UN-Supported Green Bond Initiative to Transform Africa’s Rice Sector

The United Nations, through its SDG partnership Platform in Kenya in partnership with private and philanthropic organisations, is supporting a Swiss initiative aimed at revolutionising rice production in Africa through the issuance of a Green Bond. The proposed financial instrument is designed to enhance sustainability, mitigate climate change effects, and increase market efficiency in the rice value chain.

Rice, a staple food in sub-Saharan Africa, is experiencing an annual demand growth of over 6% due to population expansion and changing consumer preferences. However, local production meets only 60% of this demand, with the deficit filled by imports costing more than $6 billion annually. The sector faces numerous challenges, including inefficient financing, outdated farming practices, and significant environmental concerns such as methane emissions from flooded rice fields and excessive chemical use.

The Green Rice Bond, designed by iGravity and Helvetas, with financial support from the SDG Impact Finance Initiative, seeks to bridge these gaps by providing structured debt financing and technical assistance. The bond’s proceeds will be channeled to financial institutions active in lending to businesses in the rice value chain as well as directly to intermediaries (such as rice millers), which will support smallholder farmers and cooperatives to transition to climate-smart agricultural practices. “This is an opportunity to move from reliance on grants to sustainable financing mechanisms,” said Arif Neky, Senior Advisor for UN Strategic Partnerships at the Resident Coordinator’s Office and the Founding Coordinator of the SDG Partnership Platform in Kenya. “We need to shift from boutique grant funded projects that fizzle out once the grant funding stops, to scalable, long-term sustainable investments,” he added.

 “This is an opportunity to move from reliance on grants to sustainable financing mechanisms,” 
Arif Neky, Senior Advisor 

The bond aims to empower smallholder farmers, who form the backbone of rice production in Africa. By improving access to financing, it seeks to enable the adoption of more sustainable practices such as alternate wetting and drying (AWD), small-scale mechanisation, and better water management. The bond also promotes gender inclusiveness by prioritising women farmers, who represent a significant portion of the agricultural workforce.
“We see huge potential for improving rice production in Africa and ensuring food security while reducing its environmental footprint,” said Andreas Müller of Helvetas. “Through targeted financing and technical assistance, we can address inefficiencies in the value chain and promote sustainable practices”.

The Green Rice Bond will be issued in tranches, with a planned, initial issuance of $10 million, and the ambition to scale to $50 million over the next 5 to 7 years. It will be structured as a blended finance model, attracting both concessional investors and private capital, while incorporating risk-sharing mechanisms to encourage financial institutions to participate. The technical assistance facility will provide tailored support to ensure effective utilisation of funds and knowledge transfer across stakeholders.
“The first issuance will serve as a proof of concept,” noted Morgane Loisel from iGravity. “If successful, it can be replicated across other agricultural value chains, strengthening food security and economic resilience across Africa”.

The initiative aligns with global climate goals by promoting sustainable rice farming techniques that reduce methane emissions and support soil health. The approach also integrates circular economy principles, including the utilisation of by-products such as rice husks for biochar production.  
With support from various stakeholders such as private investors, and development partners, the Green Rice Bond presents a pathway to a more resilient and self-sufficient rice sector, ensuring long-term benefits for farmers, consumers, and the environment.