Combating climate change in agriculture: supporting Agrobanco's strategy for mitigation and adaptation to climate change in the rural areas
This project aims to support Peru’s main financial instrument for agriculture, Agribanco, to fulfil its mission of developing the country’s sustainable agriculture. This project has been designed against a backdrop where more than a third of the Peruvian population lives in rural areas and 50% of its revenues come from agriculture, a very vulnerable sector to climate change (drought, flood, Nino and Nina phenomenon, etc.) Agricultural techniques in Peru cause deforestation and considerable degradation. In addition, the use of irrigated water is not effective due to leaks and overwatering and does not thus encourage water savings.
Through LACIF, and together with AFD, the EU is offering a contribution of 5 325 000 euros to support Agrobanco in mainstreaming climate change mitigation and adaptation in the agricultural sector in Peru.
The LACIF contribution will finance the following:
I) A Technical Assistance (TA) program to increase Agrobanco's green portfolio of projects which reduce greenhouse gas emissions or help contributing to the adaptation of the Peruvian agriculture to the consequences of climate change. More specifically, the TA will look into the following missions: Institutional Capacity building, Knowledge transfer, Market studies, marketing and communication and Monitoring, audit and verification.
II) "Green investment grants" for the projects which are most in need of incentives (specifically, in the Andean region for adaptation, in the Selvan area for mitigation and in the "Valle de los rîos Apurîmac, Ene y Mantaro" (VRAEM) area for conversion of coca cultivation to other cultivations, like shaded cocoa or coffee plantations).
The project is expected to achieve the following:
- Existing green portfolio to represent up to 60 % of the credit line.
- New green financings to represent minimum 40 % of the credit line.
- Loan portfolio to increase from 10% to 25% in three years.
- Access to finance: number of units served among relevant target group: from 24 000 beneficiaries to 32 000 - 34 000 beneficiaries.