KENYA – 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.
The facility 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.
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. It 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.
It 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.
“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.
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.