Banking & Finance
Governments Spend Billions Subsidizing Climate-Harming Industries: New Report
The report further found that governments in the North continue to fuel the climate crisis disproportionately, and even though the developed world has just a quarter of the world’s population, their annual average fossil fuel subsidies amounted to USD 239.7 billion.
:Report exposes corporate capture draining $700B in public subsidies from Global South, hindering climate action while fossil fuels outpace renewable energy funding.
By Maina Waruru
A report examining corporate capture of public finance is accusing industries fueling the climate crisis, including fossil fuel ones, of draining public funds in the Global South, singling them out for squeezing out of governments USD 700 billion in public subsidies each year.
The report, How theFinance Flows: Corporate capture of public finance fuelling the climate crisis in the Global South, released on 17 September says that the climate-destructive sectors are benefiting from money that could go to paying for schooling for all Sub-Saharan African children 3.5 times over, even as Global South renewable energy projects remain starved of cash, receiving 40 times less public finance than the fossil fuels sector.
While urging governments in the developing world to allocate more of their limited resources in ways that “truly serve their people’s needs” through climate solutions for food and energy, the analysis of financial flows by ActionAid reveals that the fossil fuel sector in the region received a staggering annual average of USD 438.6 billion a year in subsidies, between 2016 (when the Paris Agreement was signed) and 2023.
The industrial agriculture sector alone benefited from government subsidies equivalent to a whopping USD 238 billion a year on average between 2016 and 2021, even as it continued to contribute to the worsening of nature, it reveals.
It further reveals that the industries causing the climate crisis are also draining the lion’s share of public funds, including in “climate-hit countries,” in places like Sub-Saharan Africa, even as initiatives providing climate solutions remain severely underfunded.
The report points to corporate capture of public finance, combined with a lack of international climate finance, as some of the factors holding back climate action in some of the “countries and communities that need it most”.
While also finding that climate finance grants from the Global North for climate-hit countries are still grossly insufficient to support climate action and the necessary transitions in the southern hemisphere, it gives examples of several countries in Africa where policies in place were in conflict with actual reality actions.
These include the fossil fuel-rich African countries of South Africa and Nigeria, which have been found to be heavily subsidizing the discredited sector.
The countries, including Bangladesh in South Asia, Action Aid says were providing fuel subsidies up to between 22 and 33 times the “per capita level of annual public investment in renewable energy” flow, for example.
As a result, in the hemisphere, renewable energy initiatives are receiving 40 times less public finance than the fossils sector, while climate finance grants amount to just a 20th of the Global South’s public finance going to fossils and industrial agriculture.
“While trillions of dollars in climate finance from the Global North to the Global South are necessary to adequately address the climate and development crises, Global South governments must allocate their limited resources in ways that truly serve their people’s needs through climate solutions for food and energy,” it says.
“Meanwhile, the failure of Global North countries to provide adequate climate finance for climate transitions means that Global South countries are locked into harmful development pathways that destroy ecosystems, grab lands and compound the injustice of climate change,” it adds.
Citing the example of Southern Africa’s Zambia, it says that the industrial agriculture sector in the country gobbled up 80 percent of the national agriculture budget in 2023, through subsidies for “climate-harming synthetic fertilizers and commercial seeds.”
“Meanwhile, only 6 percent of the Agriculture Ministry’s Agricultural Development and Productivity Programme was spent on supporting farmers to adopt agroecological, nature-friendly farming approaches, that naturally strengthen soil fertility and reduce dependency on agrochemical inputs,” it explains the contradiction.
Zambia’s neighbor Zimbabwe has made public policy statements in support of a shift towards agroecology, a shift evidenced by 34 percent of the country’s agriculture budget this year supporting farmers to adopt practices to move from climate-destructive agrochemicals.
Despite that, Zimbabwe is still using approximately 50 percent of its entire national agriculture budget towards subsidizing industrial agribusiness inputs such as fertilizers and hybrid seeds,” signaling the industry’s continued control over the sector and budget, as well as the potential to free up more public finances for public good’.
