Credit Guarantee Scheme for Smallholder Coffee Producers

The Common Fund for Commodities (CFC) and Rabobank Foundation established a USD 2.25 million mechanism in Ethiopia to mitigate risk for lenders providing loans to coffee farmers for processing equipment. By guaranteeing 50% of losses from defaults, the scheme enabled over 23 cooperatives to access commercial credit, supported by technical assistance from CABI and Rabobank International Advisory Services. The document highlights the complementary roles of high-risk appetite philanthropic/DFI funds and low-risk commercial banks, while outlining the legal and pipeline requirements necessary for successful credit guarantee schemes in agriculture.

• The credit guarantee mechanism in Ethiopia, funded by the Common Fund for Commodities (CFC) and Rabobank Foundation with USD 2.25 million, guaranteed 50% of losses incurred by lenders to facilitate loans for coffee farmers to purchase processing equipment.
• The scheme resulted in more than 23 Ethiopian cooperatives receiving commercial loans, which improved access to markets, scaled agricultural best practices, and enhanced access to production and processing information via a technical facility.
• The project structure relies on a division of risk appetite: DFIs and philanthropic foundations like the CFC provide collateral and grants due to a high-risk appetite and climate mandate, while commercial banks act as lenders despite having a low-risk appetite and no climate mandates.
• Successful implementation of credit guarantee schemes requires a strong legal and regulatory framework where the scheme is an independent legal entity, alongside a transparent project pipeline of investable agriculture businesses and SMEs.

APA

Climate Policy Initiative (2021). Credit Guarantee Scheme for Smallholder Coffee Producers. https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/credit-guarantee-scheme-for-smallholder-coffee-producers-2/

Chicago

Climate Policy Initiative. Credit Guarantee Scheme for Smallholder Coffee Producers. 2021. https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/credit-guarantee-scheme-for-smallholder-coffee-producers-2/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Credit Guarantee Scheme for Smallholder Coffee Producers |date=16 September 2021 |url=https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/credit-guarantee-scheme-for-smallholder-coffee-producers-2/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2021credit, author = {{Climate Policy Initiative}}, title = {{Credit Guarantee Scheme for Smallholder Coffee Producers}}, institution = {Climate Policy Initiative}, year = {2021}, month = sep, url = {https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/credit-guarantee-scheme-for-smallholder-coffee-producers-2/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }