SDG Impact Finance Initiative, with the support of Convergence has awarded a $200,000 feasibility study grant to iGravity and HELVETAS under its Innovation Window to design the Green Bond for Sustainable Rice Production in Africa. This innovative financing solution aims to address systemic challenges in the rice value chain in Sub-Saharan Africa (SSA) by improving access to finance for smallholder farmers and farmer-allied intermediaries (FAIs) through financial intermediaries. The initiative seeks to promote food security, climate-smart agricultural practices, and gender equality, starting with a pilot phase targeting 2–4 countries. The grant will support the design and launch of the Green Rice Bond, a USD 50 million blended finance vehicle that combines debt financing with a grant-funded Technical Assistance (TA) facility.
Rice is a staple crop in SSA, with demand growing rapidly due to population growth, urbanization, and shifting dietary preferences. However, the region’s dependence on imports persists as local production fails to meet rising demand. Despite a 40% increase in the area under rice cultivation in the past decade, productivity remains stagnant due to challenges such as inadequate inputs, climate change, and a lack of access to finance for agricultural stakeholders. The financing gap for smallholder farmers and agri-SMEs is exacerbated by perceptions of rice as a low-value crop and the absence of targeted support from local financial institutions and government programs.
Women make up a significant portion of the agricultural workforce in SSA but face unique barriers, including limited access to land, credit, and decision-making opportunities. These challenges reinforce gender disparities in productivity and income within the rice value chain. The Green Rice Bond aims to address these issues by channeling funds to FAIs and financial institutions (FIs) that engage with smallholder (women) farmers and initiatives.
The Green Rice Bond will provide tailored financing and technical support to strengthen the rice value chain across SSA. The initiative is expected to benefit 1.5 million smallholder farmers by enhancing productivity, increasing income, and improving resilience to climate change. Additionally, it will contribute to regional food security by promoting local production, reducing imports, and fostering sustainability through the adoption of climate-smart practices.
Design Question: How can a single-commodity financial structure be designed to address financing gaps, food security, and climate-related outcomes in SSA’s rice value chain?
The Green Rice Bond will deploy USD 50 million through a tiered structure of senior, concessional, and subordinated tranches, alongside a grant-funded TA facility. At the fund level, grants will finance capacity-building activities for stakeholders, while concessional debt will de-risk investments by providing first-loss protection for private investors. The senior tranche will attract commercial investors with emerging bond market-aligned returns. The bond will raise capital from both public and private sources, including DFIs, foundations, and commercial banks, leveraging blended finance to mitigate risks and enhance investor confidence.
Proceeds from the bond will provide loans to FIs and FAIs, enabling them to serve smallholder farmers, cooperatives, and rice processors. FIs will channel loans to FAIs for working capital and capital expenditures, while the TA facility will provide technical support to ensure the adoption of climate-smart practices. These measures will improve productivity, reduce post-harvest losses, and enhance product quality, creating economic incentives for smallholders and strengthening the entire value chain.
The bond also emphasizes gender inclusion, with a focus on women-led enterprises and equitable access to resources and leadership opportunities. For example, FAIs supported by the bond will prioritize the hiring of female extension workers and the integration of women into decision-making roles in the rice value chain. By aligning investments with social and environmental outcomes, the Green Rice Bond seeks to deliver both financial returns and measurable impact, positioning itself as a replicable model for other commodity value chains in SSA and beyond.
