In a groundbreaking move towards sustainability, Uganda has secured a historic $31 million (UGX 107.7 billion) result-based payment from the Green Climate Fund (GCF).
This funding is a direct result of the country’s successful efforts in reducing deforestation and lowering greenhouse gas emissions.
The approval follows the completion of Uganda’s REDD+ (Reducing Emissions from Deforestation and Forest Degradation) project, which spans from 2016-2017.
It marks a pivotal moment in Uganda’s climate action journey, positioning the country as a leader in climate resilience and green economic transformation.
This Green Climate Fund grant is part of the GCF’s broader strategy to incentivize nations that are taking measurable steps to curb deforestation, protect natural resources, and reduce carbon emissions.
For Uganda, the payment is not just a financial windfall; it represents the culmination of years of focused national effort, underscoring the growing recognition of Uganda’s commitment to sustainable development.
Denis Tukahikaho, PhD, an expert on cooperatives, financial inclusion, and renewable energy investment, explains that this deal is just the beginning. “The success of this carbon deal is not just a recognition of Uganda’s work so far, but an opening for what’s to come.
We must plant more trees, invest in sustainable practices, and actively participate in the growing global carbon market to drive Uganda’s green economy forward.”
This first-ever result-based payment for emission reduction not only strengthens Uganda’s position in the global fight against climate change, but also lays the foundation for a more sustainable and diversified economy.
The proceeds from the deal will help fund additional reforestation projects, renewable energy initiatives, and green investments that are vital to Uganda’s long-term climate goals.
In previous columns, Tukahikaho projected that Uganda’s GDP would increasingly rely on carbon pricing revenue by 2030, with carbon pricing expected to represent a significant portion of the global economy.
The 2024 global carbon pricing market reached a record $104 billion, and this trend is anticipated to continue as more countries adopt carbon pricing mechanisms in line with the Paris Agreement. For Uganda, this market represents a crucial new revenue stream, with carbon pricing expected to account for between 25% to 30% of the nation’s GDP by 2030.
Uganda, however, faces an uphill battle in terms of climate finance. According to Tukahikaho, Uganda’s climate finance model is currently overly reliant on external sources, with 85% of funding for its decarbonization goals coming from international support, and only 15% coming from internal sources.
“This imbalance poses a challenge,” he notes, “as the country is vulnerable to shifts in global geopolitics and financing trends. Uganda must focus more on developing its domestic markets and internal financing mechanisms for climate projects.”
The carbon market presents a major opportunity for Uganda to bridge the financing gap and accelerate its green transformation. Through carbon markets, Uganda can generate revenue by trading carbon credits.
This market has seen considerable growth globally, with the voluntary carbon market alone valued at $1.4 billion in 2024. The market is expected to grow significantly, reaching between $10 billion to $40 billion by 2030, driven by increasing demand for carbon credits from both government policies and corporate net-zero commitments.
As carbon credits become a more critical part of global climate strategies, Uganda’s early entry into the carbon market offers significant potential.
The demand for carbon credits is anticipated to rise as countries update their Nationally Determined Contributions (NDCs) in 2025 and as mechanisms such as the Carbon Offsetting and Reduction Scheme for International Aviation Phase II and the Paris Agreement’s Article 6.2 and 6.4 frameworks come into full effect.
Uganda, like other emerging markets, has a unique opportunity to participate in this expanding market, but it will need to overcome challenges such as limited access to finance and the structural barriers that many developing nations face.
While international climate finance is still vital, the success of Uganda’s carbon market strategy will ultimately depend on creating a thriving domestic green economy, driven by investments in sustainable agriculture, renewable energy, and reforestation projects.
The shift towards a green economy also offers significant opportunities for Ugandans at the grassroots level. Tukahikaho emphasizes that the potential of Uganda’s carbon market goes beyond just government-led initiatives; local communities, cooperatives, and businesses must get involved.
“The key to success lies in making trees an economic asset. Planting indigenous trees should be seen not just as an environmental effort, but as an investment opportunity that can yield returns over time. The economic rent from trees—when evaluated against other real estate investments—presents an exciting new frontier for Ugandans.”
The tree economic rent model, as Tukahikaho describes it, is about recognizing the value of trees not only in carbon sequestration but also as a sustainable business opportunity.
As the world increasingly focuses on reducing carbon footprints, the financial incentives for planting and maintaining forests will grow. With more investment, Uganda can leverage its vast natural resources and become a key player in the global carbon economy.
As Uganda embarks on this journey towards a green future, it must capitalize on its progress and continue to build on its carbon market potential. The $31 million payment from the Green Climate Fund is a significant achievement, but it is only the beginning.
Uganda’s focus must now shift towards scaling up reforestation efforts, building capacity within its green economy, and securing further investment in sustainable initiatives.
With the global carbon market set to expand rapidly in the coming years, Uganda has the opportunity to become a leader in climate action in Africa and globally. By planting more trees, investing in renewable energy, and driving local participation in carbon markets, Uganda can not only meet its decarbonization goals but also create a more
resilient and sustainable economy for future generations.
