, particularly AFOLU.
- Strengthen climate finance tracking, transparency, and data credibility. Climate budget tagging could be extended to regional and local levels, as well as to climate-aligned sectors such as energy, AFOLU, transport, water and wastewater, buildings and infrastructure and industry. Embedding tagging in budget execution and reporting can reconcile climate-relevant expenditures with actual spending and outputs.
- Optimize scarce public resources through catalytic de-risking and innovative fiscal instruments. Ethiopia must meet its NDC3.0 USD 2.4 billion annual domestic public finance target amid fiscal constraints, including rising debt servicing (13% of revenue), declining tax-to-GDP ratio (7.5%), and volatile donor finance. The country can strategically use its CRGE Facility and national funds to provide guarantees or first-loss capital to crowd in private flows. Aggregation mechanisms (SPVs, Platform-based structures, financial intermediary aggregation) can also help accelerate a shift from small, planning-oriented grants to scalable investments. Debt-for-climate swaps may be another viable source.
- Unlock international and institutional capital through stronger enabling frameworks and domestic markets. High country risk, regulatory gaps, and weak monitoring limit private investment. Momentum is building through initiatives such as Ethiopia’s National Carbon Market Strategy, the establishment of the Ethiopian Securities Exchange, and the NBE’s Greening Financial Systems program. Next steps could include frameworks and regulations for carbon markets, green bonds, and other climate-aligned instruments to reduce uncertainty, enable transactions, and scale local-currency finance. Carbon markets offer a near-term opportunity to mobilize private capital, given the country’s land restoration and reforestation programs.
- Scale finance for sectors that are hard to abate or prioritized under the NDC 3.0. The limited climate finance flowing to industry represents a missed opportunity, given the sector’s importance in shaping Ethiopia’s long-term emissions trajectory and development ambition. Costed pipelines for carbon-intensive sectors, blended finance, and technical assistance for project preparation, standards, and technology deployment can help direct more capital to NDC 3.0 mitigation priorities, including industrial energy efficiency, fuel switching, and low-carbon technologies.
DULUTH — The Duluth Homegrown Music Festival is seeking both new operational leadership and a solution to financial filing issues that caused the organization to lose its federal tax-exempt status, which it has not held since 2022.
The organization is currently operating as a taxable nonprofit, confirmed Don Ness, the former Duluth mayor who serves as president of Homegrown’s
board of directors.
Ness and the board are working to discern whether there might be any outstanding tax liabilities in the wake of an apparent filing lapse.
“It’s a serious matter that requires diligence to do things right, and to correct past oversight, and to make sure that we are in full compliance with all tax and regulatory requirements,” Ness said. “The board is 100% committed to that course of action.”
As the Duluth Monitor first reported, Homegrown had its federal tax-exempt status revoked in 2022 after failing to make required financial reports for three years. The Monitor also reported that Minnesota Attorney General Keith Ellison’s office has notified the organization it may be in violation of state law requiring the proper registration of soliciting charities.
Clint Austin / Duluth Media Group file photo
“All but one of us have been on for less than a year,” Ness said of the current board members. “We’ve been committed to saying, ‘hey, we need to improve the points of accountability.’”
The organization will also require new operational leadership. Co-directors Cory Jezierski and Dereck Murphy-Williams resigned earlier this month, after leading Homegrown through four successful festivals.
“My contract ended at the end of May, and I knew a few days later that I did not want to continue in that position,” Jezierski said. “Simply put, it was the best thing for my mental health. It’s a job that requires many, many hours and a lot of work, and it can be very stressful as well.”
Amy Arntson / Duluth Media Group file photo
Murphy-Williams did not respond to an interview request for this article, nor did preceding Homegrown director Melissa LaTour. According to LaTour’s
LinkedIn profile,
she was Homegrown director from 2016 to 2022.
Jason Beckman, a recent president who is no longer serving on the board, responded to a News Tribune email but did not provide an interview availability before this article went to press.
Ness does not believe the reporting lapses were due to any ill intent. He praised Jezierski and Murphy-Williams for their success managing festival operations. “They cared deeply about the festival,” he said. “It’s amazing to see that our community continues to support this really unique and special festival.”
“Those guys run a hell of a festival,” said Scott Lunt, festival founder and a current board member. “I think they needed help with bookkeeping.”
Clint Austin / Duluth Media Group file photo
By Jezierski’s account, issues with the festival’s tax status became apparent shortly after he became co-director. “We went to file taxes, they were rejected,” Jezierski said. “At that time we, of course, didn’t know why right away, but once we started pulling on that thread, we unraveled a whole lot of the problems that were going on.”
Jezierski said “it took a long time to try to get any sort of help” from the board, but said that by the time he and Murphy-Williams left the organization, “everything had been turned over to be reconciled” with a financial professional.
Ness, like Lunt, was deeply involved with Homegrown in its first decade but had not had an official role with the festival since then. After launching the festival in 1999 and running it on his own for several years, Lunt was “burnt out,” Ness remembered.
Derek Montgomery / Duluth Media Group file photo
After a transition period during which the festival was run in partnership with the Ripsaw newspaper, Homegrown established a nonprofit organization in 2006 with Ness as festival director. Ness subsequently stepped down when he was elected mayor in 2007.
By 2025, Ness was in his current position as executive director of the Ordean Foundation.
“I was approached by a couple of longtime music scenesters,” Ness recalled. “They said, ‘There are questions about (Homegrown’s) nonprofit status. There are questions about some governance issues. We’re concerned.’”
Ness agreed to join the board, and became president. The 2026 festival ran smoothly from an operational standpoint, but Ness found the financial reporting to be lacking.
