Building the Investment Case for Adaptation in Agriculture & Food Systems in 4 African countries

Adaptation Need

Africa’s agri-food systems are increasingly vulnerable to climate shocks, threatening both borrowers and financiers. Yet, in 2023, banks in East Africa provided only $2Bn in agri-SME loans, and non-performing loan (NLP) rates for agri-business were ~40% higher than overall bank portfolio NPLs (Aceli, 2023). For Sub-Saharan Africa’s 50 million smallholder farmers, climate change is a daily reality, with crop losses of ~25–50% during climate shocks. Climate-driven yield fluctuations weaken borrowers’ ability to service loans, worsening exclusion from finance. Despite the private sector generating over 90% of employment and ~75% of economic output across Africa, its role in adaptation for agriculture is limited, fragmented, and poorly tracked—especially among micro, small, and medium-sized enterprises (MSMEs).

GCA’s Added Value

GCA’s added value lies in the project’s private sector investment lens for adaptation. GCA aims to identify scalable, commercially viable adaptation solutions that can reduce long-term systemic risk and build resilience of farmers, businesses and communities. Further, GCA seeks to prioritize investments that are inclusive of underserved value chain actors such as women smallholder farmers and women-owned micro-businesses. Activities include: running climate risk assessments at the national level for each country, assessing the vulnerability of crop and livestock value chains, prioritizing high-impact gender-responsive adaptation solutions, providing quantitative insights on market size and the return on investment for select solutions, and identifying enablers for commercial banks and other inclusive financial service providers to scale investments in these solutions.