Closing the climate finance gap

Closing the climate finance gap for smallholder farmers in Africa

Smallholder farmers across sub-Saharan Africa are already witnessing the devastating impacts of climate breakdown on their soils and crop yields, and by extension their livelihoods and wellbeing. 

This issue isn’t unique to sub-Saharan Africa. Across the globe smallholder farmers are contending with ever more erratic temperatures and weather patterns as a result of the climate emergency. In the face of failing harvests and limited income, most smallholders lack the means to build resilience to these climate shocks.

Why is climate finance important?

Climate finance refers to financial investments and resources aimed at addressing the climate crisis, including funding for mitigation and adaptation efforts. It encompasses public and private funding mechanisms that support projects and initiatives to reduce greenhouse gas emissions and enhance resilience to climate impacts.

 Over 2 billion people rely on smallholder farms for food and income. That means supporting smallholder farmers to become more climate resilient could impact one quarter of the world’s population. Despite this, just 0.3% of global climate finance reaches smallholder farmers.

Directing adequate levels of climate finance to smallholders will help more smallholders unlock a range of tools and mechanisms designed to help them secure long-term economic security in the face of climate impacts. These include inputs like seeds and fertilizers, input insurance, and training on how to increase yields sustainably. More climate finance will also enable more smallholder farmers to plant trees, providing a sustainable, reliable pathway to a stable income - not only directly through increased income, but also through co-benefits like improved soil health.

What's the cost of building climate resilience for smallholder farmers?

 Using data from our operations - embedded in the communities of the 4.8m farmers we serve - alongside estimates around the cost of further training and inputs, we have attempted to put a number on the amount of climate finance required to support the 511 million smallholder farmers across the world to build climate resilience. Our estimates include the cost of basic inputs and training alongside enhanced forms of support including broader climate insurance to cover harvest loss, intensive agroforestry, the implementation of regenerative agricultural techniques, and support with market access for climate-smart crops.

Our calculations reveal that it would cost $300 per year to help one farmer build climate resilience over an estimated period of 3-5 years. That investment in turn would help that farmer generate $788 in value per year - taking into account yields, revenue, soil health, the positive impact of trees, and the improved health of the farmer’s family.

If we were to scale those numbers up for all smallholder farmers globally it would mean $153 billion of investment. But that would generate an estimated $403 billion in value. To achieve this value, we need to close a gap of $151 billion between the share of climate finance smallholders are currently getting and the amount they really need.

It’s time to close the funding gap

These calculations come from our teams who have worked next to farmers for close to a decade or more, but they are still estimates for now. However, they demonstrate the scale of what’s needed from the global community if we’re to adequately support smallholders to increase their resilience to climate impacts. Through our work in sub-Saharan Africa, we’re proving that the models exist to provide this support. Now we need governments, policymakers and financial institutions to help scale them, so that every smallholder farmer can secure a thriving future.