Climate finance for adaptation in Sub-Saharan Africa: assessing sources and instruments

The proliferation of international climate finance sources and instruments poses a challenge for Sub-Saharan African (ASS) countries in identifying which mechanisms most effectively reduce climate vulnerability. This study therefore examines the relative effectiveness of different funding sources and financial instruments in enhancing climate resilience, using an unbalanced panel of 44 SSA countries from 2010 to 2021 and the two-step efficient Generalized Method of Moments (GMM) estimator. The results show that all sources of international climate finance dedicated to adaptation significantly reduce climate vulnerability, with Private philanthropic funding having the strongest effect, followed by Multilateral Funds and Initiatives, Bilateral donors and Multilateral Development Banks (MDBs). Regarding financial instruments, both debt and grants significantly mitigate climate vulnerability in recipient countries; however, debt-based financing has a greater impact across most sources, except for MDBs, where grants exhibit stronger effects than loans. The findings further show that the effectiveness of climate finance varies with countries’ development levels and is amplified in contexts with stronger governance. Overall, the results suggest that targeted adaptation financing, combined with robust governance frameworks, can strengthen resilience and that policy should prioritize scalable and transparent financing mechanisms in SSA.