In 2021, Rainforest Alliance (RFA) certified farmers of the Yakassé Attobrou Agricultural Cooperative (CAYAT) in Adzope, Côte d’Ivoire had their cocoa harvest ready but no way to sell it.

CAYAT’s purchase schedules and with it, cooperative members’ incomes, were on pause due to effects of the COVID-19 pandemic. Purchased beans were stuck unsold in warehouses and at the ports as European demand decreased in the wake of the second wave of COVID-19. On top of it, the shortage of shipping containers due to the disruption in global trade continued to impact exports even when demand recovered.

With sales halted, CAYAT was unable to buy newly harvested cocoa from its farmers, causing numerous ripple effects.

The Rebuild Facility stepped in with interest-free working capital. Not a loan, not a giveaway, but a promise: “We’ll give you working capital to buy sustainable cocoa now. When you sell, repay us so we can fund the next harvest, and the next.” Rebuild is a returnable grant and technical assistance facility that supports economically and environmentally sustainable businesses in the coffee and cocoa sectors. The facility is managed by Regeneration, a platform created by Palladium and Systemiq.

CAYAT took the deal. The cocoa moved and CAYAT was able to resume its purchase contracts with farmers even while shipping delays persisted. The farmers were paid, and a model of aid was quietly proven. Rebuild’s support also contributed towards the expansion of agroforestry and farmer training efforts, improving 1,408 farmers' livelihoods, and promoting agroforestry on 6,159 hectares of farmlands.

Similarly in Kenya a year later, the Coffee Management Services (CMS) and the Mutira Coffee Growers Cooperative Society had undergone Fairtrade certification but faced liquidity challenges, forcing farmers to sell their coffee beans at lower conventional prices. CMS received a returnable grant from the Rebuild Facility which went towards purchasing coffee at premium prices, providing income for 6,479 coffee farmers in the Mutira Cooperative and keeping their 1,349 hectares of land under sustainable land management.

Repeatedly and across the countries where the Rebuild Facility project worked, a similar story played out. Mission-aligned companies and farmer cooperatives that invested in sustainable production practices faced the prospect of losing their hard-won progress – not due to lack of commitment or quality, but because of temporary cash flow constraints that threaten to unravel years of investment in sustainability.

Post-Rebuild support, these organisations emerge stronger; better equipped with financial and operational confidence, and proof that regenerative models are scalable.

A Grant That Comes Back and Pays Forward

Returnable grants, the financing component of the Rebuild Facility, may be one of the most underused tools in public finance. Think of them as zero-interest, covenant-light working capital for small agricultural businesses, issued with trust, designed for impact, and structured to recycle.

Unlike traditional grants, returnable grants offer the additional value of credit history to recipient companies, allowing them to access more traditional financing, with kinder conditions, after exiting Rebuild Facility’s support. For example, CAYAT, capitalising on the visibility and credibility from its experience with the Rebuild Facility, was able to negotiate for lower interest rates (down from 13% to 8%) with banks and access more financing in the next harvest season.

“The brilliance of returnable grants,” says Rebuild Facility Lead Shasi Wagle, “is that they marry the grace of aid with the discipline of investment. They align incentives without demanding collateral from businesses that banks overlook.”

Since launching in 2020 with €10 million from the German Federal Ministry for the Environment, Climate Action, Nature Conservation and Nuclear Safety (BMUKN) and the International Climate Initiative, Rebuild has used this tool to quietly transform the cocoa and coffee sectors across five African countries.

Its capital has revolved 3.5 times, supported 22 companies to secure the incomes of more than 62,000 smallholders, kept over 123,000 hectares under sustainable land management, and unlocked €31.9 million in additional financing and increased revenues for recipient companies.

Financial Instrument and Systemic Intervention

Returnable grants aren’t just a workaround for broken lending markets; they’re a system redesign.

They target what economists might call a “liquidity canyon”: the seasonal cash crunch that prevents local enterprises from aggregating crops, meeting certification standards, and fulfilling premium contracts. This is especially critical for SMEs that act as “market access players”—aggregators, processors, cooperatives—serving as the connective tissue between global buyers and rural producers.

