Press Release First Climate Adaptation Credit Facility for Agriculture launches in Kenya

ADAPTA.EARTH delivers climate-smart data and technologies to mobilize financing for farmers and Agri-SMEs while helping them adapt to climate change.

Nairobi, Kenya. November 1, 2021: Africa's first climate adaptation credit facility for agriculture, ADAPTA, has launched with US$1.5 million in funding from the Bill & Melinda Gates Foundation for Phase I in Kenya. ADAPTA will develop and test an innovative loan underwriting 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, the largest global network on agriculture research.

Kenya's agricultural sector represents 34% of GDP, employs 60% of its rural population, and is responsible for 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. For example, a recent study predicts that optimal conditions for growing tea in Kenya will be reduced by 26% by 2050 due to climate change. Climate change is predicted to affect tea growing in Kenya through rising temperatures, droughts, frosts, shifting, and unpredictable weather patterns, as well as changes in pests and diseases threatening production.  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 focuses 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. The CSM will be open and available through the Alliance (CGIAR). ADAPTA is working with primary producers and Agri-SMEs to assess their climate change risks and resilience and embed an adaptation plan into their growth strategies.  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.  ADAPTA's Principals, German Vegarra and Madleine Mwithiga, both based in Nairobi, bring deep knowledge in agribusiness finance and years of experience developing and launching innovative, multi-stakeholder initiatives in agribusiness and SME lending, risk management, sustainability, and blended finance.   

"We hope ADAPTA's CSM can transform sustainable finance the same way credit scores and credit ratings transformed consumer and corporate finance,”

Vegarra said. “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."

In Kenya's Tana River watershed, Rachel picks tea leaves. Credit: Alliance of Bioversity and CIAT / Georgina Smith

Juan Lucas Restrepo, the Director General of the Alliance said,

“We are convinced strong partnerships between science organizations like the CGIAR and private investors can play a catalytic role in transforming the sustainable finance ecosystem in the agriculture sector. Science and innovation can help address some of the main bottlenecks currently reducing appetite for investing into agriculture, namely the lack of robust data on risks and the transaction costs associated with due diligence, technical assistance, and monitoring. We are very much looking forward to this cooperation with ADAPTA and the Gates Foundation.”

ADAPTA plans a global Phase II in 2023 focusing on Africa, Asia, and Latin America.

ADAPTA.EARTH uses an innovative loan underwriting process that incorporates climate-smart technologies to enhance risk management and credit decisions in the sector. ADAPTA leverages this process to ultimately help producers and Agri-SMEs adapt to climate change while mitigating production failures.  Based in Nairobi, Kenya, ADAPTA provides long-term funding aligned to natural agricultural production cycles to reduce the financial strain on farmers and Agri-SMEs caused by traditional financing structures. 

 

Media Contact:

Madeline Mwithiga, Director,

https://www.adapta.earth/

Email: madleine@adapta.earth

Tel: +254 725 398993