THE international Fund for Agricultural Development (IFAD) is mobilising about $1bn from private sector investors, a new move to boost funding for the organisation, to improve the lives of small-holder farmers, the incoming President Alvaro Lario, has said.
In addition, the organisation has also been able to raise $150 million from the Swedish and Japanese Pension Funds to improve the living and working conditions of Africa’s small-holder farmers in order to lift them out of poverty, reports Francis Kokutse.
He said these new investments have set the tone for new ways that IFAD sources funds to support its work to improve the lives of farmers across the Africa, adding that, ‘these new investors want to make social impact.’
Lario, who will take office as the seventh President of IFAD on October 1, 2022, said, ‘I have been with International Fund for Agricultural Development for the last four years, and therefore know exactly what must be done to boost smallholder farming in Africa.’
IFAD is a specialised United Nations agency created in 1977. It provides grants and works with marginalised and vulnerable groups such as smallholder farmers, foresters, pastoralists, fishermen and small-scale entrepreneurs by giving them disaster preparedness, access to weather information, technology transfer and social learning.
The shift to mobilise funds from pension funds is part of Lario’s plans to bring in private investors and private sector finance to help fund IFAD’s projects. It is his experience in the private sector, academia, and international financial institutions, including his past position as Associate Vice-President, Chief Financial Officer and Chief Controller of the Financial Operations Department at IFAD, which is the driving force behind the new move. Lario has acknowledged that it is private investors and the private sector that will help change the way smallholders are supported to grow.
Before joining the Fund in early 2018, Lario was the Treasury Capital Markets Lead and Principal Portfolio Officer at the International Finance Corporation of the World Bank Group. Earlier positions include various roles in the private sector asset management industry and in academia.
He said IFAD was the first UN specialised agency to receive credit rating and that was what helped the Fund to mobilise $150 million from the Swedish and Japanese Pension Funds. With this success, he said, ‘we want to continue doing this to bring in the private sector to support the agendas of the smallholders and. with respect to the Africa, my commitment is to continue to give support to Africa’s smallholders as the biggest recipient of the Fund’s contribution.’
‘Right now, IFAD has targeted at least 55 per cent of its funding to be directed to the African continent,’ Lario said, adding that, though the IFAD works in almost 100 countries and other global institutions, ‘Africa continues to be our priority.’
He explained that the Fund works with governments by providing grants and loans at highly concessional rates, but it is more involved with farmers organisations and people grassroots through whom they decide relevant programmes.
‘We have farmers organisations on the ground helping us to decide and we supervise these programmes, but it is with governments that we have the relationships,’ Lario said, adding that IFAD has been working for more than 40 years in this area.’
He is not just making pledges. ‘We work with universities and scientists to develop seed and storage mechanisation. When we design a project, we bring this to the people together with the knowledge that we have. We also collaborate with other UN agencies,’ he said.
On the recent food crisis, he said this has shown that African countries can prevent food insecurity by boosting local production with locally grown crops to ensure local consumption which, Lario said, is very fundamental. In addition to this, there is also the need to have intra-regional trade to make food move from one country to the other.
He said the Fund is also aware of post-harvest losses which has been estimated to cost the smallholder farmers across the continent between 20-30 per cent from the time of harvest till they get to the market.
‘These post-harvest losses are why the farmers’ incomes have been reducing. It is for this reason that we are working with Rwanda, where we launched a programme with them to bring the post-harvest losses down by 70 per cent,’ Lario said.
He said the Fund has also noted the effect of Climate Change on the farmers, and is introducing programmes that will help them to adapt to climate shock. In addition, storage has also become a big problem and every effort is being made to remedy it.
‘What we are seeing is that the smallholder’s assets: the soil, the land and biodiversity is under threat and without these they also cannot even feed themselves. Accordingly, IFAD has put together the biggest adaptation plans, the Smallholder Adaptation Programme, which started in 2014 is currently working to mobilise resources from climate funds like the Green Climate Fund and other environmental facilities and expertise because we have found that climate change is leading to many of these farmers falling into poverty,’ Lario said.
On how the Fund ensures that its resources to the farmers are beneficial, he said, ‘One of the things we track carefully is how much the smallholder’s income grows between the time of IFAD’s intervention and after, to ensure we have really brought some changes to their lives. Another area that is also important to the Fund is whether the farmers get access to the market, in addition to how much they can withstand shocks after out intervention.
‘We also track how our investments even though these are co-financed by local governments. We monitor the money we put in which we have found do not difficulties with how these are spent as with other institutions in the sense that our investment goes to the ground. We don’t buy big cars or big factories, for this reason, anytime we see anything going wrong, we stop the project, and the government will have to reimburse us and if they don’t, we end the project,’ Lario said.