Two west African countries, the Gambia and Senegal, and South America’s Brazil were equally found to be engaging in contradictory practices, making public investments in renewable energy, on a scale that is almost comparable to the per capita public subsidy provision for fossil fuels.
In the Gambia, the scale of public investment in renewable energy is more than four-fifths that of public finance provided to fossil fuels; while in Brazil and Senegal, the scale of renewables investment was found to be two-thirds that of fossil fuel subsidies.
“Kenya’s ambition to be a global leader in renewable energy is borne out by the finding that per capita investment in renewables in the country is outspending public subsidy provision to fossil fuels. However, recent protests in Kenya against the government’s reduction of fossil fuel subsidies underline the importance of feminist Just Transition principles,” the investigation found.
“Shifts in public financing must be carefully sequenced to protect the rights of people—especially women—living in poverty. Any reductions in fossil fuel subsidies should target the wealthy corporations first. Only once accessible and democratic alternatives and comprehensive social protections are available to people on low incomes, should progressive policies be shifted,” the analysis concluded.
The report further found that governments in the North continue to disproportionately fuel the climate crisis, and even though the developed world has just a quarter of the world’s population, their annual average fossil fuel subsidies amounted to USD 239.7 billion.
Action Aid laments that renewable energy public investment in the Global South comes to an annual average of USD 10.3 billion each year, noting that even worse, renewable energy investment in the South has been on a downward trend, more than halving from USD 15 billion in 2016 to USD 7 billion in 2021.
It calls on governments to speed up the transition to green, resilient, democratic and people-led climate solutions for food and energy, such as renewable energy and agroecology. “For Global South countries already experiencing the devastating consequences of climate change, the need for global transition is all the more urgent”.
According to Arthur Larok, Secretary General of ActionAid International, the report further helps expose wealthy corporations’ ‘parasitic’ behavior.
“They are draining the life out of the Global South by siphoning public funds and fueling the climate crisis. Sadly, the promises of climate finance by the Global North are as hollow as the empty rhetoric they have been uttering for decades. It is time for this circus to end; we need genuine commitments to ending the climate crisis,” he said.
The report also debunks the “false narrative” that fossil fuel and industrial agriculture expansion in the Global South is necessary to address food insecurity and energy poverty and to provide livelihoods and public revenue, said Teresa Anderson, Global Lead on Climate Justice at ActionAid International and one of the report’s authors.
“It seems that money is the root of all climate upheaval. Climate-destructive industries are bleeding the Global South of the public funds they should be using to deal with the climate crisis. “The lack of public and climate finance for solutions means that in climate-vulnerable countries, renewable energy is receiving 40 times less public finance than the fossil fuel sector,” she added.
The time had come for the poor to stand up to industries that are draining their finances and wrecking the climate.
Public resources, the report recommends, should be directed toward supporting just transition away from climate-destructive fossil fuels and industrial agriculture and in favor of “people-led climate solutions that safeguard people’s rights to food, energy and livelihoods.”
It should also go to scaling up decentralized renewable energy systems to provide energy access, and gender-responsive agricultural extension services that offer training in agro-ecology and adaptation.
It appeals to wealthy countries to provide “trillions of dollars in grant-based climate finance each year to Global South countries on the front lines of the climate crisis,” including by agreeing to an ambitious new climate finance goal at COP29.
Further, it calls for regulation of the banking and finance sectors to end destructive financing, including setting minimum standards for human rights, social and environmental frameworks, and transformation of the international financial institutions that are pushing climate-vulnerable countries into “spiraling debt.”
Keywords:Corporate Capture:Fossil Fuel Subsidies:Climate Finance:Global South:Renewable Energy
IPS UN Bureau Report
Banking & Finance
Equity Group Expands Into Southern Africa as It Bets on Africa’s Trade Corridors
FY2025 results show more than half of Equity’s profits now come from regional subsidiaries.
