NAIROBI, Kenya, Sept. 8 – Farmers and rural businesses in East Africa are set to access a Sh25.9 billion climate finance fund aimed at helping them invest in measures to cope with the effects of climate change.
The Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) was launched by the International Fund for Agricultural Development (IFAD) and Equity Group in Kigali, Rwanda.
The 12-year programme will operate in Kenya, Uganda, Tanzania and Rwanda, providing financing for climate-resilient investments across the agricultural sector.
ARCAFIM comprises about Sh23.3 billion in lending capital and approximately Sh2.6 billion in technical assistance.
Equity Group will contribute half of the lending capital from its own balance sheet, matching concessional funding from development partners.
The initiative targets about 260,000 smallholder farmers and 500 rural businesses, with women expected to account for at least 50 percent of beneficiaries and youth 30 percent.
The lending capital is expected to generate about Sh34.5 billion in loans over roughly four investment cycles as the funds revolve through the programme.
The financing will support investments such as irrigation and water harvesting, resilient livestock, post-harvest storage, renewable energy and climate-resilient agro-processing.
IFAD Vice President Dr Gérardine Mukeshimana said the programme aims to make climate adaptation a sustainable business for financial institutions while helping farmers access financing and technical knowledge.
“ARCAFIM’s ambition is to make rural climate adaptation a recognizable, viable and sustainable business line for African financial institutions,” Mukeshimana said.
She said the programme would start in East Africa before being adapted and replicated in other parts of Africa.
Equity Group Managing Director and Chief Executive Officer Dr James Mwangi said the initiative would help financial institutions view smallholder farmers as bankable entrepreneurs.
“By committing our own balance sheet alongside concessional capital, we are not funding a project — we are building a market, one in which lending climate resilience becomes an ordinary banking business rather than an act of charity,” Mwangi said.
Equity Bank Kenya Managing Director Moses Nyabanda said the bank will provide financing directly and through microfinance institutions, SACCOs and agricultural value-chain companies.
The programme will also provide technical assistance to participating financial institutions, farmers and rural businesses to help them identify and finance climate adaptation investments.
The mechanism is backed by the Green Climate Fund, the Ministry for Foreign Affairs of Finland, the Nordic Development Fund, the Government of Denmark and the European Union.
ARCAFIM is also expected to generate lessons for expanding blended climate finance programmes to other parts of Africa, with Southern and West Africa identified as potential future regions.
