Concessional finance boosts Africa’s hydrogen ambitions

From the newsletter

Egypt, Namibia and South Africa have been selected as inaugural participants in the Climate Investment Funds’ $1 billion Industry Decarbonisation programme. The concessional funding will support green hydrogen, positioning African industrial players at the heart of global efforts to create competitive green economies.

• Despite abundant resources and strong ambition, African countries continue to face persistent financing bottlenecks that delay progress on green hydrogen and slow efforts to decarbonise industries.

• Concessional finance can de-risk early-stage investments, boost project bankability, and unlock private capital, enabling the region to shift from hydrogen planning to large-scale industrial implementation.

More details

• The Industry Decarbonisation investment program is part of CIF’s 9-billion-dollar Clean Technology Fund, the first global concessional finance initiative dedicated to reducing industrial greenhouse gas emissions in developing countries.

• Egypt, South Africa and Namibia are among seven countries selected from 26 global applicants, alongside Brazil, Mexico, Türkiye and Uzbekistan. According to CIF, these countries were chosen for demonstrating “strong private sector engagement, institutional readiness and a clear commitment to industrial decarbonisation.”

• Following their selection, the countries will work with multilateral development banks and private partners to develop investment plans for approval by CIF’s Governing Board. Once endorsed, these plans will unlock concessional funding for clean industrial technologies including green hydrogen and low carbon materials such as steel, aluminium and cement.

• The program allows full funding for projects led or strongly supported by the private sector, with at least 50 percent of funds required to go toward such initiatives. It also emphasises workforce reskilling and support for vulnerable communities to ensure inclusive access to future green jobs.

• Lack of access to concessional finance,capital offered at below market terms with longer repayment periods, is one of the biggest barriers to scaling clean industrial projects in developing countries. CIF’s Industry Decarbonisation program directly addresses this gap by providing large scale affordable finance that can absorb early risk and unlock private investment. For Egypt, Namibia and South Africa, this presents a critical opportunity.

• Industrial decarbonisation is capital intensive, especially when it involves emerging technologies like green hydrogen, waste heat recovery and low carbon materials. These technologies require high upfront investment and long payback periods. Without risk-sharing mechanisms, private investors often hesitate. Concessional funding helps reduce that risk, makes large scale projects bankable and improves financing conditions for the private sector.

• South Africa, with its hydrogen valleys and strong industrial base, needs significant investment to retrofit steel and chemical plants for green hydrogen use. Concessional finance can lower the cost of this transition, strengthen supply chains and build investor confidence. Anchoring projects with affordable capital could create momentum for broader decarbonisation.

• In Namibia, concessional capital is even more essential. The country has the vision and renewable resources but lacks deep capital markets and the infrastructure needed to make green hydrogen exports viable. CIF funding can fill this gap, covering port upgrades, desalination for electrolysis and energy transport. It also reassures international investors that Namibia’s hydrogen agenda has credible risk mitigation and financial backing.

• Egypt, already home to dozens of green hydrogen MoUs, now has a pathway to move from commitments to execution, an opportunity that could help it shed the critique of having the largest gap between ambition and action. CIF support can finance critical components of Egypt’s industrial decarbonisation ecosystem, particularly in high-emission sectors like fertilisers and chemicals. This concessional finance could enable industries to transition competitively, without facing unaffordable costs.

• The African Green Hydrogen Report identifies the cost and availability of finance as a major bottleneck to scaling green hydrogen. Projects are often over 1 billion dollars, with complex infrastructure spanning energy generation, water supply and logistics. Development and donor financing are essential to increase bankability and build hydrogen value chains in such environments.

• This urgency is echoed in Nature Energy’s study, which found out that despite Africa’s abundant renewables, hydrogen exports will remain uncompetitive unless there is deliberate large-scale financial intervention. High interest rates, political instability, currency risks and weak infrastructure all drive up costs. To overcome these hurdles, the study recommends several tools among them concessional finance.

Our take

• For African countries, concessional finance isn’t just a funding mechanism, it’s a strategic enabler. It lowers entry barriers, crowds in private investment, and accelerates project timelines. In the global race to scale green hydrogen, CIF’s intervention could mark the turning point from ambition to industrial execution.

• CIF’s concessional capital is more than money, it’s a market signal. It reshapes investor perceptions of African risk, particularly in large-scale, first-of-their-kind hydrogen projects that often struggle to attract private capital without early-stage de-risking.

• But the real test lies in execution and pipeline readiness. For concessional finance to catalyse lasting change, recipient governments must fast-track permitting, align infrastructure plans, and provide clarity on offtake. Without this, even the most well-funded hydrogen strategies risk delay, or derailment.