Equity and IFAD invest $200 million in East African climate resilience
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The International Fund for Agricultural Development (IFAD) and Equity Group began a $200 million (Sh25.8 billion) program to support smallholder farmers and rural businesses in East Africa as they respond to climate change.
The Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) will provide both loans and training over 12 years, aiming to increase access to financing for climate adaptation in agriculture.
Equity Group will contribute $90 million toward the $180 million in lending capital, combining it with funds from other development partners. ARCAFIM intends to circulate this capital through four investment cycles, ultimately providing approximately $266 million (Sh34.5 billion) in loans to small and medium-sized enterprises (MSMEs) and smallholder farmers. The program will focus on Kenya, Uganda, Tanzania, and Rwanda, and expects to reach 260,000 farmers and 500 MSMEs.
IFAD and Equity Group plan to offer specialized financial products and a system for classifying climate adaptation investments, with the goal of encouraging long-term adaptation financing. The funding comes from several sources including the Green Climate Fund, the Finnish Ministry for Foreign Affairs, the Nordic Development Fund, Denmark, and the European Union.
The program will also work with local microfinance institutions and savings and credit cooperative organizations (SACCOs) to deliver loans and training in areas like irrigation, water harvesting, and renewable energy.