Clint Austin / Duluth Media Group file photo
“The last board meeting that we had prior to the (co-directors’) resignations was intended to be an overview of the festival that was a month before,” Ness said. “I certainly felt very uncomfortable with how little financial information we were receiving.”
Lunt also joined the board in 2025, marking his first time serving in that capacity. He said the new board has been spending significant time addressing the accounting and reporting issues.
“Every year at Homegrown time I’m like, ‘I should get more involved,’ and then I don’t,” Lunt said. “Then this board thing came up, and it was kind of sold to me as, like, four meetings a year. I was like, ‘Oh, that’s perfect.’ And now we’re meeting weekly.”
Clint Austin / Duluth Media Group file photo
Although it’s unclear how the organization’s finances will look when the accounting and reporting issues have been fully addressed, along with any outstanding tax liabilities, both Ness and Lunt said they are confident the annual festival will continue without interruption.
“The organization will continue,” Ness said. “The festival will continue. Homegrown is in no danger in terms of its viability.” The financial documentation Ness initially received indicated budgeted revenues of about $140,000, against about $130,000 in expenses.
“Financially, I think we’re in a great spot. We have the money to hire the (financial) professionals, and we have (done so),” Lunt said. “We were hoping that we could get all this sorted out before it had to become more public.”
“We poured countless hours into this festival, and this is how it ends, with everyone talking about this,” Jezierski said. “It’s rough.”
“There’s a DIY ethos that is really at the core of Homegrown,” reflected Ness. “We’re throwing a music festival that isn’t waiting for some famous band from the East Coast to bless us with their presence. We are doing this on our own.”
Clint Austin / Duluth Media Group file photo
That DIY spirit also means “you’re kind of passing wisdom down from person to person, and sometimes that’s imperfect.” Ness continued. “The ways that we do things evolve over time, because it’s not a buttoned-down corporate sort of thing. That can create its own set of challenges.”
“It’s self-supporting,” said Lunt about the festival. “It’s widely volunteer-run. You do need to pay a couple people, obviously, to keep track of some things, but it’s going to be strong into the future. It’s gone through its bumps before.”
While most AI in financial services remains advisory, LUMIQ has built the layer that owns the decision — autonomous, auditable AI agents making regulated calls in production at leading banks, insurers, and capital markets firms. Today, LUMIQ serves clients across India, the United States, and Southeast Asia — leading institutions across insurance, banking, and capital markets.
NEW YORK and SINGAPORE, June 19, 2026 /PRNewswire/ — LUMIQ, an AI-native financial services company, today announced a strategic funding round to scale auto-decisioning for financial institutions across the United States and Southeast Asia. The round was led by Bajaj Finserv, one of India’s largest and most diversified financial services groups, with participation from existing investor Info Edge Ventures.
Right now, thousands of customers are waiting for a policy to be issued, a loan to be disbursed, a claim to be adjudicated, because somewhere an FSI employee is drowning in decisions, held back by the risk of getting it wrong. Today, when e-commerce delivers the same day, banks and insurers still decide in weeks. We built LiteCone to take that burden: AI decides the routine cases, completely and accountably, so humans spend their judgment on the one case that actually needs it. This round lets us bring that to every financial institution in the markets that matter most.
Shoaib Mohammad, Co-founder and CEO, LUMIQ
From AI that assists to AI that decides
For decades, financial institutions have bought technology that made their people faster — faster data, faster scoring, faster copilots. The decision still landed on a human. LUMIQ is changing that. Through its LiteCone platform, the company deploys AI agents that read the file, apply the institution’s own guidelines, and reach the decision end to end — escalating only the cases that genuinely require human judgment. The output is not a recommendation. It is a decision, with full reasoning attached, cross-referenced to policy, and defensible under audit.
The results in production speak clearly. At a leading life insurer, LUMIQ’s LEO agent decides 75–80% of underwriting cases with zero human touch, reduced policy issuance cost by roughly 25%, and compressed turnaround from days to under eight minutes — running 24×7 with complete auditability. Across its client base spanning insurance, banking, and capital markets in India, the US, and Southeast Asia, LUMIQ now processes millions of decisions annually.
LiteCone turns a real financial-services role into a working AI agent in weeks. Every agent we deploy is consistent, explainable, compliant, and auditable by design — not as an afterthought. This capital lets us go deeper on the platform and broader across roles. And through our cloud and AI lab partnerships, institutions will increasingly find LiteCone already embedded in the platforms they run today.
Vaibhav Dobriyal, Co-founder and Chief Product Officer, LUMIQ
Consumer confidence has plunged among traditionally optimistic younger adults amid fears for their personal finances and the wider economy, figures show.
GfK’s long-running Consumer Confidence Index remained unchanged at an overall score of minus 23 in June.
However, the analyst said this was was “misleading as, beneath the surface, there are new signs that confidence is weakening”.
Neil Bellamy, consumer insights director at GfK, said: “The biggest fall this month is among those aged 16 to 29, traditionally one of the most optimistic groups.
“Here confidence has dropped 11 points over the past month to minus two, the lowest level seen for two years, driven by large falls in views on both their own personal finances and the wider economy.
“More broadly, there are now no demographic groups with a positive confidence score, including higher-income households earning £50,000 or more, who have slipped back into negative territory as of June.
“Confidence remains subdued and vulnerable to further economic or political uncertainty.”
Overall, confidence in personal finances over the coming year remained flat at minus two, four points lower than this time last year.
The measures of both personal finances and the economy over the previous 12 months were both slightly down, by two points and three points respectively, “reflecting the sense that things have been extremely tough over the last year for so many”, GfK said.
The only measure to increase was expectations for the wider economy over the next 12 months, up two points to minus 36 but still eight points below this time last year.
The major purchase index, an indicator of confidence in buying big ticket items, remained at minus 20, four points lower than June last year.
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