FSD Africa, Rabobank to fund African small-scale farmers with loans for carbon credits
NAIROBI– Financial Sector Deepening Africa [FSD Africa] and Rabobank ACORN / Rabo Foundation have launched their collaboration in helping 3,000-5, 000 small-scale farmers with their transition to agroforestry, a sustainable and climate resilient farming practice.
Acorn – Agroforestry Carbon removal units for the Organic Restoration of Nature is a programme being developed by Rabobank to unlock the international carbon market for smallholder farmers in the developing world.
It aims to help farmers transition to agroforestry at scale and monetize the carbon stored in the trees planted through Acorn’s global transparent and technology-enabled marketplace for carbon sequestration. The collaboration will focus on kick-starting new small-scale farmers’ agroforestry projects in Kenya, Nigeria and Zambia.
FSD Africa together with Rabo Foundation will provide finance to the small-scale farmers to help them transition to sustainable agroforestry. The local implementation partners will collect the farmer data and onboard the farmers onto the Acorn platform. They will then be able to sell carbon removal units [CRU] to corporate off-takers through Acorn’s technology-enabled marketplace.
The proceeds of the CRUs will be used to pay back the loan. For FSD Africa as the financier, testing this innovative finance structure will be an important outcome of this first scale phase.
“We are proud to acknowledge that this program will contribute to eight out of 17 UN SDGs, including those related to poverty reduction, food security, reduction of pollution, economic productivity, resilience, sustainability of forests and capital mobilisation,” Mark Napier, CEO -FSD Africa.
Benefits of agroforestry
Smallholder farmers benefit from agroforestry in a number of ways. There is a direct positive impact on income level and income stability; agroforestry brings along a new diversified revenue stream in the form of fruits or nuts from the new trees.
Farming yields across the board benefit from the positive impact of agroforestry on the quality of the soil; enhanced soil fertility and biodiversity, improved soil water holding capacity, stronger nutrient cycling, as well an improved microclimate; lower air temperature, less solar radiation, and less impact of wind speed.
In Sub-Saharan Africa, 71 percent of countries have committed to using agroforestry for climate change adaptation and mitigation in the plans they submitted to the United Nations Framework Convention on Climate Change.
FSD Africa, among other ventures, invests in solutions that broaden access to finance for small firms, and to financial services for underserved communities.
Rabobank domiciled in the Netherlands, is an international financial services provider, active in the area of banking, capital management, leasing, insurance and real estate. It is also a cooperative bank with agricultural roots, with the ambition to be the global leading food and agri bank.
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