Equity Group targets Angola, Zambia and Mozambique as it expands along Africa’s mineral corridors and deepens regional banking scale.
🧠 Executive Intelligence Overview
As a result of its strong FY2025 performance, Equity Group Holdings is accelerating a major expansion into Southern Africa. The lender is now targeting Angola, Zambia, and Mozambique in a strategic shift that reflects Africa’s evolving trade and mineral corridor economy.
Chief Executive James Mwangi confirmed in a Reuters interview on April 29, 2026, that the group is actively pursuing acquisition opportunities rather than greenfield market entry. This approach signals a deliberate pivot toward established financial institutions in structurally different markets.
Meanwhile, Equity’s strategy is increasingly shaped by Africa’s infrastructure-driven growth corridors, particularly the US-backed Lobito Corridor linking Angola, Zambia, and the Democratic Republic of Congo.
According to the World Bank, African financial systems are becoming more deeply integrated with trade logistics and commodity supply chains, which is reshaping cross-border banking expansion strategies.
🏛️ 1. From Rural Origins to Continental Banking Power
The institution’s current trajectory is anchored in a transformation that began 35 years ago, when Equity operated as a rural building society in central Kenya.
Since then, the lender has evolved into Kenya’s most profitable bank and one of Africa’s fastest-expanding financial groups. This transformation reflects a broader structural shift in African banking, where domestic institutions are increasingly becoming regional platforms.
📊 2. FY2025 Performance Underpins Expansion
Equity’s expansion push is strongly supported by its FY2025 financial results.
- Profit after tax: KSh 75.50 billion (~USD 582 million)
- Annual growth: 55%
- Regional subsidiaries contribution: 51% of total banking profit before tax
This performance highlights a structural shift in earnings away from Kenya toward regional subsidiaries.
In addition, the International Monetary Fund notes that African banks with diversified regional exposure tend to demonstrate stronger resilience during domestic economic cycles, particularly in volatile macroeconomic environments.
🌍 3. DRC Remains the Core Profit Engine
The Democratic Republic of Congo continues to play a central role in Equity’s regional strategy.
The lender is currently the second-largest bank in the country, following acquisitions completed in 2015 and 2020. These transactions helped establish a strong market position in one of Africa’s most underbanked but resource-rich economies.
As a result, the DRC has become Equity’s most important regional earnings hub outside Kenya.
FY2025 performance reflects this dominance:
- Profit: KSh 24.70 billion (~USD 190 million)
- Growth: 58% year-on-year
- Estimated market share: ~24%
Moreover, the World Bank continues to classify the DRC as a frontier financial market with significant long-term inclusion potential despite elevated operational risks.
🚢 4. Lobito Corridor: The Structural Growth Logic
Equity’s expansion strategy is increasingly aligned with the Lobito Corridor, a strategic infrastructure route supported by the United States.
This corridor connects:
- Angola (Atlantic export gateway)
- Zambia (copper belt and mineral transit hub)
- DRC (resource extraction base)
Consequently, banking expansion is no longer being driven by national boundaries but by trade flow systems.
Mwangi emphasized in the Reuters interview that expansion decisions are now guided by customers and trade routes rather than geography alone.
This reflects a broader trend identified by the International Finance Corporation, which highlights the growing importance of infrastructure-linked financial ecosystems in emerging markets.
🇦🇴 🇿🇲 🇲🇿 5. Southern Africa Expansion Targets
Equity is actively pursuing acquisition-led entry into three key Southern African markets.
📍 Angola
Angola represents the most advanced target market. The country serves as a strategic Atlantic export gateway for minerals and energy resources.
📍 Zambia
Zambia plays a critical connector role between the DRC and Mozambique, particularly in copper and mineral logistics.
📍 Mozambique
Mozambique provides access to Indian Ocean trade routes and is expected to become Equity’s sixth non-Kenyan subsidiary.
