Equity Bank Kenya and the International Fund for Agricultural Development have launched a climate fund for East African farmers worth roughly Ksh25.9 billion, equivalent to about $200 million or £151 million. The Africa Rural Climate Adaptation Finance Mechanism, known as ARCAFIM, will finance climate adaptation investments by smallholder producers and small rural enterprises across the region. Equity Group, the bank’s parent company, and IFAD jointly announced the twelve-year facility as African governments pressed for greater climate finance. The announcement came alongside the 81st UN General Assembly in New York, held in mid-September. Forecasters expect the current El Nino pattern to persist into early 2027, adding further pressure on rainfall-dependent smallholder farms across the region.
ARCAFIM is expected to reach roughly 260,000 smallholder farmers and 500 rural micro, small and medium-sized enterprises across Kenya, Uganda, Tanzania and Rwanda. Equity Group and IFAD say the mechanism should strengthen food security for close to 1.2 million people over its lifetime, by helping farmers invest in equipment and infrastructure that can withstand erratic rainfall and prolonged dry spells.
The facility combines Ksh23.3 billion in lending capital with Ksh2.6 billion set aside for technical assistance to borrowers. Equity Group is contributing Ksh11.7 billion, around $90 million or £68 million, from its own balance sheet, with the remainder drawn from concessional capital arranged through IFAD. Funds are earmarked for irrigation, water harvesting, livestock resilience, post-harvest storage, renewable energy and climate-resilient agro-processing. Equity Group managing director James Mwangi said smallholder farmers are not waiting to be rescued, describing them instead as entrepreneurs already operating in demanding conditions.
African governments push for climate finance at the UN
African governments used the gathering in New York to press wealthier nations for faster, larger climate finance disbursements. Delegations raised loss-and-damage commitments and called for changes to global lending rules, arguing the rules leave African states paying higher borrowing costs than wealthier counterparts, despite contributing least to historical emissions.
Philip Kilonzo of the Pan African Climate Justice Alliance said African communities have already shown they hold workable solutions, arguing that effective adaptation happens close to the ground rather than through distant pledges. That argument is increasingly backed by examples on the continent. In Kenya’s Gazi Bay, a mangrove restoration project has replanted 65,000 seedlings across six hectares, part of a broader 226-hectare rehabilitation effort feeding into a national plan to cut coastal storm damage by 2035.
In Tanzania, the Trees for the Future programme is using a $2.9 million grant to support roughly 2,780 farmers a year between 2026 and 2029, restoring an estimated 3,000 acres of mixed agroforestry annually. Advocates point to projects like these, alongside ARCAFIM, as evidence that homegrown, locally administered finance can move faster than multilateral climate funds, which are often criticised for slow disbursement and heavy bureaucracy.
For Equity Group, the climate fund for East African farmers extends a wider strategy that uses the bank’s retail network to channel finance directly to farmers who rarely qualify for conventional agricultural loans. Its own contribution alongside IFAD’s concessional backing gives the mechanism a commercial lending arm, potentially allowing it to outlast the shorter funding cycles typical of grant-based adaptation programmes. Whether ARCAFIM can be replicated by other African lenders may depend on how quickly its early loans are repaid, and on how effectively the technical assistance component helps borrowers absorb new equipment and practices.
