Country-led climate finance:
Policy pathways for sustainable development
Opinion: Climate and development are inseparable. Climate finance must shift from fragmented aid to country-led platforms that reclaim sovereignty and treat resilience as the foundation of national economic planning.
This essay is the fifth piece that Devex is producing in partnership with the Children's Investment Fund Foundation as part of The next frontier: Reimagining financing for development and growth — a series convening diverse global voices to redefine collaboration and unlock capital for future growth.
For decades, development and climate action occupied separate worlds. The first was framed as the provision of social and economic infrastructure, hospitals, roads, and schools; the second as a separate, often externally driven environmental agenda. This artificial divide, rooted in funding silos and policy beliefs, fostered a false dichotomy between immediate human needs and long-term sustainability.
Today, however, we are witnessing a deeper transition: not just an overhaul of development financing — as traditional official development assistance is slashed and global fiscal space evaporates — but an intellectual reckoning in which development and climate priorities are recognized as mutually reinforcing and inseparable.
Global economic growth is set to decline significantly if current climate trends continue: Some estimates suggest that global gross domestic product could fall by around 11%-14% by midcentury under high-emissions scenarios. Internal data from the Global Reporting Initiative and the London School of Economics show that developing countries could face even steeper — potentially double-digit — losses.
These projected declines are not abstract. They translate directly into reduced government revenues, disrupted productivity, increased cost of infrastructure maintenance, and increased public expenditure related to disaster response and reconstruction. This is already being felt: The increasing frequency of climate shocks is placing a strain on many vulnerable economies, contributing to widening fiscal deficits and rising debt distress.
This reality demands a fundamental redefinition of development finance: one that accounts for changing global realities; one that recognizes climate action not as a competing priority, but as the foundation of sustainable growth — and, thereby, one that is country-led.
Achieving a system that is inclusive, sustainable, and effective requires moving beyond rhetorical commitments toward concrete shifts in how development finance is structured and driven. Such a transformation depends on empowering finance ministries to coordinate and direct capital across sectors and transitioning to country-led platforms that align climate and development priorities under national strategies.
These approaches, combined with innovative financial models and stronger partnerships, are redefining how resources are mobilized and deployed. Importantly, they are also integrating climate action into the core of development rather than treating it as a parallel agenda.
Achieving a system that is inclusive, sustainable, and effective requires moving beyond rhetorical commitments toward concrete shifts in how development finance is structured and driven.
The failure of fragmented capital
The transition toward country-led platforms is not merely a policy preference; it is a response to the mounting insolvency of the traditional aid architecture under a convergence of pressures and the critical realization that climate action and development investments can not be separated. In addition to the slowing economic growth, increasing geopolitical tensions, supply chain disruptions, and evolving national priorities. Climate change acts as a threat multiplier within this context, intensifying existing vulnerabilities and exposing weaknesses in traditional financing models.
In Uganda, for example, this is evident in the coffee-growing regions of the Rwenzori and Elgon mountains, where increasingly frequent landslides and flash floods do more than destroy plantations; they sever critical transport corridors and wash away years of infrastructure investment. For a government navigating tight fiscal space, these shocks create a compounding crisis, transforming localized climate shocks into national fiscal emergencies.
As a result, development finance is being redirected toward new priorities, particularly those that integrate climate resilience, the energy transition, and sustainable infrastructure. But, even as public resources remain the indispensable foundation — providing the conditions to unlock additional investment — there is growing recognition that they alone are insufficient to meet the scale of investment required.
Ministry of Finance officials and partners during the Second Africa Climate Summit in Addis Ababa, Ethiopia. Photo by: CFMCA Secretariat, Uganda.
Ministry of Finance officials and partners during the Second Africa Climate Summit in Addis Ababa, Ethiopia. Photo by: CFMCA Secretariat, Uganda.
Ministry of Finance officials and partners during the Second Africa Climate Summit in Addis Ababa, Ethiopia. Photo by: CFMCA Secretariat, Uganda.
Ministry of Finance officials and partners during the Second Africa Climate Summit in Addis Ababa, Ethiopia. Photo by: CFMCA Secretariat, Uganda.
This has led to the rise of collaborative platforms and “coalitions of the willing,” where public institutions, private investors, multilateral development banks, philanthropic groups, and sovereign entities work together to bridge financing gaps. These partnerships aim to enhance not only environmental sustainability but also economic and institutional resilience, driving domestic policy reforms in regulatory frameworks, investment policies, and governance systems that shape development outcomes.
