Agriculture is the backbone of Africa’s economy, feeding millions and driving growth. It contributes 25% of the continent’s GDP, employs 65% of its workforce and underpins 75% of domestic trade. However, this critical sector is also one of the most vulnerable to climate change. Rising heat, prolonged droughts, destructive floods and invasive pests place enormous strain on Africa’s 95% rainfed cropland, threatening both food security and livelihoods.
By Lebogang Mashala, Editor at African Farming
According to Leon Kotze, Head of Agribusiness at Business & Commercial Banking, Africa Regions & Offshore, Standard Bank Group, this crisis is also an opportunity. “With 65% of the world’s uncultivated arable land and a vast labour force, Africa has immense growth potential,” he said, adding that the key lies in adopting climate-smart agriculture, a transition that requires both innovation and strong financial backing.
Turning Climate Risks Into Opportunity
Kotze said building resilience starts with rethinking how we farm. He said practices such as regenerative agriculture restore soil health, improve water retention and help sequester carbon. Technologies such as precision agriculture, solar-powered irrigation, protected cultivation and drought-resistant seeds can help farmers adapt and thrive in increasingly unpredictable conditions.
But although these solutions exist, the challenge lies in financing their adoption. “Modern agriculture is capital-intensive,” said Kotze. “The upfront costs of climate-smart practices often reduce short-term profitability, creating barriers for farmers. This is where financial institutions with deep sector knowledge must step in.”
The Crucial Role Of Financial Institutions
Kotze explained that supporting agriculture requires more than loans; it demands specialised expertise and sector empathy. Effective financial partners invest in human capital, with experts who spend time on farms, understand cyclical revenues and tailor solutions to farmers’ realities.
“For example, recognising seasonal price fluctuations allows financiers to structure loans around commodity cycles, helping farmers buy inputs when prices are low and sell produce when prices are high. This kind of nuanced support enhances both operational efficiency and long-term financial viability,” he said.
Equally important is the ability to unlock concessional finance. Development Finance Institutions (DFIs) and funds such as the Green Climate Fund can provide cheaper, longer-term capital. Leading banks go further by navigating the complexities of accessing these funds on behalf of their clients, removing friction from the system and making climate-smart adoption easier.
Commercial Farmers: Scaling For Global Competitiveness
Africa’s commercial farmers face a dual challenge: investing heavily in infrastructure while meeting strict export standards for markets such as the European Union (EU). From large-scale irrigation systems to state-of-the-art processing plants, these projects require significant long-term capital.
According to Kotze, financial institutions can play a pivotal role by structuring phased investments. “For example, instead of full-scale infrastructure upgrades, farmers might begin with precision planters, variable-rate fertiliser spreaders or energy-efficient irrigation pumps. Over time, these incremental steps build towards a fully climate-resilient operation,” he explained.
“Flexible debt with extended repayment terms, enabled through partnerships with DFIs, ensures that sustainability doesn’t come at the expense of competitiveness.”
Small-scale Farmers: Building Climate-smart Ecosystems
Furthermore, Kotze said that for the millions of smallholders who form the backbone of Africa’s food system, direct financing is often less effective than value chain partnerships. “Here, financial institutions are most impactful when they support seed companies, poultry genetics firms and other input providers, ensuring innovation reaches every farmer,” he said.
“Investments in drought-resistant seed varieties, for instance, make resilient inputs widely available. Support for climate-smart irrigation systems ensures reliable yields for smallholders and commercial outgrowers alike. Similarly, financing grandparent farms and hatcheries strengthens Africa’s poultry industry, reducing reliance on imports and mitigating risks from diseases like avian flu.”
By building these climate-smart ecosystems, financial partners enhance productivity, lower risks and safeguard affordable protein and staple crops for communities across the continent.
A Partnership For The Future
According to Kotze, Africa’s agricultural transformation cannot happen in isolation. It requires a collaborative approach where farmers, financial institutions, governments and development partners work hand in hand. “Tailored financing solutions, concessional funding, scalable value chain investments and knowledge-sharing platforms all play a role in creating a resilient food system,” he said.
“Agriculture is not just an industry, it’s Africa’s future. By supporting the transition from adaptation to mitigation, financial institutions can help secure a sustainable agricultural legacy for generations to come.”
