A new $200 million climate adaptation finance mechanism is being rolled out across Kenya, Uganda, Tanzania and Rwanda to finance smallholder farmers and rural businesses.
The Africa Rural Climate Adaptation Finance Mechanism, backed by the International Fund for Agricultural Development and Equity Group, is designed to reach approximately 260,000 smallholder farmers and 500 rural enterprises.
The 12-year facility comprises about $180 million in lending capital and $20 million in technical assistance.
Because the lending capital will revolve through several investment cycles, the mechanism is expected to generate approximately $266 million in loans over its lifetime.
The initiative was launched alongside the Africa Food Systems Forum in Kigali, Rwanda, where investors, governments, farmers and development organisations discussed ways of increasing investment in Africa’s food systems.
The financing will target businesses and farmers exposed to climate-related risks, helping them invest in technologies and practices that can improve productivity and resilience.
For East Africa’s agricultural economy, access to affordable long-term financing remains one of the major constraints facing smallholder producers.
The new facility represents a shift towards using private-sector finance alongside development funding to address that gap.
