FSD UgandaRethinking Climate Finance through Block Farming
By Victoria Adong Abuin
At the daybreak, Nabirye, a smallholder farmer in Namutumba, Busoga region, walks through her garden frowning. Her groundnuts are yielding poorly, again. The rains, once predictable, now come too late or last only a short while. She used to estimate her harvest with confidence, which ensured she could meet her basic needs. But as the rain patterns changed, so too have her yields, reducing both her certainty for food security and income. To cope, Nabirye has borrowed money from her village savings group and moneylenders at crippling interest rates, a lifeline that has only worsened her vulnerability.
She remains invisible within the financial ecosystems mainly because she has no collateral, no credit history, no bank account, and no stable income. Her story is far from unique. It reflects the stark reality faced by many smallholder farmers across the country – the very people who feed the nation yet remain unprotected from the escalating threats of climate change.
This is the intersection where climate change meets financial exclusion, and where we must rethink both agricultural finance and climate finance.
What climate finance means for the last mile
UNDP’s Sustainable Finance Hub defines climate finance as financial flows that support mitigation and adaptation activities essential for transitioning to a low-carbon, climate-resilient economy. These financial flows take various forms including concessional loans, green bonds, blended-finance structures, carbon-pricing mechanisms, direct investments and policy driven expenditures such as debt swaps and tax incentives that accelerate transition.
While most discussions on climate finance remain fixated on energy transition and emissions reduction, its transformative power lies in its ability to support climate adaptation for those most exposed – people like Nabirye.
According to the World Meteorological Organization (WMO), 2024 was the hottest year on record. For Uganda, where the economy is heavily dependent on natural resources and agriculture, this has severe implications such as crop failure, drought, flooding and rising food insecurity.
Yet, Uganda mobilised only $785 million per year in climate finance between 2019 and 2020, just 21 percent of its actual need, leaving an annual gap of US$3.4-$4.0 ( AfDB, 2023). At the recent COP 30, African governments adopted a declaration for mobilizing $1.3 trillion per year by 2035. However, history shows that such commitments rarely translate into tangible benefits for rural, climate-exposed communities.
For climate finance to mean something to Nabirye and others like her, it must translate into climate resilient seeds, weather information services, micro-insurance, affordable seasonal credit, water harvesting and solar irrigation systems, and digital tools for planning and market access. This reinforces the reality that climate resiliency cannot be achieved without financial Inclusion.
The missing link: Financial inclusion
Conventional financing fails Nabirye long before climate shocks. Banks expect a steady income, predictable cash flow, physical collateral, and formal records, all which do not align with Nabirye’s realities where her income is seasonal, assets are non-existent, and the climate’s variability shapes her survival.
To change this, smallholder farmers must be brought together into production units that reduce risk and enable meaningful investment – this is the essence of block farming.
Block Farming as a Climate-Resilient Solution for financial inclusion
Block farming is a new emerging model where small holder farmers collectively cultivate on a consolidated piece of land, commonly called a block. It is usually at least two acres or more, and a similar crop is grown. The model allows for shared irrigation, collective use of machinery, bulk purchase of inputs, and coordinated extension services. It further supports increase in productivity, mitigates risks, and creates opportunities for better markets and partnerships.
But perhaps what makes block farming even more powerful is how it turns smallholder farmers into organized production units. Financial service providers often cannot lend to individual farmers because the cost of assessment and monitoring is simply too high relative to the loan size. However, with the aggregation of farmers into cultivating large blocks of land together, evaluation, support and follow up become easier.
This gives lenders distinct visibility into the production cycles of the group, reduced operational costs and reliability on the strength of the collective block farming group rather than the vulnerability of one individual farmer. In practice, block farming turns previously “unbankable” smallholder farmers into credible borrowers.
The Stimulating Agribusiness for Youth Employment (SAYE) project presents a powerful demonstration of how the block-farming model transforms rural finance.
By organizing young farmers into self-help groups and enabling them to cultivate at least two-acre blocks of land with similar crops such as watermelon, tomatoes, onions, groundnuts, and Soybean, SAYE illustrates how aggregation can unlock financing opportunities that would otherwise be unavailable to rural communities.
This approach builds scale, enhances coordination, attracts investment, and increases climate resilience. The project clearly demonstrates that when farmers are organized, they not only increase their productivity, but also become more attractive partners for financial institutions.
This shift implies that block farming creates room for new, and more relevant financial products that align with the realties of the agriculture sector and the climate context. Financial institutions must therefore rethink traditional group lending models and redesign them to accommodate shared assets and synchronized repayment schedules that align with how block farming is practiced, particularly in relation to specific crop cycles.
Another key advantage of block farming is the ease with which it attracts and unlocks partnerships with private sector actors. When farmers cultivate larger consolidated blocks of land, input suppliers, off-takers, mechanisation providers and agritech companies find it far more viable to work with them. This aggregation reduces operational costs, improves coordination and strengthens the entire value chain. This kind of ecosystem approach also builds reliability that financial institutions require to confidently lend to the agriculture sector.
EzyAgric, an agritech, has successfully partnered with block-farming smallholder farmers to deliver services like extension support, land mapping, soil testing and climate- resilient input supply, a clear testament of the model’s effectiveness.
With initiatives like SAYE leading the way, it is becoming evident that the future of smallholder agriculture in Uganda may rely not on farming individually, but on farming together.
By organising, aggregating, and strengthening their voice within the financial system, farmers like Nabirye can finally become visible — unlocking the resources they need to withstand a changing climate and build a more secure future
