Beyond Loans: How Microfinancing is Helping African Micro Businesses Overcome Climate Change

(MENAFN- djembe consultants) Deputy CEO, Advans International.
Although Africa has contributed only 7% of global carbon emissions since the 19th century, it remains the most vulnerable region to the adverse effects of climate change. The International Rescue Committee (IRC) estimates that seven of the ten countries at highest risk are in Africa. Somalia, Chad, South Sudan, the Democratic Republic of Congo, and Nigeria are among those countries. The impacts of climate change pose a significant threat to the region's progress toward achieving the Sustainable Development Goals (SDGs) defined by the United Nations. Rising temperatures, droughts, and flash floods generate food insecurity and growing economic inequality, increasing poverty levels.
The situation is especially tough for micro and small businesses, as well as farmers across the continent. Climate shocks are not distant concerns, they are direct, immediate threats to income and business continuity. Given the increasingly present risks facing African populations, Advans, a leading microfinance group in Africa, has developed a climate strategy to support its MSME and farmer clients to build their capacity for adaptation and resilience. This strategy goes beyond traditional lending by integrating financial and non-financial solutions to help clients recover from shocks and prepare for the future. Advans is piloting this approach in Côte d'Ivoire, Ghana, and Tunisia, with plans to expand to additional subsidiaries in the future.
Ghana has faced over 27 major floods in the past 30 years, with 15 of those affecting Accra, the country’s capital. It is reported that seven out of ten Ghanaians lack access to insurance, and 42% of the population remains excluded from basic financial services, leaving them without any means to recover from a climate shock. Advans’ studies and client interviews have shown that in Tunisia, water scarcity is the most serious climate-related physical risk for farmers in the cereal, market gardening, and livestock sectors. Meanwhile, in Côte d’Ivoire, climate change is heavily impacting the cocoa sector, with reduced rainfall, rising temperatures, and shifting seasons having negative consequences on producers’ yield. Advans estimates that 22% of clients in its portfolio in the three pilot markets for the climate strategy are vulnerable or highly vulnerable.
Advans therefore aims to integrate climate risks directly into its operations and overall strategy. This approach first requires a thorough understanding of how climate risks affect the various geographies and sectors that Advans serves. It then involves developing financial products that help clients adapt and recover, while raising their awareness of climate challenges.
Advans’ climate strategy is built around four key pillars:
Raising awareness among teams
Advans places great emphasis on building climate awareness among its management and staff, especially those who serve clients directly. Employees at all levels are trained on the causes and effects of climate change and how this will impact customers, enabling them to act as ambassadors in the field. Over 700 staff members across the group participated in the Climate Fresk workshop, and Advans is currently deploying online and classroom modules on climate risks and client awareness for field staff.
Evaluating the impact of climate change on its portfolio
Advans’ risk analysis aims to evaluate which climate hazards are likely to impact the areas where its clients operate and to what degree each client and sector is vulnerable. These two elements are then combined to determine a physical risk score. This information allows the Advans Group to map climate risks in its portfolio and identify the hazards that will impact clients the most. For example, Advans’ work with Horus Development Finance has shown that around 25% of borrowers in Ghana are currently at significant or very high risk of flash floods.
Building the resilience of vulnerable clients through awareness and education programs
Advans supports its clients, who face flooding, droughts, or fires, through awareness and educational programs. For example, Advans Ghana has been focusing on raising awareness about flood mitigation methods, distributing flyers with key advice, and sending targeted alerts via mobile and social media at the start of the rainy season. Advans Ghana has already reached nearly 20,000 users with this campaign via social media. Advans also has plans to launch specific client training programs on climate adaptation practices for farmers in Côte d’Ivoire and Tunisia.
Adapting its products and services to help strengthen resilience in the long term
To reinforce long-term resilience, Advans is adapting its financial products and services to better reflect the realities of climate risk. This includes developing loan-insurance packages that allow entrepreneurs to recover more quickly after extreme weather events, and offering flexible repayment terms and preferential interest rates when clients are affected by shocks. Climate-indexed insurance products are also being piloted to protect vulnerable sectors, such as cocoa farming in Côte d’Ivoire where over 2,300 farmers were covered in 2024–25. In Tunisia, a 2024 60 Decibels study showed that 59% of farmers felt better prepared for climate shocks after accessing tailored loans, while in Ghana, emergency recovery loans bundled with insurance are helping clients rebuild and restart their businesses following severe events.
In today's rapidly evolving African economy, adaptability is crucial for success. This principle guides efforts to help small businesses and entrepreneurs recover from climate-related crises. Organizations like Advans have proven that financial inclusion in Africa can drive meaningful and sustainable change. This is a powerful call to action for others to join this vital journey. The roadmap is clear: let's harness the power of microfinance to equip African businesses with the resilience they need to sustain their activities and keep growing in the face of climate challenges.

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