In addition, Mwangi confirmed ongoing high-level engagement with Mozambique’s leadership, reinforcing the strategic importance of the market.
⚖️ 6. Regulatory and Structural Constraints
Despite strong expansion momentum, regulatory differences across African markets continue to shape entry strategy.
Earlier efforts in Ethiopia were slowed by foreign ownership restrictions limiting stakes in local banks, prompting a strategic shift toward Southern Africa.
As a result, Equity has prioritized markets with clearer acquisition pathways and more flexible regulatory environments.
The Bank for International Settlements notes that regulatory fragmentation remains one of the most significant constraints on cross-border banking expansion in emerging economies.
📡 7. Acquisition-Led Growth Strategy
Unlike traditional expansion models, Equity is increasingly favouring acquisitions over greenfield entry.
This strategy is driven by three operational realities:
- Language and cultural differences in new markets
- High cost of establishing new banking infrastructure
- Need for immediate market scale and deposits
As Mwangi explained, acquiring established institutions allows Equity to scale faster while transforming existing operations into regional platforms.
🌍 8. Competitive Landscape Across Africa
Equity’s expansion is unfolding within a highly competitive African banking environment.
Key competitors include:
- Ecobank (pan-African network)
- UBA (United Bank for Africa)
- State-linked financial institutions
- Regional banks expanding cross-border
The World Bank highlights that Africa’s banking sector remains fragmented, with low credit penetration but increasing exposure to sovereign debt across multiple jurisdictions.
⚠️ 9. Risk Environment
While growth prospects remain strong, Equity’s expansion is exposed to structural risks.
These include:
- Currency volatility across Southern Africa
- Regulatory fragmentation between jurisdictions
- Commodity price sensitivity in mining economies
- Macroeconomic instability and political transitions
Nevertheless, the long-term opportunity remains anchored in Africa’s demographic growth, infrastructure investment, and commodity cycles.
🌐 Conclusion: A Shift to Corridor Banking
Equity Group’s Southern Africa expansion reflects a deeper transformation in African finance.
The banking model is evolving from:
- Country-based expansion
➡️ to - Corridor-based financial ecosystems
In this new structure, banks are increasingly aligning with trade routes, commodity flows, and infrastructure networks rather than national boundaries.
Ultimately, Equity is positioning itself not simply as a regional lender, but as a financial institution embedded within Africa’s evolving economic geography.
Commercial Banking
Inside the DRC Banking Rush: Who Is Entering First
Digital banking is enabling faster, lower-cost entry into fragmented financial environments.
Regional banks are racing into the DRC as Equity, KCB, CRDB and others compete for Africa’s fastest-growing banking frontier.
🧠 Inside the DRC Banking Rush: Who Is Entering First
Unlike earlier phases of African banking growth, which focused on domestic consolidation, the current cycle is defined by cross-border competition for underbanked populations and resource-driven economies.
According to the World Bank, the DRC remains one of the least financially included large economies in the world, with banking penetration still below 20% in many estimates. This structural gap is now attracting regional lenders seeking long-term growth.
At the same time, the International Monetary Fund has identified the country as a frontier economy where financial deepening could significantly accelerate formal economic activity.
👉 The result is a competitive entry race—where timing is now a strategic advantage.
🏦 1. The First Movers: East Africa’s Banking Giants
The earliest and most aggressive entrants into the DRC banking landscape include:
- Equity Group Holdings
- KCB Group
- CRDB Bank
- Bank of Kigali
These institutions are not simply opening branches—they are building regional banking ecosystems that integrate retail, SME, and trade finance services across borders.
For example, Equity Group Holdings has positioned the DRC as a strategic growth pillar within its pan-African model, reflecting a shift from national banking to continental banking platforms.
KCB Group has similarly expanded its regional footprint through subsidiaries and partnerships, leveraging cross-border integration to capture trade flows between East and Central Africa.
👉 These early movers are shaping the competitive structure of the market.
