Why boosting Kenya’s climate finance makes economic sense

Behind every dry spell that destroys crops, every flooded road that cuts off a village, or every outbreak of disease after a water crisis, there is a direct hit to our national economy and to the budgets of everyday families.

The truth is this: climate change is already costing Kenya billions of shillings every year. In 2022 alone, we lost over Sh100 billion to climate-related disasters. These are not just numbers in a report; they represent disrupted schooling, hospital repairs, lost harvests, and shattered dreams. And if we do nothing, the cost will only rise higher.

That is why the National Treasury prioritises climate finance, not as a luxury or a donor-driven agenda, but as a sound national economic investment. It makes fiscal sense. It is about managing risk, protecting development gains, and ensuring long-term financial stability.

Think about it this way: if we can invest in projects today that help farmers harvest water, improve drought-resistant crops, or restore degraded land, we avoid the far greater costs of food aid, economic slowdown, or rebuilding after floods.

For every shilling we spend on adaptation now, we could avoid spending up to Sh4 in the future. This is not just good environmental planning; it is smart economics.

This understanding has shaped how the National Treasury is responding. Over the past few years, we have embedded climate actions into our planning and budgeting processes.

We are aligning public finances with climate goals, so that every investment considers both immediate returns and long-term resilience.

But more than just adjusting systems, we are also getting money to where it matters most: the counties, villages, and communities facing climate change effects every day.

That is where for instance, the Financing Locally-Led Climate Action (FLLoCA) programme comes in, our flagship initiative, anchored at the National Treasury and implemented with all 47 county governments. It is built on a simple but powerful philosophy: let communities lead their own climate responses, and the national government will support them with resources and systems to succeed.

We have mobilised over Sh30 billion through this programme, with support from multiple partners: the Government of Kenya ($5 million), county governments ($ 75 million), the World Bank ($150 million), the Government of Germany ($34.4 million), the Government of Sweden ($ 14.4 million), the Government of Denmark ($8.9 million), the Government of the Netherlands ($ 10 million), and the IMF’s Resilience and Sustainability Facility ($ 544 million).

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Already, more than 2,245 community projects are up and running, helping Kenyans dig water pans, plant trees, build terraces, restore their farms, and create over 1.5 million green jobs across the country.

In Ilima Ward, Makueni County, a Sh16 million investment through this programme has transformed how over 8,700 residents relate to the land. Fields that were once dry and dusty are now green with spinach, onions, maize, and kale.

Young people who had left in search of work are returning home to help build water harvesting systems and grow food. The economic impact is real and lasting.

But it’s not just Makueni. Across the country, more than 57,000 jobs have been created under this initiative, many of them going to women and youth. Over 27,000 hectares of degraded land have been restored.

And crucially, every county now has climate legislation in place and the institutional tools to lead local resilience efforts.

This programme is also performance-based, meaning counties must meet high standards in planning, citizen engagement, budgeting, and transparency to qualify for grants. Earlier this month, we disbursed nearly Sh7 billion to 42 counties that passed a rigorous independent assessment. This is how we build trust in public finance: by showing that good governance is rewarded.

For us at the Treasury, this is a new kind of budgeting, not just for roads, schools, or health centres, but for future-proofing our country. The investment is not only protecting lives and livelihoods, it is reducing risk, stimulating local economies, and positioning Kenya as a global leader in climate-smart development.

As the world debates climate financing, Kenya has taken a positive step and is showing what works. We are proving that when resources flow to the grassroots, guided by clear national frameworks and local leadership, the results can be transformative.

This is the kind of innovation and pragmatism that defines Kenya’s approach; homegrown, accountable, and economically sound.

So yes, climate change is a crisis. But with the right financial tools and political will, it is also an opportunity, a chance to build a stronger, greener, and more inclusive economy from the bottom up.

That is why climate finance matters. That is why we must invest in it. Not just for the planet, but for our people, our economy, and the generations to come.

Dr Kiptoo is Principal Secretary, The National Treasury