But these collaborations must go beyond mobilizing capital to ensure that financing mechanisms are aligned with national development strategies and social priorities. Without this, investments risk being technically sound but socially disconnected.
This is why ministers of finance formed the Coalition of Finance Ministers for Climate Action, or CFMCA, to bring together fiscal and economic policymakers and ensure that climate finance mechanisms are aligned with countries’ development objectives and socioeconomic transformation. The coalition works to mainstream adaptation, resilience, and mitigation within the core mandates and functions of ministries of finance.
The CFMCA has developed tools to analyze macroeconomic impacts, assess long-term risks from a finance ministry perspective, and produce practical guidance to support peers in fulfilling their core mandate — particularly in shaping economic and fiscal policy.
Looking ahead, leading institutions, including ministries of finance, the International Monetary Fund, and the World Bank, must work together to integrate climate considerations into development planning frameworks.
Moving beyond the era of fragmented capital requires more than incremental change; it demands a new financial architecture. To bridge the widening adaptation gap and secure long-term resilience, we must prioritize four strategic pillars: scaling country-led platforms, reforming institutional frameworks, leveraging analytical innovation, and centering radical inclusion.
The Coalition of Finance Ministers for Climate Action brings global deputies for an in-person meeting in Kampala, Uganda, from Feb. 9 to 11, 2026. Photo by: Uganda Co-Chair Coalition Secretariat
The Coalition of Finance Ministers for Climate Action brings global deputies for an in-person meeting in Kampala, Uganda, from Feb. 9 to 11, 2026. Photo by: Uganda Co-Chair Coalition Secretariat
Can country platforms provide the solution?
One lesson emerging from recent years is that high levels of climate mitigation financing have not consistently delivered the expected results. Despite substantial investments, emissions remain high, and adaptation gaps continue to widen. This has prompted a reassessment of how climate and development finance are structured.
Increasingly, there is a shift toward long-term, integrated development projects that combine economic transformation with strong sustainability components. A central concept in this transition is the creation of country platforms: coordination mechanisms that aim to reduce silos on both the supply and demand sides of finance. On the supply side, they align donors, multilateral institutions, private investors, and development banks behind a coherent strategy. On the demand side, they strengthen national ownership by ensuring that governments articulate clear investment plans linked to development and climate priorities.
The emphasis on country ownership is critical. Financing arrangements that are externally driven often struggle with implementation, legitimacy, and long-term sustainability. Country platforms, on the other hand, anchor investment in locally defined strategies, integrating national policy reforms, regulatory changes, and capacity-building efforts.
When properly designed, such platforms will reduce duplication, improve efficiency, and enhance accountability. They also create a pipeline of bankable projects aligned with national objectives, thereby lowering transaction costs for investors while strengthening development impact.
There are already some strong examples of country platforms:
On the other hand, some platforms have not performed as expected. One of the key elements of success has been policy and institutional reform to ensure sustainability, recognizing that financial sustainability ultimately determines viability.
Sustainability through policy and institutional reform
Redefining development finance requires more than innovative instruments — it demands systemic reform to ensure capital is not only accessible but also effectively deployed. This will ultimately lead to sustainability in the broad sense of the term, extending beyond environmental considerations to include fiscal stability, institutional resilience, and social inclusion. This is precisely what country platforms must be designed to achieve.
Sustainable financing — stable macroeconomic policies, credible regulatory frameworks, and transparent governance systems essential for attracting long-term investment — depends heavily on domestic policy reforms. It must be embedded within policy environments that promote inclusive growth, environmental protection, and institutional stability.
Countries that integrate climate considerations into national planning, budgeting, and regulatory systems are better positioned to leverage global capital. However, this is still difficult in most developing regions such as sub-Saharan Africa, where information and data gaps and institutional constraints persist.
Redefining development finance requires more than innovative instruments — it demands systemic reform to ensure capital is not only accessible but also effectively deployed.
Improving effectiveness through analytical tools
Another significant development in redefining development finance is the increased use of advanced economic modeling tools that integrate climate parameters. Traditional economic models often treat climate change as an external or secondary variable. Today, input–output models, computable general equilibrium models, and macroeconomic forecasting tools increasingly incorporate climate risks, transition scenarios, and adaptation costs.
