Kenya becomes Africa's first country to have Climate Credit Facility launched for Agriculture.
Posted on : Friday , 26th November 2021
ADAPTA, Africa's first climate adaptation credit facility for agriculture, was started in Kenya with support from the Bill and Melinda Gates Foundation of USD 1.5 million for Phase I.
ADAPTA will create and test a cutting-edge loan underwriting platform that blends agricultural technology and climate-smart agriculture.
To unlock finance for farmers and Agri-SMEs, ADAPTA proposes to employ climate scoring algorithms to change how banks and investors assess agricultural risk. These improvements will be developed in collaboration with the Alliance of Bioversity International and CIAT, both of which are part of the CGIAR, the world's largest agricultural research network.
ADAPTA's Phase I focuses on building and testing a Climate-Smart Module (CSM) and an agriculture risk management framework to address adaptation funding barriers proactively, in collaboration with the Alliance of Bioversity International and CIAT's flagship climate project for Africa (AICCRA).
The CSM will assess risk and suggest adaptation solutions within value chains using satellite-derived and other data sets on vegetation, soils, hydrology, climate, energy, and water efficiency, as well as social and gender dimensions.
The Alliance will make the CSM open and accessible (CGIAR). ADAPTA is assisting primary farmers and agribusinesses in assessing their climate change risks and resilience, as well as incorporating an adaptation strategy into their growth plans.
ADAPTA is also collaborating with USAID's Kenya Investment Mechanism to mobilise and develop local financial advisors' sustainable finance knowledge, which is in high demand.
German Vegarra and Madleine Mwithiga, both located in Nairobi, are ADAPTA's Principals. They have extensive expertise creating and delivering innovative, multi-stakeholder programmes in agriculture and SME financing, risk management, sustainability, and blended finance.
"We expect that ADAPTA's CSM will alter sustainable finance in the same manner that credit scores and credit ratings did for consumer and business finance," Vegarra stated. "We will not reach the small farmers and agri-SMEs who are on the front lines of climate change and will be hurt the hardest unless we mobilise significant pools of cash for climate adaptation. We are ecstatic that the Gates Foundation has decided to support ADAPTA's mission."
The Alliance's Director General, Juan Lucas Restrepo, stated, "Strong relationships between science organisations like the CGIAR and private investors, we believe, may play a catalytic role in reshaping the agriculture sector's sustainable finance environment. Science and innovation can help remove some of the major roadblocks to agricultural investment, such as a lack of reliable risk data and transaction costs associated with due diligence, technical support, and monitoring. We are very excited to work with ADAPTA and the Gates Foundation on this project."
In 2023, ADAPTA hopes to launch a global Phase II, focusing on Africa and other continents.