💰 2. Why Early Entry Matters
Early entrants typically benefit from:
- First access to corporate clients
- Stronger brand recognition
- Early deposit base accumulation
- Relationship dominance in SME lending
The International Finance Corporation has consistently emphasized that financial institutions entering underserved markets early tend to establish long-term structural advantages, particularly in environments with low competition density.
👉 In the DRC, being first often means shaping the rules of engagement.
📡 3. Digital First Entry: The New Banking Model
Unlike traditional banking expansion, entry into the DRC is increasingly driven by digital infrastructure rather than physical branches.
Banks are deploying:
- Mobile banking platforms
- Agent banking networks
- Integrated fintech partnerships
This approach reduces operational costs while expanding reach into rural and semi-urban populations.
Institutions such as Equity Group Holdings are leveraging digital ecosystems to scale rapidly across fragmented infrastructure environments.
This aligns with insights from the World Bank, which highlights digital financial services as a critical driver of inclusion in low-infrastructure economies.
👉 Digital entry is now the default expansion strategy.
⛏️ 4. Resource-Linked Banking: The Corporate Entry Layer
Beyond retail banking, corporate banking tied to the DRC’s resource sector is a major entry driver.
The country’s vast reserves of copper, cobalt, and gold create high-value financing opportunities for banks in:
- Trade finance
- Commodity-backed lending
- Mining sector project finance
The International Monetary Fund has repeatedly identified the DRC’s resource sector as a key macroeconomic stabiliser and long-term growth driver.
👉 This makes the DRC not just a retail banking opportunity—but a corporate finance frontier.
⚖️ 5. Competition Structure: A Regional Contest
The DRC banking market is now shaped by regional competition rather than isolated expansion.
Key competitive blocs include:
- Kenyan banking groups
- Tanzanian financial institutions
- Rwandan regional banks
Each is targeting overlapping segments:
- Retail deposits
- SME credit
- Trade finance corridors
At the same time, informal financial systems remain dominant in many regions, meaning formal banks must compete against deeply entrenched cash economies.
📉 6. Risk Environment: Why Entry Is Not Simple
Despite strong opportunity, the DRC remains structurally complex.
Key challenges include:
- Currency volatility and dollarisation
- Weak credit information systems
- Infrastructure gaps in financial services
- Regulatory fragmentation
The Bank for International Settlements notes that frontier markets with fragmented regulation and high volatility tend to experience amplified operational risk during rapid financial expansion cycles.
👉 This makes execution capacity as important as market entry.
🌍 7. The Bigger Picture: Why This Matters Regionally
The DRC banking rush is not an isolated event—it is part of a broader East and Central African financial integration process.
It connects directly to:
- Cross-border banking expansion
- Regional trade corridor financing
- Fintech-enabled financial inclusion
- Currency and liquidity interdependence
👉 The DRC is becoming the central node in regional banking integration.
🚀 Conclusion: A Market Defined by First Movers
The DRC banking rush is not about who enters eventually—it is about who establishes dominance early.
First movers are not just entering a market—they are shaping:
- Customer acquisition patterns
- Financial infrastructure
- Competitive pricing structures
- Regional capital flows
As the World Bank and International Monetary Fund both emphasize in different ways, financial deepening in frontier economies is a long-cycle transformation.
👉 In the DRC, that transformation is already underway—and the entry race has begun.
Kenya’s Rise as Africa’s New Capital Hub
Safaricom’s $1.2bn Ethiopia Bet Deepens as Telecom Losses Persist
Stanbic’s $27m Profit Signals Banking Shift
-
Telecommunications6 days agoSafaricom’s $1.2bn Ethiopia Bet Deepens as Telecom Losses Persist
-
Corporate Earnings7 days agoCo-op Bank’s $65m Profit Reveals Hidden Power
-
Corporate Earnings7 days agoStanbic’s $27m Profit Signals Banking Shift
-
Banking & Finance6 days ago
Kenya’s Rise as Africa’s New Capital Hub