Catalytic funding could unlock Africa’s hydrogen potential

From the newsletter

Namibia has announced up to $250 million in catalytic funding for industrial-scale green hydrogen projects under the Climate Investment Fund. By de-risking first movers and attracting private capital, the initiative strengthens Namibia’s hydrogen ambitions while providing a model that could be replicated across Africa.

• By absorbing early-stage risk, catalytic funding tackles the single biggest barrier in Africa’s hydrogen rollout, high upfront costs. This enables projects to progress from pilot stage to full industrial deployment.

• Namibia’s approach could serve as a blueprint for Africa, inspiring similar initiatives, sparking regional hydrogen corridors and integrating African industries into low-carbon value chains.

More details

• Announced by the Namibia Green Hydrogen Programme, the opportunity follows Namibia’s invitation by the Climate Investment Fund (CIF) to develop a Sectoral Transformation Investment Plan (STIP). The STIP will establish a project pipeline aligned with CIF’s Industry Decarbonisation Programme (IDP), which aims to accelerate low-carbon industrial pathways in developing nations.

• Applications for the funding are open to private and public-private project developers with industrial projects that demonstrate high decarbonisation potential. The initiative focuses on hard-to-abate sectors including iron and steel, cement and concrete, chemicals and petrochemicals, non-ferrous metals, textiles and zero-emission shipping.

• Catalytic funding is a specialised form of financing designed to unlock additional investment by reducing risk for private and institutional investors. Unlike traditional grants or loans that fully fund a project, catalytic funding provides initial capital or guarantees that make industrial-scale projects bankable. In the case of Namibia, the $250 million offered through CIF is intended to leverage matching contributions from development banks and financial institutions, potentially multiplying the total investment available for green hydrogen initiatives.

• The approach is particularly favourable for hard-to-abate sectors where decarbonisation is complex, expensive, or technologically challenging. Catalytic funding lowers entry barriers, enabling developers to deploy innovative hydrogen technologies at scale. By de-risking these projects, it encourages private sector participation and accelerates the adoption of low-carbon industrial pathways.

• Beyond project economics, catalytic capital creates market certainty by structuring project pipelines that move initiatives from concept to bankability. This visibility gives investors confidence that industrial ventures can progress at scale, while also sending a strong policy signal that green hydrogen and industrial decarbonisation have institutional backing. Lower production costs achieved through scale would improve Africa’s competitiveness in export markets while making green hydrogen more affordable for local industries.

• The knock-on effect could extend across borders, enabling regional hydrogen hubs, shared infrastructure and integrated value chains that enhance Africa’s competitiveness in the global hydrogen economy. Lower hydrogen production costs achieved through scale could also improve Africa’s positioning in export markets while supplying affordable inputs for local industries.

• For investors and project developers, catalytic funding represents a unique opportunity to participate in a continent-wide transition toward green industrialisation. By providing the initial financial leverage, it attracts larger pools of capital, encourages public-private collaboration and helps build bankable projects in sectors traditionally underserved by conventional financing. In this sense, catalytic funding functions as both a financial enabler and strategic instrument, positioning Africa to play a leading role in the global hydrogen economy.

Our take

• Catalytic funding could be Africa’s strongest lever to de-risk first-mover hydrogen projects. By multiplying each public dollar into several private ones, it builds the momentum to move technologies from pilot scale into industrial reality

• For Africa’s industrial base, catalytic funding could mean the difference between being locked out of low-carbon value chains or leapfrogging into global competitiveness, with affordable hydrogen inputs transforming steel, cement and shipping.

• The broader opportunity lies in replication. If Namibia’s model succeeds, catalytic funding frameworks could spread across Africa, enabling regional hubs, shared infrastructure and integrated industrial corridors that scale hydrogen adoption continent-wide.