IFAD launches innovative financing mechanism - ITREALMS

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Following the recent release of data confirming a sharp global decline in climate finance dedicated to adaptation efforts, the UN’s International Fund for Agricultural Development (IFAD) and partners have today unveiled a new financing mechanism to boost support to small-scale food producers in rural communities in Kenya, Rwanda, Tanzania and Uganda to adapt to a changing climate.

The Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) is a large-scale model of tailored finance for poor small-scale food producers and rural microenterprises. Small and medium-sized rural agribusinesses will also access concessional loans through this new scheme. The mechanism is scalable and can be replicated in other countries and regions.

“We need to invest at speed and scale to ensure rural populations, including rural small scale food producers, are able to adapt to climate impacts now,” said Alvaro Lario, President of IFAD, at ARCAFIM’S launch event at the climate change conference (COP 28). Lario emphasized IFAD’s commitment to making a positive impact on people's lives through innovative financial solutions such as ARCAFIM, bringing together funding from like-minded partners, and leveraging collaboration with the private sector.

Access to finance is essential to sustain and improve the agricultural livelihoods that vulnerable rural communities rely upon. Strengthening their resilience to climate change has become urgent. Supporting small and medium-sized enterprises in rural areas in turn supports increased employment, income, and services to rural communities.

ARCAFIM aims to contribute to reducing poverty and hunger in Eastern Africa. It seeks to make agriculture more sustainable and profitable, while enhancing rural communities’ capacity to withstand a variety of climate and economic shocks. The mechanism will leverage potential linkages within IFAD's existing portfolio of projects in the region.