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Wednesday, 15 August 2018

Using climate science to de-risk investments in African agribusiness

Using climate science to de-risk investments in African agribusiness: Agriculture is Africa’s main source of livelihood and employs nearly three-quarters of its total population, but farmers continue to struggle to attract investments and financing packages, Evan Girvetz writes for the Financial Times. This financing gap is largely the product of the African continent’s unpredictable conditions — both meteorological and political — which make investments highly risky. Enter climate-smart agriculture (CSA), which is meant to equip farmers with the tools and knowledge necessary to adapt to climate change, thereby making their practices more sustainable and increasing food security. “Climate-smart agriculture helps to de-risk agricultural lending and insurance by making climate-related crop failures and other risks less likely to occur or less severe when they do occur.”

Incentivizing CSA for better access to financing: Financial products are now beginning to emerge that incentivize farmers’ use of climate-smart agriculture by offering them better terms on loans, Girvetz says. Meanwhile, investors are being guided towards “the most viable CSA options” in Africa to make better investment decisions through a large-scale research project launched by the International Center for Tropical Agriculture, the World Bank, and the UN Food and Agriculture Organization. The research provides a “detailed snapshot of the diverse climate risks each of these countries is facing, and an analysis of the factors that are driving or hindering the adoption of climate-smart practices.”

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