Strengthening Smallholder Farmers’ Resilience to Climate Change

That is why Cordaid Rwanda set up the project 'Strengthening Smallholder Farmers’ Resilience to Climate Change' (SFAREC), which ran from 2024 to 2026. The idea was simple, but important: if farmers are expected to adapt to climate change, they need access to finance that actually fits the realities of farming. Not just any loan, but finance that arrives on time, matches the agricultural season, and helps farmers invest in practical solutions such as soil conservation, irrigation, climate-smart seeds, or agroforestry.

Agriculture remains central to Rwanda’s economy. It contributes around 24% of GDP, and about 75% of the rural population depends on it for a living. Yet finance still lags far behind the sector’s importance, it receives less than 1% of formal lending in Rwanda. That gap matters because climate adaptation costs money, and without the right finance, many farmers are left trying to absorb climate shocks with too few tools.

SFAREC was designed to address that mismatch. But it did not lend directly to farmers. Instead, it focused on the microfinance institutions (MFIs) that already serve rural communities. The logic was straightforward: if these lenders are better equipped to understand climate risk and design suitable products, they can reach many more farmers over time.

One of the key lessons behind SFAREC is that the challenge is not only a shortage of loans. Rural finance is often not designed for climate adaptation. A farmer may need credit for seeds, erosion control, or irrigation, but if the money arrives after planting, it is already less useful. If collateral is required and the farmer has no land title, access stops there. And if the loan is not clearly explained, it may be used like ordinary farm credit instead of as a tool for resilience.

According to the project’s full report, 75% of surveyed farmers cited collateral as the main barrier to accessing finance. Women and young farmers face this even more sharply because they are less likely to control formal assets. Other barriers include limited financial literacy, weak understanding of insurance, and loan processes that do not always line up with farming seasons. In short, this is not just a funding gap. It is a design problem in the system itself.

Cordaid Rwanda worked with four partner MFIs: CLECAM-EJOHEZA, CPF Ineza, Umutanguha Finance, and Inkunga Finance. The project helped them strengthen their internal capacity to offer more climate-sensitive finance. That included support for policy development, staff training, product refinement, and practical tools to assess climate-related risk in agriculture. Rather than building a parallel system, SFAREC aimed to improve the one that already existed.

Some of those changes were highly practical. Loan officers were trained to ask more specific questions: Is the farm vulnerable to erosion? Does the loan fit the crop cycle? Will the investment actually make production more resilient over time? In simple terms, the project helped lenders move from “Can this person repay?” to “Will this loan genuinely help this farm cope better with climate shocks?”

By the end of 2025, SFAREC had helped strengthen climate-finance readiness across four MFIs and support active loan portfolios in three of them. Across those three partners, the project recorded 4,029 loan records and more than RWF 5.8 billion (~ EUR 3.4 million) disbursed, mainly in climate-vulnerable districts in Rwanda’s Southern and Western Provinces, including Kamonyi, Muhanga, Rubavu, and Ruhango.

In total, 76% of surveyed farmers adopted new climate-smart practices after accessing finance. These included using organic fertilizer, improving soil conservation, managing water better, planting climate-smart seeds, and integrating trees into farming systems. In other words, the loans were not only spent, they were translated into concrete changes on the farm.

Those changes on the farm were also reflected at household level. Among surveyed farmers, 83.5% reported increased household income, 86.4% reported better yields, and 60% said they were better able to cope with climate shocks. Many used their loans not only for farm inputs, but also to buy livestock, expand land, pay school fees, or start small side businesses. That matters because resilience is rarely built through one crop alone. It grows when households are able to strengthen income, assets, and stability from several directions.

Perhaps the most powerful demonstration of SFAREC's catalytic value is the linkage between project-built institutional readiness and the unlocking of external concessional financing. The SFAREC-supported development of climate risk policies, green product documentation, and environmental governance frameworks directly enabled the three partner MFI to qualify for a preferential-rate climate loan program that would not otherwise have been available. This illustrates how targeted capacity-building can expand access to climate-focused finance and help unlock new funding opportunities for partner institutions.

As a long-term partner to Cordaid Rwanda and the participating microfinance institutions, Rabo Foundation backed SFAREC with targeted technical assistance financing. Supporting Cordaid in strengthening climate-finance capacity across four partner MFIs, combining financial support with strong accountability and learning, facilitating access to additional financing beyond the project. Rabo Foundation also brought strategic insight on rural finance and climate resilience, stayed closely involved through regular monitoring and progress reviews, and built on relationships with local MFIs that had been developed over many years. That long-term engagement helped ensure that SFAREC was not treated as a stand-alone pilot, but as part of a broader effort to strengthen inclusive agricultural finance in Rwanda. Ensuring that new green finance products are not only developed, but embedded, owned, and ready for replication at scale.

Editor’s note: Strengthening Smallholder Farmers’ Resilience to Climate Change (SFAREC) ran from 2024 to 2026. Institutional and portfolio figures in this article refer to project progress reported by the end of 2025 where specified. Farmer-level outcome figures are drawn from the project’s final evaluation, completed in March 2026, and reflect results measured at the close of the project period. Reported farmer outcomes are based on self-reported survey responses and should be read as indicative of perceived change.