The document proposes using climate finance and emission certification to unlock financing opportunities for smallholder agriculture in fragile states. It identifies limited access to financial services, declining public spending on agriculture, land degradation, climate change, and lack of farmer organization as key problems. Governments, aid providers, and the private sector would be motivated by prospects for economic growth, food security, and climate change mitigation. Obstacles include limited agricultural spending, capacity, and linkage to emission markets. The proposed solution is to mobilize climate finance and carbon markets for agriculture and develop smallholder-focused value chains through capacity building, extension services, and better public-private investment designs.

1. 1
A financing solution that will increase private and/or public finance
for (agricultural) development in fragile states
Emmanuel Olatunbosun Benjamin

2. 2
AGENDA
1. Problem or issue that you are trying to solve
2. Reasons government, official aid provider or private sector
would want to participate?
3. Obstacles to unlocking financial opportunities
4. Potential solution

3. 3
• Limited access to financial services
- Lack of savings, credit & insurance facilities
as well as cash transfer service
• Dwindling public sector expenditure  < 7%4
• Land degradation
• Climate change
• Gender inequality
• Human and social capital constraints
- Farmer´s (dis)organization and limited knowledge transfer
1. Problem or issue that you are trying to solve

4. 4
2. Reasons government, official aid provider or private sector
would want to participate?
Reduce deforestation
Improve Afforestation and Reforestation
Promote sustainable land use management
Effective public agriculture policy and spending
Reduce risk associated with smallholder agriculture
Advancing of agricultural credit to less risky agribusiness

5. 5
• Prospective economic growth in SSA
• Increasing population
• Urbanization
2. Reasons government, official aid provider or private sector
would want to participate?
• Value chain development
• Linkage to modern markets
• Climate change mitigation and adaptation instruments
• Sustainable agriculture production
Food prices and demand
Smallholder´s investment decision as well as availability of
financing and investment

6. 6
• Limited public agricultural expenditure
• Limited capacity building relating to climate finance
• Limited linkage to modern (emission) markets
• Unsustainable agriculture production
• Limited incentive for smallholder farmers climate
change mitigation and adaptation
3. Obstacles to unlocking financial opportunities

7. 7
• Climate Finance and Emission Certification (Sustainability & Standard)7
7Benjamin(2011), Benjamin et al. (2015)
Value Chain Upgrading and Financing
Source: Author´s modification of Mahieux et al. 2011
Financial Services
(letter of Credit)
4. Potential solution

8. 8
• Climate finance – climate change mitigation and adaptation investment
- Volume: USD 359 billion8
Source: World bank Group, 2014
8World bank Group (2014)
4. Potential solution

9. 9
• Carbon fund - purchase GHG emission reductions
- Capitalized at USD 2.3 billion9
Source: World Bank Group, 2013
3. Financing and investments opportunities (cont´d)
15 Funds: Forestry /agriculture  17 %9
World Bank Group (2013), 9(2015)

10. 10
• Smallholder agriculture is relevant for food security
• Financing and investment opportunities for smallholder agriculture
 Climate change and emission certification
• Agri-enterprise, institutional and governance re-engineering is vital
• Capacity building & extension services in smallholder agriculture
 Human and social capital
• Designing public and private investment and financing
 smallholder agriculture
4. Conclusion

11. 11
Benjamin, EO, Punt, M & Blum, M (2015), ‘The impact of extension and ecosystem services on smallholder’s credit constraint’, The Journal of
Developing Areas (forthcoming).
Benjamin, OE. 2015. Financial institutions and trends in sustainable agriculture: Synergy in rural sub-Saharan Africa." (e-published doctoral
dissertation). Available online at: http://elpub.bib.uni-wuppertal.de/edocs/dokumente/fbb/wirtschaftswissenschaft/ diss2015/benjamin (accessed
February 2015).
Mahieux, T., Zafar, O., and Kherallah, M. 2011 Financing Smallholder Farmers and Rural Entrepreneurs through IFAD supported
Operations in the Near East and North Africa
World Bank (2003) Reaching the rural poor: A renewed strategy for rural development
World Bank (2013): e-institute Climate finance essentials : the landscape of climate finance http://wbcarbonfinance.org/docs/biocf-WB-CFU-
Workshop-Presentation-final.pdf
World Bank (2014): e-institute Climate finance essentials: the landscape of climate finance
World Bank Group (2015) Climate Finance Sectoral Distribution of carbon finance project Percentage share by number of project
References