IFAD and Equity Group Launch $200M ARCAFIM for Farmers

In Short

• IFAD and Equity Group have launched ARCAFIM, a 12-year, US$200 million blended finance mechanism for climate adaptation.
• The programme targets smallholder farmers and rural MSMEs in Kenya, Uganda, Tanzania, and Rwanda.
• Equity Group is putting in US$90 million from its own balance sheet to match concessional capital.

What Happened

IFAD and Equity Group launched ARCAFIM on September 8, 2026, at the Africa Food Systems Forum in Kigali. ARCAFIM stands for Africa Rural Climate Adaptation Finance Mechanism. It is designed to move climate adaptation finance from global commitments into loans that reach farmers and rural businesses.

ARCAFIM has two parts. It includes US$180 million for lending and about US$20 million for technical assistance, meaning training, tools, and support that make borrowers and lenders better at using the money well. The lending capital is expected to revolve across roughly four investment cycles, which could produce about US$266 million in loans over time.

The mechanism uses blended finance, which mixes public concessional capital, meaning cheaper, longer-term funding, with private capital from a commercial bank. Equity Group is matching the concessional lending contribution one-for-one from its balance sheet. The risk is also shared, with partners covering a first-loss layer, a shared mezzanine layer, and Equity holding the senior risk.

ARCAFIM also includes a climate adaptation taxonomy, which is a structured checklist of what qualifies as adaptation spending. IFAD and Equity say this is meant to help banks, SACCOs, and microfinance institutions consistently identify viable adaptation investments.

Why It Matters

Climate adaptation finance often fails at the last mile. Smallholder farmers and rural MSMEs may not meet standard bank requirements, even when they are central to food systems.

If ARCAFIM works, it could show that adaptation lending can be a normal bank product, not a time-bound donor programme. The technical assistance component also matters because it supports practical upgrades like irrigation, water harvesting, resilient livestock systems, post-harvest storage, renewable energy, and climate-resilient agro-processing.

The programme aims to finance about 260,000 smallholder producers and 500 rural enterprises, with at least 50% women and 30% youth beneficiaries. IFAD and Equity also estimate the broader food security impact could reach over 1 million people.