Launch of ARCAFIM: The Africa Rural Climate Adaptation Financing Mechanism

The Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) is a blended finance risk-sharing facility, together with a technical assistance facility, that catalyzes up to USD 700 million of private sector climate change adaptation (CCA) investments in small producers and MSMEs in rural areas of Kenya, Rwanda, Tanzania, and Uganda. Climate variability and change affect the region’s economic growth, food security, health, and ecosystems. Despite the importance of the food and agriculture sector, it remains underdeveloped and unprepared for climate change due to a host of barriers including weak productivity and incomes, lack of CCA knowledge and risk management capacity, and limited access to markets and financing. ARCAFIM’s goal is therefore to establish a demonstration effect of the viability of large-scale private sector CCA financing and beyond by introducing a practical, scalable model that follows a comprehensive approach combining financial solutions, knowledge and policy advocacy as well as an innovative CCA Finance Taxonomy. IFAD has initiated and conceptualized ARCAFIM and led the assembly of its funding base from various donors, including the Green Climate Fund, the Nordic Development Fund, the Government of Finland, and the Government of Denmark, with Equity Bank Kenya as the implementation partner.