Climate-Smart Lending Platform: New partnership offers technology and data-driven solutions for climate-resilient agri-lenders and farmers in East Africa

Katowice, Poland 

Climate-Smart Lending Platform members, Financial Access Consulting Services B.V. (FACS) and F3 Life Limited have entered into a partnership with Partnerships for Forests to accelerate the provision of climate-smart loans to smallholder farmers in East Africa.

Showcased today at the World Climate Summit 2018 – Investment COP in Katowice, Poland – which brought together thousands of government, business and civil society decision-makers to explore business and investment-driven solutions to climate change – the Climate-Smart Lending Platform offers innovative data-driven solutions to reducing climate risk in lending portfolios and incentivising the adoption of climate-smart farming methods by smallholders.

Both smallholders and lenders with smallholder lending portfolios (which currently account for about USD 50 billion globally,) are highly vulnerable to climate change impacts. By incorporating Climate-smart Agriculture (CSA) metrics into credit scoring systems, the Climate-Smart Lending Platform model helps mitigate these challenges and supports smallholder farmers to achieve greater financial inclusion, improved environmental performance and climate resilience.

With the support of Partnerships for Forests, FACS and F3 Life will develop an integrated credit services platform which will:

  • support agri-lenders to provide ‘climate-smart’ credit facilities to smallholder farmers by incorporating requirements and metrics for climate-smart and sustainable land-management including agro-forestry into loan terms and credit scores;
  • help lenders to overcome risk and cost barriers in smallholder finance by streamlining loan origination processes and providing access to a plug-and-play credit-scoring tool;
  • apply remote-sensing methodologies to identify and assess the bankability of farmers located in environmentally suitable areas;
  • monitor the implementation and impact of improved climate-smart farming practices and detect early warning signs for credit and climate risk related loan defaults, caused by amongst others drought, flooding, deforestation or unsustainable land use.

By enabling simultaneous management of the credit and the environmental risk faced by providers, the credit services platform will increase the flow of climate-smart capital to farmers at scale. This is expected to improve the livelihoods of smallholder farmers and to reduce the economic losses associated with land degradation in sub-Saharan Africa, which is estimated at USD 68 billion per year.

Read more about the partnership

Photo credit © F3 Life