Overview
The Climate Collateral Alliance (CCA) is a USD 75 million initiative to mobilize blended capital to smallholder farmers and agMSMEs implementing climate-smart activities. CCA is an opportunity-led blended investment scheme that brings together commercial debt from impact investors’ capital, credit support through a special purpose vehicle funded by donors and concessional capital providers, and a technical assistance fund targeting financial institutions (FIs) in sub-Saharan Africa.
Problem
Insufficient access to capital is a major constraint for the productivity of smallholder farmers and agMSMEs in Sub-Saharan Africa, hindering investments in inputs and technologies with the potential to increase crop yields and farmers’ incomes. The climate crisis exacerbates this challenge, demanding the frequent replacement of farmers’ climate-affected harvests and inducing smallholder farmers’ and agMSMEs’ transition to diversified production systems. Financial institutions are often hesitant to finance resilient agricultural practices due to their perceived novelty and associated risks.
Solution
The CCA aims to bridge the gap between impact and catalytic capital and women and farmers, setting the groundwork for an investing vehicle that makes capital deployment faster and more efficient. The gap previously mentioned is partially evidenced by the inefficient pricing of agriculture loans (relative to other types of loans), reflecting both the scarcity of risk-weighted capital, as well as the downside-skewed nature of risk underwriting, given the low and volatile income from borrowers.
CC Facility Support
The CC Facility will help the CCA: i) finalize the design needs prior to launch, particularly around legal documentation for the deployment of capital and marketing materials, ii) support investor engagement efforts to secure fundraising commitments, iii) develop gender and social inclusion strategy, and thought leadership agenda, iv) enhance financial and impact models, and v) strengthen pipeline development activities with FIs to meet capital mobilization expectations.
Website
Opportunity International, Inc. - https://opportunity.org