In Uganda, I have seen how extending the Social Accounting Matrix to incorporate climate-related variables can make a real difference. This enhancement has significantly strengthened our ability to analyze how climate impacts the economy, which is critical for making more informed and effective resource allocation decisions. Our experience demonstrates that when climate is treated as a macro-critical variable, it ceases to be a cost and begins to be managed as a risk.
In addition, reports and presentations from CFMCA member countries have demonstrated how analytical tools allow policymakers to assess both the risks of inaction and the opportunities associated with climate investment. They help quantify how climate shocks affect productivity, employment, trade, and fiscal balances. They also illuminate the co-benefits of investing in renewable energy, resilient infrastructure, and sustainable agriculture. A 2025 study by the World Resources Institute analyzed over 320 investments and found that every $1 spent on adaptation can yield $10.50 in total benefits, with average returns of up to 27%. Significantly, much of this value comes from immediate boosts to productivity and social resilience that accrue regardless of whether a climate shock occurs.
By integrating climate variables into economic planning, governments and development institutions can make more informed decisions about resource allocation. This enhances effectiveness by ensuring that investments are grounded in evidence rather than short-term political considerations. Furthermore, better modeling supports transparency and accountability. It allows stakeholders to track progress, evaluate trade-offs, and adjust strategies over time. In this way, analytical innovation becomes a cornerstone of more effective and sustainable development finance.
The inclusion imperative
For development finance to be genuinely transformative, it must be inclusive. Climate change disproportionately affects low-income communities, small island states, and marginalized populations. Financing mechanisms that prioritize large-scale infrastructure without addressing social dimensions risk exacerbating inequality.
Inclusive finance requires deliberate attention to adaptation, social protection systems, and community- and household-level resilience. It means ensuring that vulnerable groups, small and medium enterprises, local governments, and low-income countries can access funding and participate in decision-making processes.
Country platforms and multi-stakeholder partnerships can help advance inclusion by creating space for civil society, local institutions, and subnational groups. When designed effectively, they enable bottom-up solutions that reflect local knowledge and priorities. Projects that are socially accepted and locally supported are also more likely to succeed in the long term.
Local consultations on community-based solutions for adaptation, resilience, and increased household incomes within parishes in the Parish Development Model in Uganda.
Photo by: Uganda PDM Secretariat
One example I have seen work well is the Local Climate Adaptive Living, or LOCAL, project in Uganda, which brings together partners and funders while ensuring that local solutions — right down to the subnational level — are taken into account. In addition, Uganda is implementing the Parish Development Model, which serves as a vehicle for providing finance at the household level to increase productivity while also enhancing resilience and supporting socioeconomic transformation.
Recent global initiatives in this vein include the Country Platform Hub launched around COP30 in Brazil. Its aim is to facilitate south-to-south exchange, strengthen country leadership, and mobilize climate finance. By centering the “Belém Principles” of local inclusion, the hub ensures that the next generation of country platforms is built on a foundation of social equity rather than top-down mandates.
A new architecture for global stability
As climate risks intensify and fiscal pressures grow, it is no longer viable to treat climate and development goals as separate agendas. Instead, they must be pursued together through a new architecture that prioritizes country-led platforms as the primary vehicle for coordination, reforms institutional frameworks, strengthens policy and decision making through analytical tools, and centers radical inclusion via country-owned approaches.
Only by embracing this fundamental shift can countries unlock the capital required to ensure development outcomes that are sustainable, resilient, and — above all — sovereign.
About the author
Dr. Sam Mugume Koojo is the special representative of Uganda’s minister of finance to the CFMCA, cochair of the Global Country Platform Hub, and special adviser to PAMFCA. He serves as assistant commissioner in the Macroeconomic Policy Department at Uganda’s Ministry of Finance, Planning, and Economic Development. With over 25 years of experience in macroeconomic and fiscal policy analysis, sustainable development, and climate change economics, he advocates for resilient economic policy and sustainable growth. He holds degrees in Statistics, Environmental Economics, and a Ph.D. in Natural Resource Management from Makerere University.25.
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This content is produced in partnership with CIFF as part of The next frontier: Reimagining financing for development and growth — a series convening diverse global voices to redefine collaboration and unlock capital for future growth.
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