Africa’s climate adaptation credit facility for agriculture, ADAPTA, has launched with Ksh. 166,950,000 (USD 1.5 million) in funding from the Bill and Melinda Gates Foundation for Phase I in Kenya. ADAPTA will develop and test an innovative loan insuring platform that incorporates agricultural technologies and climate-smart agriculture.
ADAPTA plans to use climate scoring algorithms to transform how banks and investors assess agricultural risk to unlock financing for farmers and Agri-SMEs. These innovations will be developed in partnership with the Alliance of Bioversity International and CIAT, part of the CGIAR.
Kenya’s agricultural sector represents 34% of GDP, employs 60% of its rural population, and is responsible for more than 50% of exports. With less than 5% of total lending going to the sector, the potential to apply and scale climate-smart agriculture technologies to enhance the climate resilience of agriculture value chains is limited.
Over half a million small-scale farmers in Kenya depend on tea for their livelihoods. ADAPTA’s climate-smart banking approach will be vital to financing climate adaptation in various agriculture value chains in Kenya, including the tea sector.
Working closely with the Alliance of Bioversity International and CIAT and its flagship climate project for Africa (AICCRA), ADAPTA’s Phase I will focus on developing and testing a Climate-Smart Module (CSM) and an agriculture risk management framework to address adaptation finance barriers proactively. The CSM will leverage satellite-derived and other data sets on vegetation, soils, hydrology, climate, energy, and water efficiency, including social and gender dimensions, to assess risk and identify adaptation options within value chains.
ADAPTA is also partnering with USAID’s Kenya Investment Mechanism to mobilize local financial advisors and strengthen their sustainable finance expertise, a service in great demand.
“We hope ADAPTA’s CSM can transform sustainable finance the same way credit scores and credit ratings transformed consumer and corporate finance. Unless we mobilize large pools of capital for climate adaptation, we will not reach the small producers and Agri-SMEs that are on the front lines of climate change and will be hit the hardest. We are thrilled that the Gates Foundation is supporting ADAPTA’s vision,” Vegarra said.
ADAPTA plans to launch a global Phase II in 2023 focusing on Africa, Asia, and Latin America.