2024-07-31 22:05:10
Last year, one in five people suffered from hunger in Africa. The annual report on the State of Food Security and Nutrition in the World shows that levels of malnutrition are comparable to those of the past fifteen years. This is mainly due to lack of funding. This is why IFAD, which is responsible for financing the projects of the United Nations for food and agriculture, is looking for new solutions.
To achieve the goal of “zero hunger” in the world by 2030, the organization estimates that it will be necessary to invest $ 480 million per year. ” Traditionally, IFAD is financed solely by contributions from Member Statesexplained Natalia Toschi, head of IFAD financing (International Fund for Agricultural Development), money from Member States stagnates at around 5% of total public development aid. And this is of course due to the many intersecting priorities for which member countries must invest. There are wars, there are migration crises. Agriculture has also been heavily financed. »
“Imagine new applications”
So we must innovate. In 2020, Fida became the first institution of Nations to obtain a credit rating on the market. And in 2022, it issued its first sustainable bonds. ” Our innovation helps to imagine new resources to be able to invest in the rural sectordetails Bernard Hien, regional director for West and Central Africa of Fida, and these new instruments can be, for example, sustainable bonds. IFAD is the first specialized agency of the United Nations to receive a credit rating and issue sustainable bonds. We started in 2022 and so far we have raised $480 million from pension funds and insurance companies. Just today, in fact, we issued our first mortgage bond of 50 million with a partnership with a Japanese corporate insurance company. So this will allow us to consider the issues of malnutrition in the project and to support the countries as well. There are other innovations in finance. Are these not risk reduction tools? For example, guarantees, financing, but also re-financing, investments, these are all opportunities that can support States. »
Private use
The goal is to attract the private sector to invest in agriculture and rural services. There are many possible levers for this. ” Asset managers are increasingly choosing to invest in securities that respect the environment, society and management principles.Natalia Toschi continued, Our typical investors are pension funds, insurance companies, which usually have a corporate mandate. » Investors want to know the impact of the money they lend. Fida projects support 16 of the 17 Sustainable Development Goals. And we have a sustainable finance strategy that complies with the principles of the International Capital Markets Association.
For greater effectiveness, IFAD is experimenting with risk reduction instruments for investment, guarantees and mixed financing. If the trend does not change, IFAD evaluates that the cost of not eating the world will cost the world $12 trillion.
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