Kenyan farmers and agricultural SMEs will now have access to a line of credit incorporating climate-smart agriculture and agricultural technologies through ADAPTA, the first line of credit for climate adaptation in Africa that is being funded by the Bill and Melinda Foundation. Gates.
ADAPTA is also partnering with USAID’s Kenya Investment Facility to mobilize local financial advisers and strengthen its expertise in sustainable finance, in the first phase of the project supported by US $ 1.5 million (approximately KES 167 million).
German Vegarra, one of ADAPTA’s directors, spoke optimistically during its launch, saying that they hope the agricultural risk management framework they provide to farmers can “transform sustainable finance in the same way as credit ratings and ratings. lending transformed corporate and consumer finance. ”
“Unless we mobilize large reserves of capital for climate adaptation, we will not reach the small farmers and agricultural SMEs that are on the front lines of climate change and will be the most affected. We are delighted that the Gates Foundation is supporting ADAPTA’s vision. ” Vegarra added.
Although the agricultural sector contributes up to 34% of Kenya’s GDP and employs the majority of the rural population, less than 5% of loans are available to them. Climate change, as shown by rising temperatures, drought, and pests and diseases, is expected to have drastic negative effects on production.
For example, more than half a million smallholder farmers in Kenya depend on tea for their livelihoods, and will see a decrease of up to 26% in the optimal conditions for growing tea by 2030.
ADAPTA is developing and testing a Climate Smart Module (CSM) that will leverage satellite-derived data sets and other data sets on vegetation, soil, hydrology, climate, energy, and water efficiency, including gender and social dimensions, to assess risk and identify adaptation. options. They will also work with primary producers and agricultural SMEs to assess their climate change risks and resilience and incorporate an adaptation plan into their growth strategies.
In their plan, they will also use climate rating algorithms to transform the way banks and investors assess agricultural risk to unlock financing for farmers and agricultural SMEs. These innovations will be developed in partnership with the Alliance of Bioversity International and CGIAR, the world’s largest agricultural research network.
“We are convinced that strong partnerships between scientific organizations and private investors can play a catalytic role in transforming the sustainable finance ecosystem in the agricultural sector,” the Alliance Director General said in a press release.
Bottlenecks such as a lack of robust risk data and transaction costs associated with due diligence, technical assistance, and monitoring have reduced the appetite for spending on agriculture, and they hope to proactively address all barriers.
ADAPTA plans a global Phase II in 2023 focused on Africa, Asia and Latin America.