Equity Bank to channel $25m into climate finance for Tanzanian farmers

Dar es Salaam. Smallholder farmers and rural businesses in Tanzania are set to access about $25 million in climate adaptation financing under a new regional facility backed by the International Fund for Agricultural Development (IFAD) and Equity Group.

The Tanzania allocation is part of the $200 million Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM), which will provide financing and technical assistance to farmers, agricultural processors and rural micro, small and medium enterprises in Tanzania, Kenya, Uganda and Rwanda over 12 years.

In a statement shared with The Citizen yesterday, Equity Bank Tanzania Managing Director Isabela Maganga said the Tanzania allocation would strengthen the bank's focus on agricultural financing, financial inclusion and helping farmers invest in climate resilience and adaptation.

“For Tanzania, this mechanism is about making climate finance practical and reachable for farmers and agribusinesses. Our focus will be to support productive investments that help farmers adapt to climate realities, including solar irrigation systems, cold-chain storage facilities, water reservoir construction and other climate resilience solutions,” she said.

“Agriculture remains central to livelihoods, food security and enterprise growth, and Equity Bank Tanzania is committed to working with farmers and rural businesses to finance solutions that protect production and support long-term growth,” Ms Maganga added.

Equity Group Managing Director and Chief Executive Officer James Mwangi said the mechanism would change how financial institutions view rural borrowers, arguing that smallholder farmers are entrepreneurs operating in challenging conditions who need financing to strengthen their resilience and expand their businesses.

“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. ARCAFIM changes that equation,” Dr Mwangi said.

Equity Group is committing $90 million from its own balance sheet alongside concessional capital under the facility, in a structure designed to increase the role of commercial finance in climate adaptation.

Speaking during the launch, IFAD Vice President Gérardine Mukeshimana said the success of climate adaptation finance would depend on whether global commitments translated into investments reaching rural communities.

She said ARCAFIM was designed to make rural climate adaptation a viable and sustainable business line for African financial institutions.

ARCAFIM is expected to reach about 260,000 smallholder producers and 500 rural MSMEs across the four participating countries.

At least 50 percent of the targeted beneficiaries will be women, while young people are expected to account for 30 percent, according to information provided at the launch.

The mechanism combines lending capital with technical assistance, with $180 million earmarked for lending and about $20 million for technical support.

The lending capital is expected to be recycled through several investment cycles, generating an estimated $266 million in loans across East Africa's food systems.

The programme will also support participating financial institutions, microfinance institutions, savings and credit cooperative societies (Saccos) and agricultural value-chain players to strengthen their capacity to provide climate adaptation financing.

Farmers and rural enterprises are also expected to receive technical support to identify investments that can protect production, income and business operations from climate-related risks.