- East African farmers will access a Sh25.9bn climate finance fund.
- The programme targets 260,000 farmers and 500 rural businesses.
- Funds will support irrigation, livestock, storage, renewable energy and agro-processing.
Smallholder farmers and rural businesses across East Africa are set to benefit from a new Sh25.9 billion climate finance mechanism, designed to help them invest in solutions that build resilience against climate change.
The Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) was jointly launched in Kigali, Rwanda, by the International Fund for Agricultural Development (IFAD) and Equity Group. The 12-year programme will roll out across Kenya, Uganda, Tanzania and Rwanda.
Equity Group Managing Director and Chief Executive Officer Dr James Mwangi said the initiative goes beyond simply financing a project. Instead, he described it as an effort to build an entirely new market, where financing climate resilience becomes standard banking practice rather than a charitable gesture.
Structure and reach
The mechanism combines roughly Sh23.3 billion in lending capital with about Sh2.6 billion set aside for technical assistance. Equity Group will match concessional funding from development partners by contributing half of the lending capital from its own balance sheet.
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Notably, that capital is projected to generate about Sh34.5 billion in loans over approximately four investment cycles, as funds revolve through the programme.
The initiative is expected to reach around 260,000 smallholder farmers and 500 rural businesses. Of these, women are expected to make up at least half of beneficiaries, with youth accounting for 30 per cent.
Funds will support a range of climate-resilient investments, including irrigation and water harvesting, resilient livestock, post-harvest storage, renewable energy and climate-resilient agro-processing.
Equity Bank Kenya Managing Director Moses Nyabanda said the bank would channel financing both directly and through microfinance institutions, SACCOs and agricultural value-chain companies. Technical assistance will also be extended to participating financial institutions, farmers and rural businesses, helping them identify and finance suitable adaptation investments.
IFAD Vice President Dr Gérardine Mukeshimana said the programme’s broader goal is to turn rural climate adaptation into a credible and sustainable line of business for African financial institutions, rather than a one-off intervention. She added that the programme would first take root in East Africa before being adapted for other regions on the continent.
By Benedict Aoya
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