Private sector investments to be increased in forthcoming funding period of International Fund for Agricultural Development (IFAD)
IFAD aims to reduce rural poverty and increase food security in the poorest countries in the world. The need for IFAD’s efforts is even more acute following Russia’s invasion of Ukraine. Finland and the other IFAD Member States announced additional contributions to the Fund in Paris last week.
The priorities and financing of the International Fund for Agricultural Development (IFAD) for the forthcoming period 2025–2027 were agreed on at a meeting of the Members States in Paris on 14–15 December 2023. In the period 2025–2027, IFAD will particularly focus on fragile states, on investments for the preservation of biodiversity and better adaptation to climate change and on cooperation with the private sector.
In line with Finland’s objectives, the funding period starting in 2025 will see some of the additional contributions be used for the first time for implementing a private sector programme. Agriculture across the world is suffering from underinvestment, and the programme aims to respond to this shortfall. Based on Finland’s proposal, innovations will be employed more efficiently during the forthcoming period.
IFAD is one of the world’s largest providers of funding for agriculture and rural development in the poorest countries. The organisation promotes food security and nutritional health and works to reduce rural poverty in developing countries. Russia’s invasion of Ukraine has further aggravated the already serious food security situation worldwide and thus increased the need for IFAD’s activities.
In the period 2019–2021, IFAD’s investments improved the incomes of 77 million people and helped 38 million people bolster their resilience to changing climate conditions. Over 62 million smallholder farmers increased their production, and more than 64 million rural people improved their access to markets, enabling them to sell their production. IFAD focuses especially on gender equality, young people and persons with disabilities.
“It is important that IFAD works with smallholder farmers to link them to national and international value chains and thus helps agriculture to evolve into a commercial business activity,” says Minister for Foreign Trade and Development Ville Tavio. “Special focus is on women farmers.”
Finland is a long-term supporter and partner of IFAD. In the forthcoming period 2025–2027, Finland will contribute to IFAD’s core funding by awarding a EUR 13 million grant and a EUR 30 million loan. In addition, Finland allocated three million euros for financing the private sector programme.
Earlier this month, Finland announced an investment into IFAD’s ARCAFIM finance mechanism to boost the agricultural productivity in Eastern Africa and mobilise private financing.
In line with Finland’s impact targets, IFAD aims to finance its activities increasingly from sources other than public development cooperation funding. IFAD was the first United Nations specialised agency to issue a sustainable bond in 2022. IFAD has raised over EUR 200 million in funding through bonds, for example from pension funds.