Landscaping inclusive climate finance in Kenya, Mozambique, Ethiopia, Nigeria, Rwanda, and Tanzania

• Mar 27, 2026
• 2 min

Adaptation finance worldwide remains significantly under-supplied relative to the scale of climate risk faced by low-income households and small enterprises. While public and concessional finance continue to play an important role, they are insufficient on their own to meet growing needs. Financial institutions often lack the evidence, product frameworks, and market intelligence needed to identify viable opportunities, understand the adaptation needs of clients, and respond to the real and perceived risks of serving vulnerable populations.

FSD Kenya, with support from the Gates Foundation, engaged MSC to lead a six-country initiative to address this gap across Sub-Saharan Africa. The initiative sought to strengthen the evidence base for inclusive climate finance. It was initially launched in Kenya and Mozambique as Phase 1 and later expanded to Ethiopia, Nigeria, Rwanda, and Tanzania as Phase 2. The initiative also sought to understand how financial systems could better support low-income households to adapt to climate risks and identify viable pathways to scale private-sector engagement.

MSC designed and piloted a livelihoods-centric analytical framework to support this initiative. The framework linked climate risks, adaptation pathways, and household financial needs to potential financial sector responses. The methodology combined livelihood segmentation, adaptation-to-finance mapping, financial-gap analysis, and a structured taxonomy to assess where financial services could play a meaningful role. Across the six countries, MSC conducted desk research, stakeholder consultations, and market analysis to identify priority livelihood segments, household adaptation pathways, and the financial and non-financial constraints that shape resilience.

A key feature of our work was cash flow analysis of selected adaptation solutions and livelihood strategies to assess business viability, investment readiness, and points of market failure. This helped distinguish where financing gaps reflect weak commercial viability or high risks, where they stemmed from product design or delivery constraints, and where blended or catalytic approaches may be required.

The project generated country diagnostics, market-frontier maps, and actionable recommendations to catalyze commercial finance for locally led adaptation measures. The outputs from our work identified promising product pathways, policy and technical assistance levers, and financial institution pipeline opportunities. These also provide a replicable framework that donors, financial institutions, and ecosystem actors can use to shape more inclusive and climate-responsive adaptation finance markets.

FSD Kenya commissioned the project with the Gates Foundation’s support.