Overview
The ADAPTA Climate Finance Facility (ACF) is a USD 50 million debt facility aimed at transforming agricultural finance and food security in Sub-Saharan Africa. By utilizing ADAPTA’s proprietary climate risk management software, ACF offers a tailored, data-driven approach to reduce the risks associated with lending to smallholder farmers while promoting regenerative agricultural practices. ACF combines first-loss capital with technical support and capacity-building initiatives for financial intermediaries (FIs) and farmers. This strategy makes climate-smart agricultural loans more accessible, enabling farmers to adopt sustainable practices that enhance food security, increase their incomes, and build resilience against climate change.
Problem
Smallholder farmers in Sub-Saharan Africa face significant challenges in accessing affordable financing that is properly structured for climate-resilient practices. This troubling financing gap prevents farmers from adopting regenerative agriculture methods, which could enhance soil health, improve water management, and increase overall resilience to climate impacts like prolonged droughts, rising temperatures, and erratic rainfall. Additionally, deforestation and soil degradation exacerbate these challenges, negatively impacting crop yields and farmers' incomes. As a result, lenders often view farmers as high-cost and high-risk, leading to either a refusal to lend or the imposition of higher interest rates.
Solution
Unlocking Africa's $1.5 trillion banking industry is crucial for addressing this issue. The ACF tackles these barriers by utilizing a blended finance model that combines concessional and commercial capital, which encourages banks to lend to farmers. With ADAPTA’s proprietary climate risk scoring tool, financial institutions can effectively assess and mitigate climate risks, allowing for affordable loans with lower default rates. By partnering with financial intermediaries, such as Kenya’s Savings and Credit Cooperative Organizations (SACCOs), ACF offers farmers financial support alongside training and resources to adopt climate-resilient, regenerative practices. This comprehensive approach empowers farmers to sustainably improve productivity, enhance food security, and build resilience against climate shocks.
CC Facility Support
The CC Facility is supporting ACF in developing a comprehensive scale-up strategy, refining its financial model and vehicle structuring, and engaging investors. It is also assisting ACF in developing a comprehensive and rigorous gender strategy and action plan. This support is designed to enable ACF to mobilize more capital, expand its reach across Sub-Saharan Africa, and strengthen its impact on climate adaptation in the agricultural sector.
Website
ADAPTA - https://www.adapta.earth/