Africa’s Financial Industry Validates the Continental Sustainable Finance Taxonomy

 

Africa’s financial sector has taken a major step toward aligning with global climate and sustainability goals with the validation of a continent-wide Sustainable Finance Taxonomy.  The groundbreaking framework, the first of its kind for Africa, was endorsed by regulators, commercial banks, insurance firms, and development finance institutions in Nairobi on July 16-17.   

Led by the African Development Bank through its African Financial Alliance on Climate Change (AFAC) platform, the two-day workshop marked the culmination of a year-long, consultative process involving over 60 institutions from across the financial and real sectors. The Taxonomy provides standardized definitions of activities that contribute to sustainable development, enabling financial institutions to direct capital toward climate-smart and socially responsible investments.

The initiative addresses a key gap in Africa’s financial architecture: the lack of standardized, fit-for-purpose tools to unlock domestic sustainable finance. This need was first identified in a 2021 survey of African financial sector stakeholders (http://apo-opa.co/47s39C0), and later integrated into AFAC’s five-year strategy (http://apo-opa.co/3V3apNa) and Vision 2030, launched in 2023 (http://apo-opa.co/4fAZUue).

Technical support for the taxonomy was provided by PricewaterhouseCoopers Luxembourg, with funding from the Global Center on Adaptation under the Africa Adaptation Acceleration Program (AAAP) through the African Climate Change Fund.

Nana Sika Ahiabor, Manager of the Climate and Sustainability Office at the Bank of Ghana, commended the Bank and AFAC for their leadership in developing an African Sustainable Finance Taxonomy.

“Although the taxonomy is voluntary, it comes at a crucial moment as Africa seeks to scale up green finance,” she noted. “It offers a transparent framework to classify assets and financial activities that support sustainability in an African context.” She urged African countries and institutions to adopt the tool—”developed by Africans, for Africa”—as it aligns both with global standards and our national priorities.

Other participants echoed this sentiment, highlighting the taxonomy’s potential to harmonize financial markets, attract green capital, and strengthen economic resilience.

“It has been an exciting nine-month journey,” said Ann Njuguna, Finance Manager at BRITAM Kenya. “The process was insightful and rewarding, especially as we worked through real-world case studies showing how a unified taxonomy can align African financial systems with global ESG standards while preserving our unique development priorities.”

Mahamadi Balima, Head of Sustainable Finance at the Financial Markets Authority of the West African Monetary Union (AMF-UMOA), underscored its importance for regional financial integration.

“This taxonomy is a strategic tool to guide capital flows toward sustainable investments, strengthen economic resilience, and foster inclusive growth. It will also help standardize financial products, enhance regional integration, and attract both regional and international impact investors,” Balima stated.

Representatives from the private sector also expressed enthusiasm. Rochelle Chetty of Standard Bank shared: “Participating alongside other banks, DFIs, and insurers was invaluable. The discussions were practical and collaborative, and testing the taxonomy in real-world scenarios was a vital step toward implementation.”

Senior African Development Bank leadership described the taxonomy as a foundational pillar in Africa’s climate finance architecture.

“The African Sustainable Finance Taxonomy marks a critical milestone in our efforts to create an enabling environment for mobilizing private sector resources toward sustainable development. It is a key pillar of the Bank’s Climate Change and Green Growth agenda,” said Prof. Anthony Nyong, Director of the Climate Change and Green Growth Department at the Bank.

Ahmed Attout, Director of Financial Sector Development at the Bank, added: “The consultative process that led to the validation of this taxonomy reflects our deep commitment to partnering with Africa’s financial sector to manage sustainability risks while unlocking opportunities for green investment.”

As the continent grapples with escalating climate and sustainability challenges, the Africa Sustainable Finance Taxonomy lays the groundwork for a more coherent, transparent, and aligned financial ecosystem—one rooted in Africa’s development priorities but designed to connect seamlessly with the global sustainable finance architecture.

Distributed by APO Group on behalf of African Development Bank Group (AfDB).

About AFAC:
The African Financial Alliance on Climate Change (AFAC) is a voluntary coalition of Africa’s financial institutions hosted by the African Development Bank. It aims to direct capital toward sustainable development by fostering policy alignment, developing frameworks, and supporting innovation across the financial ecosystem.