Standard Bank targets smart agricultural finance

Climate change is a material risk for Africa and the world.

Climate change is a material risk for Africa and the world.

Published Jul 11, 2023


With agriculture accounting for 75% of Africa’s trade, 70% of its employment and over 20% of the continent’s GDP, it is critical for Africa’s farmers to understand how climate change impacts agriculture and how agriculture influences climate change.

Climate change is a material risk for Africa and the world. Agriculture has an especially impactful relationship with climate change as the sector is both a contributor of greenhouse gases (GHGs) as well as, potentially, one of the world’s greatest carbon sinks.

In short, “agriculture has a disproportionally large role to play in reducing carbon emissions and sequestering carbon. Understanding and introducing more climate smart farming practices will assist the industry in achieving a just transition to a more sustainable future,” explains Louis Van Ravesteyn, Group Head: Agribusiness, Business & Commercial Banking, Standard Bank.

In as much as agriculture releases carbon into the atmosphere, sustainable agriculture focuses on systems that conserve land, water, plant, and genetic resources in environmentally regenerative, technically appropriate, and economically and socially enhancing formats. Farming systems that are climate-smart can adapt to and help manage climate risk, countering global warming by reducing GHG emissions.

“As a leading African financial institution, Standard Bank has developed a strategy to finance climate-smart agriculture on the continent. This promotes the development of a sustainable agricultural sector in Africa, ensuring that the continent realises its potential as a global agricultural powerhouse,” says Tunde Macaulay, Head: Africa Regions, Business & Commercial Banking, Standard Bank.

Quality aside, “the traceability of products, including reporting the impact of their production on the environment, is increasingly legislated by the European Union and other receivers of African agricultural produce,” reports Van Ravesteyn. In time, as sustainability reporting becomes a reality globally, “being able to accurately report the carbon footprint of Africa’s agricultural products will become a pre-requisite for both domestic and global trade,” he adds.

Many of Africa’s commercial farmers are aware of and - to some extent - are already practising sustainable agriculture. While many of Africa’s smallholder farmers operating under survivalist conditions are not always able to consider the longer-term impact of their farming methods, most are experiencing the impact of man-made environmental degradation driven by climate change.

Farmers across Africa are increasingly seeking support in transitioning to more sustainable farming methods. This includes the measurement of GHG emissions so that they can professionally risk-manage their operations, access finance, and report their carbon footprint for off-taker and export purposes.

Working with research associations, NGOs, development finance and tertiary institutions in Africa and globally, Standard Bank is developing a body of scientific evidence on which to assemble globally compliant guidance on sustainable agriculture in Africa.

Standard Bank’s vision to build an ecosystem of scientific, technical, and academic ability capable of informing, measuring, and funding Africa’s transition to sustainable, climate smart agriculture will insure that “our continent assumes a much larger share of global agricultural investment, production and trade,” concludes Macaulay.