Equity Group, IFAD launch $200 million climate finance plan for East Africa’s farmers    

Equity Group, East Africa’s largest lender by assets, and the International Fund for Agricultural Development (IFAD) have launched a $200 million climate finance mechanism aimed at helping smallholder farmers and rural businesses in East Africa invest in ways to withstand climate change. 

The Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) was launched at the Africa Food Systems Forum 2026 in Kigali, Rwanda, as governments, development agencies and private investors look for ways to get more climate finance into rural economies.

Financing farmers and rural businesses 

ARCAFIM will operate for 12 years across Kenya, Uganda, Tanzania and Rwanda. It combines $180 million in lending capital with about $20 million in technical assistance. 

The lending pool is expected to revolve through about four investment cycles, generating roughly $266 million in loans for smallholder farmers and micro, small and medium-sized enterprises involved in East Africa’s food systems. 

Equity Group will provide $90 million from its own balance sheet, matching the concessional funding on a one-for-one basis. The financing structure also spreads credit risk between the bank and international partners, with development financiers covering the first-loss portion while Equity carries the senior risk. 

The mechanism is expected to reach about 260,000 smallholder producers and 500 rural businesses. Women are expected to account for at least 50% of beneficiaries, while young people will represent 30%. 

IFAD Vice President Gérardine Mukeshimana said the program is intended to turn global climate commitments into investments that can make a practical difference in rural communities. 

“ARCAFIM’s ambition is to make rural climate adaptation a recognizable, viable and sustainable business line for African financial institutions,” Mukeshimana said. 

The program will also provide technical support to microfinance institutions and savings and credit cooperative organizations, helping them develop climate-focused lending products. Farmers and rural businesses will receive guidance on investments such as irrigation, water harvesting, livestock resilience, post-harvest storage, renewable energy and climate-resilient processing.

Building a lasting lending market 

Equity Group CEO James Mwangi said the program is designed to treat smallholder farmers as commercial borrowers rather than recipients of aid. 

“By committing our own balance sheet alongside concessional capital, we are not funding a project, we are building a market,” Mwangi said. 

Equity Bank Kenya Managing Director Moses Nyabanda said the bank will lend directly to farmers and agricultural producers while working through microfinance institutions, SACCOs and value-chain companies. 

The Green Climate Fund is committing $55 million to ARCAFIM. Catherine Koffman, its Africa regional director, said the program shows how public financing can help attract private investment into climate-resilient agriculture. 

Finland, the Nordic Development Fund, Denmark and the European Union are also supporting the mechanism. 

The agreements were signed by Mukeshimana for IFAD and Nyabanda for Equity Bank Kenya at a ceremony presided over by Hannington Namara, managing director of Equity Bank Rwanda. 

IFAD and Equity Group said lessons from the program could eventually support similar financing models in other parts of Africa, with Southern and West Africa identified as potential next regions. 

Equity Group posts stronger first-half profit

Equity Group, which operates across Kenya, Uganda, Tanzania, South Sudan, Rwanda and the Democratic Republic of the Congo, is led by Mwangi and has a customer base of 22.7 million supported by a footprint of 409 branches, 86,910 Agents. 

The lender reported a 32% increase in first-half profit in 2026, with net income rising to KSh45.5 billion ($351.6 million) from KSh34.6 billion ($267.4 million) a year earlier. Operating income increased 25% to KSh124.9 billion ($965 million), from KSh100.2 billion ($774 million) and total assets rose 20 percent to Ksh2.16 trillion ($16.7 billion).

IFAD, the only international financial institution focused exclusively on rural economies, says it and its partners have nearly $23 billion invested in projects aimed at improving food security, incomes and rural development.