IFAD and Equity Group launch US$ 200mln climate finance mechanism for East Africa

The International Fund for Agricultural Development (IFAD) and Equity Group have launched the Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM). This US$ 200 million, private sector-led initiative aims to expand climate adaptation financing for smallholder farmers and rural businesses across East Africa.

Launched at the Africa Food Systems Forum 2026 in Kigali, Rwanda, the 12-year mechanism consists of US$ 180 million in lending capital and approximately US$ 20 million in technical assistance. It is supported by co-financiers including the Green Climate Fund, the European Union, the Government of Denmark, the Ministry for Foreign Affairs of Finland, and the Nordic Development Fund. The lending capital is expected to generate approximately US$ 266 million in loans to micro, small, and medium-sized enterprises (MSMEs) through multiple investment cycles.

Separately, at the Africa Inclusive Climate Finance Conference in Lagos, stakeholders emphasized that climate resilience is inextricably linked to financial inclusion. Leaders from LAPO Microfinance Bank and the World Savings and Retail Banking Institute (WSBI) argued that for climate finance to be effective, it must reach underserved sectors, including women farmers and rural households, by moving beyond conventional lending models to address specific community vulnerabilities.