• The Andes Resilientes Project, in collaboration with the Ministry of Environment, Water, and Ecological Transition (MAATE), as part of the implementation of the National Climate Financing Strategy (Estrategia Nacional de Financiamiento Climático, EFIC), is working to tailor financial products to the needs of agriculture in areas highly vulnerable to climate change.
• Between 2021 and 2022, the project focused on the production and dissemination of baseline information, as well as on the technical and managerial strengthening of savings and credit cooperatives (COAC).
• Currently, a pilot microfinance product for sustainable agriculture, integrated into the cooperative’s operational and administrative processes, is being developed. It will be presented as part of the product portfolio of the San José savings and credit cooperative.

While banking institutions are becoming increasingly aware of the implications of climate change for various productive activities in the Andean region, microcredit options for family farming that consider climate risk variables are not yet very widespread.  Practical examples of the lack of specificity and focused treatment of gaps and opportunities for small family farming as consumers of these financial products include the fact that agricultural loans do not currently consider agricultural calendars, and one of the most significant limitations in the sector is the lack of capacity to measure non-economic impacts and risks in their investments. Financial products with these characteristics can serve as an adaptation measure to climate change and play a crucial role in this effort.

The National Climate Financing Strategy (EFIC) sets a bold vision: by 2030, Ecuador will mobilize national and international resources, both public and private, to manage climate change and promote resilience development. The Ministry of Environment, Water, and Ecological Transition’s commitment is to educate the popular and solidarity financial sector about climate risks and opportunities, as well as its role in climate financing.

In this context, the Andes Resilientes Project has partnered with MAATE to establish links with the microfinance sector by strengthening financial services for the climate resilience of small family farming (SFF). In this framework, between 2021 and 2022, the project focused on producing and disseminating baseline information, as well as enhancing the technical and managerial capabilities of savings and credit cooperatives (COACs).  A summary of the progress can be found HERE (Span).

In 2021, a mapping of microfinance entities was conducted, and the characterization and analysis of more advanced microfinance products in Ecuador were carried out. The studies identified nine rural SCCs offering relevant services to SFFs in high Andean areas, allowing for criteria to prioritize collaboration spaces.  Furthermore, a detailed understanding of the scope of microfinance products already in the market was gained. An important point from this analysis is that most financial institutions have not yet incorporated the analysis of climate risks affecting agriculture into the development of their products or processes.

In 2021, a document was also prepared identifying and analysing the profile and needs of subsistence and transition of smallholder farmers as users or clients of microfinance products, including the ad hoc modelling of the most requested agricultural microcredit products linked to climate adaptation (see figure below). Furthermore, perceptions of clients using microfinance products from SCCs were analysed. These studies were shared with the environmental project offices of FAO, UNDP, and WFP in the country.

On the other hand, as part of the strengthening actions for SCCs, an assessment of the technical needs and gaps of 5 cooperatives was conducted, jointly developing roadmaps for their enhancement with a focus on improving their microfinance products with climate considerations.

In 2022, collaboration with the SCCs went a step further by strengthening the technical and managerial capacity of three SCCs (Hermes Gaibor, San José, and Visandes), which benefited from a technical and managerial institutional strengthening process that culminated in the development and implementation of an Environmental and Social Risk Analysis System (Sistema de Análisis de Riesgos Ambientales y Sociales, SARAS) with a crucial component focused on climate change. These efforts also allowed for the updating of the SCCs´ guidelines, manuals, and operational functions, establishing a solid foundation for a more resilient future.

As this line of activities progresses, its results are becoming increasingly visible. In early 2023, the three COACs presented their new SARAS to the Superintendency of Popular and Solidarity Economy (Superintendencia de Economía Popular y Solidaria, SEPS) and MAATE, marking a milestone on the path toward financial management more aligned with inclusive environmental sustainability.

In this commitment to the future, Andes Resilientes is currently working with the Network of Development Financial Institutions (Red de Instituciones Financieras de Desarrollo, RFD) to conduct a technical and managerial institutional strengthening process for the San José savings and credit cooperative, developing and implementing a microfinancial credit product pilot for sustainable agriculture integrated into the cooperative’s operational and administrative processes.

Through these intersectoral and collaborative efforts, the vision of a climate-resilient agricultural Ecuador comes to life. As part of this ever-expanding vision, technical support is planned for a SCC to link with credits for rural women, in line with the National Agricultural Strategy for Rural Women (Estrategia Nacional Agropecuaria de Mujeres Rurales, ENAMR) promoted by the Ministry of Agriculture and Livestock (Ministerio de Agricultura y Ganadería, MAG)

The transformation towards a more resilient and sustainable agriculture is in full swing, and the actors involved are moving towards a promising future of adaptation and growth.

The Andes Resilientes al Cambio Climático project, led by the consortium of HELVETAS Swiss Intercooperation-Fundación Avina and implemented by Swiss Cooperation COSUDE, provides support to the Ministry of Environment, Water, and Ecological Transition as part of Result 1 of the Andean Resilience project. This involves promoting climate finance and microfinance by providing technical assistance to enhance public financing products and services. It also seeks to establish connections with private financing, specifically targeting the climate change vulnerabilities of small family farming in the Andean regions. A summary of this report is available on the Regional Andes Resilient to Climate Change Program website.

Source: Andes Resilientes al Cambio Climático

About Andes Resilientes:

Andes Resilientes al Cambio Climático seeks to contribute to the strengthening and coordination of the capacities of public and private actors to provide services that enhance the resilience and adaptive capacity of rural Andean populations living in poverty and vulnerability, aiming to improve their food and water security.

More information:
Andes Resilientes al Cambio Climático Regional Project Website
Regional Project Andes Resilientes al Cambio Climático Brochure (Span)
Ecuador – Regional Project Andes Resilientes al Cambio Climático Brochure (Span)
Fact Sheet Project Regional Andes Resilientes al Cambio Climático
Andes Resilientes al Cambio Climático Facebook Page