Supporting the ARCAFIM Project Transforming African Agriculture

The Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM), a US$200 million program launched by the United Nations International Fund for Agricultural Development (IFAD) at COP28, represented a significant advancement in climate-resilient agriculture for East and Southern Africa. This innovative blended finance initiative aims to drive substantial improvements in agricultural practices and outcomes for small-scale producers across nine countries: Kenya, Uganda, Tanzania, Rwanda, Malawi, Zambia, Angola, Mozambique, and Lesotho.

ARCAFIM’s primary objective is to catalyze private sector investment in climate adaptation strategies for small-scale agricultural producers. The program achieves this by strategically combining international donor resources with commercial funds from Equity Bank, a leading financial services provider in the region. Given the challenges faced from climate changes for these countries with significant agriculture sectors, this pioneering approach has been designed to create a sustainable model for agricultural investment.

Mapping the Future of African Farming

Recognizing the critical need for actionable data to guide these investments, IFAD engaged finres to provide comprehensive analytical support for the ARCAFIM initiative. finres conducted detailed adaptation analyses across all nine countries, utilizing advanced modeling techniques to augment existing datasets through machine learning algorithms. This process incorporated climate projections, agronomic parameters, and market prices from local and international data providers.

Our methodology employed reinforced learning, machine learning, and Bayesian Hierarchical Calibration to identify critical correlations between climate hazards and crop yields. We generated location-specific projections of crop yields and farming incomes under various climate change scenarios, conducting millions of simulations to account for system uncertainties and evaluate the effectiveness of various adaptation measures and technologies.

Cultivating Resilience: From Data to Action

finres delivered a comprehensive set of outputs to support ARCAFIM’s decision-making process. These included a detailed taxonomy of technologies categorized by crop and country, risk and return profiles for each adaptation option, and granular, subnational insights for implementing banks’ operational branches. finres also provided projected net benefits of adaptation options, including quantified effects on farming incomes, and prioritized adaptation strategies based on calculated internal rates of return.

Our partnership with ARCAFIM contributes significantly to the future of small-scale agriculture across East and Southern Africa. The data-driven insights support the implementation of climate-resilient farming practices, with potential long-term benefits including enhanced food security, strengthened local economies, and improved agricultural sustainability throughout the region.

For more information on how finres can support data-driven decision-making in climate-resilient agriculture and sustainable development, please contact our team.