IFAD, Equity Group’s 12-year blended finance to generate $266 million for farmers, MSMEs 

International Fund for Agricultural Development (IFAD) and Kenya’s Equity Group Holdings have launched a 12-year blended-finance mechanism expected to generate about $266 million in loans for smallholder farmers and micro, small and medium-sized enterprises (MSMEs) across East Africa.

The Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM), launched at the Africa Food Systems Forum 2026 in Kigali, Rwanda, is backed by $200 million in financing and is designed to expand access to climate adaptation finance across the region’s food systems.

$200 million mechanism to unlock $266 million in lending

ARCAFIM comprises $180 million in lending capital and approximately $20 million in technical assistance. The lending capital is expected to revolve through roughly four investment cycles over the programme’s 12-year lifespan, generating about $266 million in cumulative loans.

Equity Group is committing $90 million from its own balance sheet to the lending pool, matching the concessional contribution on a one-for-one basis.

The mechanism is being convened with co-financiers including the Green Climate Fund, Finland’s Ministry for Foreign Affairs and the Nordic Development Fund, alongside co-financing from Denmark and the European Union.

East African farmers, MSMEs targeted

The programme will operate in Kenya, Uganda, Tanzania and Rwanda, targeting approximately 260,000 smallholder producers and 500 rural MSMEs.

At least 50% of the intended beneficiaries will be women, while 30% will be youth. The programme is expected to strengthen food security for approximately 1.2 million people and benefit an estimated 1.5 million people directly and indirectly.

The financing will support investments designed to help rural communities withstand climate-related risks, including irrigation and water harvesting, livestock and dairy resilience, post-harvest storage, renewable energy and climate-resilient agro-processing.

Equity Group takes commercial risk

Unlike structures in which development finance institutions provide capital while commercial banks administer programmes, ARCAFIM is designed to place Equity Group’s balance sheet directly alongside public and concessional capital.

The $180 million lending base will comprise $90 million from Equity Group, with international financing partners providing protection through first-loss and mezzanine layers while the bank carries the senior risk. The structure is intended to encourage commercial lending to rural borrowers while reducing the risks that have historically limited financial institutions’ exposure to smallholder farmers and rural businesses.

The programme will provide financing alongside technical knowledge to help farmers and rural enterprises determine which investments can protect production, increase incomes and improve resilience.

IFAD and Equity Group eye wider African rollout

ARCAFIM is designed to remain commercially sustainable after its concessional capital has been deployed, with the partners seeking to establish climate-resilience lending as an ordinary business line for African financial institutions.

The initiative is also expected to generate practical lessons for replicating blended-finance structures in other African markets.

Following its initial rollout in East Africa, IFAD and Equity Group have identified Southern and West Africa as potential regions for expansion, potentially extending the model to more farmers and rural businesses facing growing climate-finance challenges.