We saw this play out through Adom Cocoa, one of the few farmer-owned licensed buying companies in Ghana. The team couldn’t raise finance in its first season of operation despite representing over 27,000 Fairtrade and Rainforest Alliance certified cocoa farmers. With a returnable grant from Rebuild, it purchased deforestation free beans, secured the incomes of 1,948 farmers, and—after repaying early—attracted €500,000 from private investors.

“When money returns, impact compounds,” Wagle explains. “Adom’s repayment wasn’t just a financial milestone; it was a signal to other investors: this model works.”

Why Public Finance Should Care

For governments and donors seeking leverage, efficiency, and accountability, returnable grants offer rare alignment. Based on Rebuild’s experience, for every €1,000 invested, 3 farmers earn their income, 6.5 hectares of land are sustainably maintained, and €3,500 of revenue is generated. Each repayment event generates transaction-level data—on sourcing volumes, sustainability compliance, and farmer income—that traditional grants can’t touch.

They also nest easily within public finance structures. National treasuries can channel returnable grants through existing challenge funds, revolving mechanisms, or climate-smart agriculture budgets with minimal legislative change. What’s missing is not capacity, but codification: model term sheets, risk-sharing templates, and open-source documentation to guide deployment.

“Liquidity is the cheapest climate intervention nobody funds,” quips Wagle. “We’re asking public agencies to do what private capital hesitates to do: trust the informal, support the regenerative, and build resilience from the bottom up.”

Since 2020, Rebuild facility has received demand for over €177 million of financing from 100+ cocoa and coffee SMEs.

Field Tested Operational Playbook

Rebuild Facility’s approach is not hypothetical. It has financed 22 projects across five countries, categorised its grantees by developmental tiers, and tailored both financing and technical assistance accordingly. Whether supporting Uganda’s Kyagalanyi Coffee to scale agroforestry on Robusta coffee plantations or Ghana’s Fairafric to build a local deforestation-free chocolate supply chain, the facility offers not just capital but technical assistance on traceability, investor readiness, governance, and EU regulatory compliance.

It has also proven that returnable grants can unlock mainstream investment. Rockbern Kenya used credit history from the returnable grant to obtain a loan from local banks in the following season. Adom Cocoa secured enough cocoa to meet the minimum tonnage to qualify for funding from the Ghana Cocoa Board. Fairafric scaled up organic cocoa sourcing and repaid its grant on time, positioning itself for a second round of funding and broader market access. Agri-Evolve improved their partly developed compliance mechanism allowing them to pass the risk profile assessment and obtaining a 2-million-euro investment.

Rebuild’s impact is the result of a deliberate and rigorous approach – not an easy feat in fragile supply chains. Its tiered funding model matches support to each grantee’s scale and capacity, with Tier 3 cooperatives prioritised for their proximity to farmers and potential for high impact. To manage risk, Rebuild provides tailored funding, links grantees to reliable offtakers, and maintains in-country oversight, ensuring that grantees not only meet buyer compliance but are positioned for long-term success and scalable impact.

A Call to Action: Seed the Next Generation

Despite its promise, the returnable grant model faces bureaucratic headwinds. Budget classifications rarely accommodate partially repayable instruments. Development finance institutions often require high thresholds for due diligence, even when working with high-trust local actors. And donors lack standardised guidance to scale these tools beyond pilot projects. The Rebuild Facility has demonstrated that returnable grants can work. They recycle capital, strengthen enterprises, and generate measurable impact—what’s needed now is a broader, coordinated push to integrate them into the mainstream.

Scaling this approach will not be without its challenges. Institutional inertia, budgeting constraints, and the absence of standardised guidance remain real obstacles. But so too is the momentum (among implementing partners, funders, and frontline enterprises) that suggests change is not only possible, but increasingly probable.

What is needed now is collaboration. Donors, development banks, and public finance institutions must engage with this tool not as a niche innovation, but as a mainstream option worthy of integration. The goal: make returnable grants as easy to deploy as standard grants, but with far greater returns.

"Returnable grants aren't a silver bullet," adds Wagle. "But they are a smart, proven step toward more resilient and regenerative economies. The opportunity is here. Let’s not miss it."

Learn more about the Rebuild Facility's work with CAYAT, or Adom Cocoa, or contact info@thepalladiumgroup.com for more.