Agro-Value Chain Finance and Climate Adaptation

The document argues that while climate change threatens agro-value chains and the financial institutions that support them, the banking sector's integration of climate risk remains limited. It highlights the potential for innovative finance models and information and communication technologies to reduce vulnerability, using the coffee value chain in Uganda as a primary case study. The authors recommend that banks explicitly integrate climate risk into management strategies, incentivize adaptation through climate-proofed instruments, develop new products via partnerships, and target financial services toward women.

• Climate change poses significant risks to financial service providers because risks faced by their clients translate into institutional risks, including reduced demand for credit, fewer savings deposits, delayed loan repayments, and high default rates.
• Despite the importance of agriculture in Africa—representing approximately 32 per cent of GDP and 65 per cent of total employment—bank lending to the sector is only about five per cent.
• In Uganda, the coffee value chain is highly vulnerable to climate change, with increased drought frequency and rising temperatures since 1960 leading to reduced yields and quality. A specific example of climate impact occurred during the 199798 El Nino, where road damages cost over US$47.5 million and caused a 60 per cent drop in coffee exports between October and November 1997.
• Centenary Rural Development Bank Ltd in Uganda is piloting a coffee credit scheme based on the "factoring principle," which advances 80 per cent of invoice values to bulkers who then pay farmers immediately. This model, adapted from the Warehouse Receipt System (WRS), can reduce post-harvest losses and vulnerability to shocks by improving access to safe storage and timely credit.
• Information and communication technologies are reducing transaction costs and improving financial inclusion. Examples include mobile banking services and a smartphone application piloted by GIZ and SAP in Ghana and Uganda that allows farmers to register produce and money transactions to provide data for bank risk-evaluation.
• Access to finance alone is insufficient for sustainable development in a changing climate; it must be paired with government-supported sensitization campaigns and training on climate risk management for both financial institutions and value chain actors.
• Financial inclusion for women is critical for climate adaptation because women in rural Africa are more likely to repay loans than men and tend to reinvest income into families and productive activities.

APA

Dekens, J., & Bingi, S. (2014). Agro-Value Chain Finance and Climate Adaptation. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/agro_value_chain_bank_sector.pdf

Chicago

Dekens, Julie, and Susan Bingi. Agro-Value Chain Finance and Climate Adaptation. International Institute for Sustainable Development, 2014. https://www.iisd.org/system/files/publications/agro_value_chain_bank_sector.pdf.

Wikipedia

{{cite report |last1=Dekens |first1=Julie |last2=Bingi |first2=Susan |title=Agro-Value Chain Finance and Climate Adaptation |publisher=International Institute for Sustainable Development |date=June 2014 |url=https://www.iisd.org/system/files/publications/agro_value_chain_bank_sector.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{dekens2014agrovalue, author = {Dekens, Julie and Bingi, Susan}, title = {{Agro-Value Chain Finance and Climate Adaptation}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = jun, url = {https://www.iisd.org/system/files/publications/agro_value_chain_bank_sector.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }