An African woman carries a basket of freshly harvested vegetables from a community vegetable garden. The image illustrates the role of smallholder farmers and women in food production and rural livelihoods. Food Tank, Confident African woman in vegetable garden.

NNA News - The International Fund for Agricultural Development (IFAD) and Equity Group have launched a US$200 million financing mechanism aimed at expanding access to climate adaptation finance for smallholder farmers and rural businesses across East Africa.

The Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) was launched on 4 September on the sidelines of the Africa Food Systems Forum in Kigali. The 12-year mechanism will operate in Rwanda, Kenya, Uganda and Tanzania.

The facility comprises US$180 million in lending capital and about US$20 million in technical assistance. The lending capital is expected to generate about US$266 million in loans through four investment cycles. Equity Group will contribute US$90 million from its own balance sheet, matching concessional capital mobilised through the programme.

ARCAFIM aims to reach about 260,000 smallholder producers and 500 rural micro, small and medium-sized enterprises. At least half of the intended beneficiaries are expected to be women, while young people are expected to account for 30%. The initiative is also expected to strengthen food security for about 1.2 million people and benefit an estimated 1.5 million people directly and indirectly.

IFAD Vice President Gérardine Mukeshimana said the mechanism was intended to turn climate adaptation finance into a sustainable area of business for financial institutions.

“ARCAFIM's ambition is to make rural climate adaptation a recognizable, viable and sustainable business line for African financial institutions,” Mukeshimana said. “It will support tailored financial products and a climate adaptation financing taxonomy, so that participating institutions gain the experience, systems and confidence to continue expanding adaptation finance.”

The programme will provide financing for investments including irrigation and water harvesting, livestock resilience, post-harvest storage, renewable energy and climate-resilient agro-processing. It will also support microfinance institutions and savings and credit cooperatives in developing adaptation lending capacity.

Equity Group Chief Executive James Mwangi said the mechanism was designed to change how financial institutions view smallholder farmers.

“Africa's smallholder farmers are not waiting to be rescued. They are entrepreneurs operating in the most demanding risk environment on earth, and what they have lacked is a financial system built to back them,” Mwangi said.

The Green Climate Fund has committed US$55 million to the mechanism and said its contribution helped structure the programme to mobilise commercial investment alongside public and concessional financing.

IFAD and Equity Group said the model is intended to make climate-resilient lending a sustainable business line for African financial institutions beyond the period of concessional funding. They have also identified Southern and West Africa as potential regions for future expansion.

Why I prefer this version: it uses two verified direct quotes from different people, corrects the launch date from September 5 to September 4, and avoids turning the supplied paraphrase of Mwangi's remarks into a quotation.