Climate change is impacting agricultural productivity in West Africa. Smallholder farmers, who supply up to 80% of produce in the region, are among the most vulnerable to its effects. Climate-smart agriculture (CSA) can offer smallholders a way to better absorb climate shocks and sustainably increase productivity and income.
Yet public and private investments into agriculture remain insufficient, due to high transaction costs and the risks associated with the sector. Coupled with unaffordable financial services and lack of information, the high upfront costs of implementing CSA practices limit the ability of smallholder farmers in West Africa to adopt CSA practices.
The West African Initiative for Climate-Smart Agriculture (WAICSA) is the only West Africa-led blended finance fund with a specific focus on increasing the uptake of CSA practices by smallholder farmers. By mobilizing public and concessional capital, WAICSA is able to provide subsidized interest rate loans to smallholders’ organizations and agribusinesses of ticket size below US$ 1 million, thus making credit more accessible. WAICSA also builds the capacity of local financial institutions to design loan products with CSA adoption conditions, helping bring additional resources to this sector. In addition, technical guidance on CSA implementation is provided to bridge the knowledge gap and further support smallholders to adopt these practices and comply with loan conditions.
An initiative led by the Commission of the Economic Community of West African States (ECOWAS), WAICSA will target six of the 15 ECOWAS member states in its pilot phase, with the objective of being replicated in all 15 states after the concept is proven.
At scale, WAICSA has the potential to improve the food security of 90,000 smallholder farming households in the region and convert over 185,000 hectares to climate-smart agriculture. The fund can also contribute to mitigating up to 2 million tonnes of CO2 emissions a year, which is equivalent to over 4 billion miles of driving.
WAICSA is composed of a Financing Facility (80% of the fund), managed by the ECOWAS Bank for Investment and Development (EBID), and a Technical Assistance Facility (20% of the fund), managed by the Regional Agency for Agriculture and Food (RAAF).
The Financing Facility offers subsidized-rate loans, guarantees, and equity investments to agricultural businesses and smallholder organizations, both directly and through local financial institutions. It uses guarantees and blended finance, including contributions from ECOWAS Member States and investments from the fund manager, to de-risk and crowd-in private investments. Embedded into WAICSA’s financial products are conditions meant to incentivize the adoption of CSA by smallholders, thus reducing their exposure to climate risk.
The Technical Assistance Facility is financed through grants and subsidies from ECOWAS and donors. It supports financial intermediaries to design loan products that integrate CSA conditionality and guides smallholders in implementing locally adapted CSA practices. In this way, the Technical Assistance Facility further de-risks investments, ensuring favorable conditions for repayment of loans by providing support for CSA practices that offer improved productivity and income.
Flickr photo credit: Arne Hoel/World Bank
News & Events
ECOWAS has mobilized $80 million to promote Climate Smart Agricultural (CSA) practices in 15 member states under the The West African Initiative for Climate Smart Agriculture, endorsed by the Lab in 2019. The initiative aims to protect smallholder farmers against volatility in temperatures by designing financial products that incentivize the adoption of CSA practices. Read […]
Business Green, a UK’s specialized media outlet on green economy and environmental issues, has published a note about the Lab’s 2019 endorsement meeting, which took place on October 2nd at The Rockefeller Foundation, in New York. It quotes Lab director Barbara Buchner, also executive director of the Climate Policy Initiative, saying the projects would unlock investment […]
Investors launch new solutions for climate action targeting blue carbon, clean energy access, sustainable agriculture, and sustainable cities in developing countriesOctober 2, 2019
Today, the Global Innovation Lab for Climate Finance announced the endorsement and launch of six innovative financial instruments for climate-related projects in developing countries. The Lab, an initiative of over 60 public and private investors and institutions, accelerates much-needed investment solutions to support developing countries to meet their climate change and sustainable development goals. Created […]
Investor initiative chooses ideas that will mobilize investment for sustainable cities, energy access, blue carbon, and sustainable agricultureMarch 5, 2019
LONDON – The Global Innovation Lab for Climate Finance, an investor-led initiative that identifies, develops, and launches promising solutions to drive critical investment to action on climate change in developing countries, has selected its top six ideas for 2019. At a time when large-scale action on climate change is more urgent than ever before, the […]