Following enormous pressure caused by climate change and the novel Coronavirus, COVID-19 pandemic on the global food system, affecting poor countries most, the Food and Land Use Coalition, Wednesday, called for $350 billion annually to eradicate global hunger and poverty by 2030.
This was contained in a statement issued by the International Fund for Agricultural Development, IFAD, where the President, Gilbert Houngbo, disclosed that for the first time in history, 13 Public Development Banks, PDBs, made a joint commitment to strengthen investments in food and agriculture in the context of a global pandemic and a changing climate, with optimism that more signatories expected in the coming days.
According to the Food and Land Use Coalition, transitioning to more sustainable practices in food systems may require US$300-350 billion per year until 2030, but deliver an ‘economic prize’ of $5.7 trillion saved in ‘hidden costs’ associated with current practices, and unlock $4.5 trillion annual opportunities for businesses.
Houngbo said: “COVID-19 and climate change are putting enormous stress on our food systems. We need to act now and step up financing if we want to free the world from hunger and poverty by 2030 and offer a sustainable future to the two billion rural people who grow much of our world’s food. Public Development Banks can be leaders in unlocking opportunities, building a more resilient world, and ensuring more equitable societies.”
According to the statement, the Finance in Common Summit holding from 9-12 November 2020, will have 450 PDBs from all sectors which they will meet for the first time to commit to actions that shift investments to a greener and more sustainable path while responding to the COVID-19 crisis.
“In this context, IFAD is stepping up its engagement with the private sector to attract investments in small-scale agriculture and rural small and medium-sized enterprises (SMEs).
“In October, IFAD was the first UN fund to receive a public credit rating making it easier to raise funds from public and private lenders. Last March, IFAD invested in a private impact fund, the ABC Fund, to boost investments in rural SMEs.
“To that end, the need to improve regulations, policies, governance, and institutional capacity to allow PDBs to take on the necessary investment risks while remaining financially viable and institutionally sustainable in a rapidly changing financial market.”
The statement also added that “The signatories also acknowledge the importance of focusing on smallholder farmers and small and medium-sized agribusinesses, and developing financial products and services tailored to their needs.
“Their ability to access finance for investment is often constrained by their size, asset base, fragmentation, and lack of information and coordination in both agricultural and financial markets.”
According to the IFAD boss, “It is critical that Public Development Banks focus on small-scale producers and agripreneurs who are the backbone of food systems and economies of many low and middle-income countries.
“With access to finance, they can be far more productive and contribute to broader food security and prosperity.”
The statement further emphasized the important role PDBs will play as catalyzing forces of private sector investments which are often hindered by a variety of risks, costs, and poor economic returns.
“PDBs can develop innovative financial solutions to attract investors to the sector and help align commercial finance to global development, environmental and climate-related goals”, it pointed.