Reproducibility package for Managing Agricultural Credit Risk In The Face Of Natural Disasters: Lessons From Sub-Saharan Africa, Asia And The Americas

Natural disasters are driving sharp increases in credit risk for agricultural lenders in low‑income and climate‑vulnerable countries. Based on evidence from 36 financial institutions (FIs) in Burkina Faso, Kenya, Madagascar, and Rwanda, this study finds that disaster events routinely cause spikes in non‑repayment, with agricultural portfolios‑at‑risk peaking at 22 percent and average loan write‑offs reaching 10.7 percent. Smaller lenders—especially MFIs and SACCOs—face disproportionate losses due to high exposure to agriculture, limited liquidity, and weak risk assessment capacity.
Despite these challenges, viable borrowers generally repay when supported through targeted forbearance and recovery lending. FIs that use tailored agricultural loan products, specialized loan officers, and proactive damage assessments experience significantly fewer losses, yet such practices remain limited. Regulatory frameworks also lag behind: most supervisors lack disaster‑responsive provisions that would allow restructuring without punitive classification or provisioning consequences.
The study calls for three priority actions: (i) strengthening FIs’ technical capacity, assessment tools, and risk‑transfer mechanisms such as credit‑linked insurance and portfolio guarantees; (ii) integrating disaster risk into prudential regulation and supervision; and (iii) enhancing public‑sector support through climate data systems, disaster‑linked liquidity facilities, and coordinated financial, agricultural,and disaster‑risk policies.