New climate-linked funding supports waste projects

From the newsletter

The European Investment Bank (EIB) and the World Bank have provided $1.3 million in technical assistance to support climate-resilient urban development projects in eight African cities. A significant portion of the funding will go toward waste management efforts in 6 Kenyan cities, one Tanzanian city and one Ugandan city.

• Despite generating millions of tonnes of waste daily, African cities struggle to develop large-scale waste recovery projects due to a lack of early-stage climate finance, hindering long-term investment.

• Access to climate finance remains a major hurdle for African municipalities. Unlike Europe, where cities can tap into dedicated green investment funds, African urban waste projects often stall at the concept stage due to financial constraints.

More details

• As EU’s long-term lending institution, the European Investment Bank (EIB), is financing waste management efforts in the eight African cities through the City Climate Finance Gap Fund, a multi-donor trust fund supported by Germany and Luxembourg and implemented jointly with the World Bank in partnership with German Development Cooperation (GIZ).

• The funding will provide technical assistance for early-stage waste management projects in Kisumu, Malindi, Kericho, Nyamira, Embu and Eldoret in Kenya, as well as Zanzibar in Tanzania and Makindye in Uganda. This aligns with the Gap Fund’s mission to support preliminary project preparation, helping urban projects secure financing that might otherwise remain at the idea stage.

• In these cities, the technical assistance will focus on assessing solutions for solid waste and faecal sludge management, waste-to-energy initiatives such as biogas production and wastewater treatment.According to an EIB statement, preliminary recommendations include integrated solid waste management plans, emphasizing waste segregation at source, separate waste collection, waste recovery and proper disposal.

• "Cities and local governments play a key role in fighting climate change because they experience its effects the most. However, they often struggle to develop climate-resilient infrastructure, mainly due to a lack of resources and expertise to create strong, investment-ready projects,” EIB Vice-President Thomas Östros said.

• Waste management remains one of the most pressing environmental and economic challenges for African cities. As urban populations grow, municipal solid waste generation is increasing, yet infrastructure development has not kept pace. Despite producing vast amounts of waste daily, most African cities continue to view waste management as a sanitation issue rather than an economic opportunity. As a result, they miss the chance to turn waste into a valuable resource through circular economy models such as waste-to-energy, recycling and composting.

• A major barrier to implementing these solutions is the lack of access to climate finance at the early stages of project development. Many municipalities struggle to develop bankable projects because they lack the technical expertise, feasibility studies and clear business models needed to attract investment. Without this groundwork, projects remain stuck at the idea stage, unable to secure the large-scale funding necessary for implementation.

• Technical assistance programs like the Gap Fund play a crucial role in bridging this gap. By providing early-stage support, the fund helps cities design investment-ready waste management initiatives that can later attract larger financing. For example, in Kisumu, Kenya, the Gap Fund provided $184,000 to support a feasibility study for a waste-to-biogas project. In Northern Morocco, the fund has supported Chefchaouen town in northern Morocco in optimising municipal waste services by improving organic waste management, treatment and recovery. These early-stage interventions create the foundation for full-scale implementation.

• Once cities establish strong feasibility studies and clear business models, they become attractive to major investors. A case in point is Sierra Leone’s 30 MW waste-to-energy plant, where Climate Fund Managers (CFM) invested $3.1 million in EU-backed funding. The plant will convert 365,000 tonnes of waste into 236.5 GWh of electricity annually, reducing 94,000 tonnes of carbon emissions while addressing waste and energy shortages.

• Yet, even with technical assistance, policy and financial reforms are needed to accelerate private sector investment. Africa’s waste management sector remains underfunded because most financial institutions perceive it as high risk and municipal governments often lack incentives for private-sector participation. More structured climate finance mechanisms - such as blended finance models, government-backed guarantees and regulatory reforms - are needed to scale up waste recovery and circular economy solutions. 

Our take

• Early-stage funding is the missing link in Africa’s waste management sector. African cities lack investment-ready waste management projects, making it difficult to attract large-scale financing. Programs like the Gap Fund are critical because they de-risk projects at the feasibility stage, setting the groundwork for sustainable, bankable solutions.

• Policy reforms are needed to unlock private sector investment.  Governments must go beyond financing and implement policies that incentivise private investment in waste-to-energy and circular economy projects. Tax breaks, public-private partnerships and streamlined regulatory frameworks could accelerate waste recovery investments across the continent.

• Waste-to-energy is Africa’s untapped green transition opportunity. With growing urban populations and rising energy demand, waste-to-energy solutions present a dual opportunity: reducing waste pollution and expanding clean energy access. African governments and investors must recognize this sector’s potential as a core pillar of the green economy.