Africa contributes just 7 per cent of global carbon emissions, yet it remains one of the regions most exposed to the economic impacts of climate change, according to data from the International Rescue Committee.

Seven of the ten countries considered most vulnerable to climate risk are in Africa, raising concerns about the continent’s ability to meet the Sustainable Development Goals set by the United Nations.

For millions of African small businesses and farmers, climate change is no longer an environmental issue but a financial one. Rising temperatures, prolonged droughts, and recurring floods are disrupting production, reducing incomes, and increasing poverty, particularly among micro and small enterprises that lack savings, insurance, or access to formal credit.

“When it floods in front of my shop, customers don’t show up,” said Justine, a trader in Ghana’s capital, Accra. “Even if I want to reopen quickly, I don’t always have the money to recover.”

Ghana has experienced more than 27 major floods in the past 30 years, including 15 in Accra alone. Yet about 70 per cent of Ghanaians lack insurance, and 42 per cent remain excluded from basic financial services, leaving businesses with limited options after climate-related shocks.

Similar challenges are emerging across the continent. In Tunisia, water scarcity has become the most significant climate risk for farmers in cereals, market gardening, and livestock, according to studies conducted by Advans, a microfinance group. In Côte d’Ivoire, climate volatility, driven by reduced rainfall, rising temperatures, and shifting seasons, is disrupting cocoa production, with negative consequences for yields and incomes.

Advans estimates that 22 per cent of its clients in Ghana, Côte d’Ivoire, and Tunisia are vulnerable or highly vulnerable to climate risks. In response, the group has developed a climate strategy aimed at strengthening the resilience of micro, small, and medium-sized enterprises (MSMEs) and farmers.

Deputy Chief Executive Officer, Advans International, Grégoire Danel Fedou, said: “Climate change is increasingly shaping the risk profile of our clients. Addressing it requires more than access to credit.”

The strategy combines financial and non-financial solutions and is being piloted in the three countries, with expansion plans. It is structured around four pillars.

First, Advans is investing in internal climate awareness, training management and frontline staff to understand climate risks and their impact on clients’ livelihoods. More than 700 employees have participated in Climate Fresk workshops, alongside ongoing classroom and online training.

Second, the institution is integrating climate risk into portfolio analysis, mapping climate hazards and client vulnerability to generate physical risk scores. Research conducted with Horus Development Finance shows that around 25 per cent of borrowers in Ghana face significant or very high flood risk, information that is now used to inform decision-making.

Third, Advans is supporting client adaptation through education and awareness programmes. In Ghana, flood mitigation campaigns using flyers, mobile alerts, and social media have reached nearly 20,000 users. Similar climate adaptation training is planned for farmers in Côte d’Ivoire and Tunisia.

Finally, the group is adapting its financial products to improve long-term resilience. In Tunisia, 59 per cent of farmers report feeling better prepared for climate shocks thanks to Advans loans, according to a 2024 client survey by 60 Decibels. In Côte d’Ivoire, index and yield insurance now covers more than 2,300 cocoa farmers. In Ghana, a new loan-and-insurance package is being tested to help businesses restart operations after extreme weather events, offering flexible repayment terms and grace periods.

As climate risks intensify, analysts say the effectiveness of climate finance in Africa will depend on whether it helps businesses not only recover from shocks but continue to grow.

For institutions operating at the intersection of finance and development, the challenge is clear: resilience is becoming a core requirement for economic sustainability in Africa’s most climate-exposed markets.