The official narrative of blended finance in Sub-Saharan Africa is a polished one. It’s the story told at the World Economic Forum and printed in glossy fund prospectuses: public and philanthropic capital acts as the “first-loss” cushion, absorbing risk so that private institutional money can finally flow into underserved markets. It’s framed as a surgical market correction — addressing the climate crisis and gender inequality in one fell swoop.
Then there is the data.
A February 2026 report by I&P Ecosystems, in partnership with the Catalytic Climate Finance Facility, has pulled back the curtain on 46 gender and climate-focused funds in the region. After interviewing 30 fund managers and building a comprehensive database, the researchers found something more systemic than simple inefficiency.
They found a set of unwritten rules — a “shadow” rulebook — that determines who actually gets capital and who is left in the cold. If you’re a fund manager in Nairobi, Lagos, or Dakar, these are the rules you’re actually playing by.
Rule 1: Be Huge or Be Invisible
The system is designed to reward scale, not necessarily impact. Of the $372 million in concessional capital tracked in the study, 70% ($261 million) went to debt funds — the largest and most predictable vehicles.
Meanwhile, early-stage SME funds — the ones backing unproven entrepreneurs in tough markets — received just $8 million. That is 2% of the total pool.
- The Math: Debt funds received concessional capital equivalent to 26% of their assets.
- The Reality: Early-stage funds received just 13%.
The system effectively concentrates subsidies where they are least “additional” and withholds them where the risk is highest.
Rule 2: The “Track Record” Circularity
To get the concessional capital required to build a track record, you must already have a track record.
- 92% of early-stage SME funds in the sample were led by first-time managers.
- Institutional investors, bound by rigid mandates, find it nearly impossible to take a “leap of faith” on these teams.
While “warehousing facilities” — which provide pre-close capital to let managers prove themselves — are hailed as a solution, only one fund in the 46-fund sample actually used one.
A handful of initiatives are attempting to break the loop, nevertheless. The Resilient Futures Fund, managed by 2X Global and backed by Amazon, Reckitt, and US foundations, warehouses capital for gender-responsive climate funds. The Mastercard Foundation Africa Growth Fund has pursued a similar approach for women-led managers. These interventions remain exceptional rather than standard.
For most first-time managers, the loop remains firmly closed.
Rule 3: Lead with Climate, Layer on Gender
In conference panels, climate and gender are inseparable. In capital allocation, there is a clear hierarchy. Funds with a rigorous climate strategy but a secondary gender thesis (climate-smart, gender-aware) had a 100% success rate in raising a concessional tranche.
Conversely, funds that led with a gender-transformative mission but were only “climate-aware” saw that success rate drop to 50%. Managers have caught on: the “savvy” move is to lead with a climate narrative and treat gender as an ESG checkbox.
Rule 4: Women are the Target, Seldom the Managers
Fifteen percent of the funds at the gender-climate nexus were led by women. Eight percent by balanced teams.
This is a sector explicitly tasked with advancing gender equity.
The mechanisms are familiar. Anchor commitments flow through networks. Larger vehicles attract concessional capital. Larger vehicles are more often run by experienced managers. Experienced managers are disproportionately male.
The effect compounds. Women fund managers are twice as likely to invest in women-led businesses. A management layer that is 85% male will not generate pipelines consistent with the sector’s impact claims.
The report highlights one instructive shift. Persistent Energy Capital initially encouraged gender alignment. In 2021, following the addition of a woman partner, it formalised gender criteria as an investment condition. The timing is noted without comment.
Rule 5: VC is the “Big Zero”
If you are running a Venture Capital fund at the gender-climate nexus, the amount of concessional capital available to you is exactly zero. The report found that across $372 million deployed, not a single dollar reached a VC vehicle.
VC funds at the gender-climate intersection exist — Kazana, Sahara Impact Ventures, ATG Samata, Catalyst Fund — and many remain undersized despite strong pipelines. The report states that blended finance “has not yet been mobilised effectively” for early-stage innovation funds. The data suggests this is not a timing issue but a structural one.
The system views the VC model — long timelines, high-risk tech, and theoretical leverage ratios — as too messy for the current underwriting standards of development finance institutions (DFIs). To put it succintly, the system is not built for it — and absent deliberate redesign, it will not become so.
The Operational Trap
The report also highlights the “2% Problem.” A standard 2% management fee on a $10 million fund yields $200,000 a year. That has to cover:
- Investment team salaries.
- Operational costs in multiple African jurisdictions.
- Specialized gender and climate reporting (which is expensive).
Small funds are essentially asked to do more work with less money, often carrying the “cost of impact” entirely on their own shoulders.
The Negotiated Reality
Perhaps most surprising is that the terms of blended finance are rarely “scientific.” The concessional tranches in the study ranged from 2% to 56% of total fund size. The researchers found no systematic rationale for these numbers. Instead, they are the result of:
- Institutional “appetite” at the time of signing.
- The fund manager’s existing relationship with the DFI.
- Negotiating leverage (which the smallest funds have the least of).
Consider the Spark+ Africa Fund. It is a success story — the first fund dedicated to clean cooking in Sub-Saharan Africa. But it took six years from the first conversation with the African Development Bank to reach a final close.
For a first-time manager without a deep balance sheet or a “sponsoring” institution like the Clean Cooking Alliance, a six-year fundraising cycle isn’t a challenge — it’s a death sentence.
What the rules are really protecting
The institutions deploying blended finance are not indifferent to these outcomes. Many expressed concern. Several commissioned the research.
What the rules protect is institutional comfort: scale, predictability, defensible leverage, reliance on legacy networks, a fear of the “innovation layer” (VC), and narratives that survive committee scrutiny. Changing them would require redefining what success looks like — and designing instruments for funds the system was never built to support.
None of this is technically difficult. The recommendations already exist. The constraint is not knowledge. It is will.
The conference version of blended finance is not false. It is incomplete. The data version reveals who the system leaves behind.
What happens next is a question for those holding the capital.
“Transformative Capital: The Role of Blended Finance in Shaping the Trajectories of Gender and Climate-Focused Impact Funds in Sub-Saharan Africa” was authored by I&P Ecosystems and published in February 2026. It is available via the Catalytic Climate Finance Facility Learning Hub.