IFAD: Why New Global Financing Pact Must Work for Small-scale Farmers

Oluchi Chibuzor

The President of the United Nations International Fund for Agricultural Development (IFAD), Alvaro Lario, has called on world leaders attending the New Global Financing Pact Summit to find solutions that would significantly drive more funding to rural populations and the poor small-scale farmers who are key to global food security.

At the event holding in Paris, from 22nd and 23rd June, 2023, world leaders from government, international organisations, financial institutions, civil society and the private sector, are gathered to discuss how best to reshape the global financial architecture to ensure that low-and middle-income countries can access the financing they need for their sustainable development, transition to net-zero and adapt to climate change.

According to a statement from IFAD, Lario was quoted to have said: “This summit is an opportunity to build a consensus for a more inclusive global financial order which currently leaves the world’s poorest countries struggling to finance their own agricultural development and, most importantly, the small-scale farmers they depend on to feed local and national populations. “Collectively, these farmers grow one third of the world’s food, making investments in their economic wellbeing and resilience to climate change, critical to global food security and stability.”

Equally IFAD maintained that while the quantity of Official Development Assistance (ODA) directed specifically at agriculture had been stagnant at four to six per cent for at least two decades, developing countries were finding it increasingly difficult to finance the agricultural sector due to tightening credit conditions, rising financing costs and global inflation.

This, IFAD noted, that at least 54 developing economies are currently suffering severe debt exposure.
Small-scale farmers grow one third of the world’s food and up to 70 per cent of the food in low- and middle-income countries thus playing a significant role in global food security and stability. Yet, they often go poor and hungry.

Eighty per cent of the world’s poorest live in the rural areas of developing countries and the three billion rural people of the world are already affected by climate change and extreme weather events, IFAD stated in the statement.

Lario added: “Developing nations need far more access to highly concessional financing. Multilateral organisations must optimise their balance sheets, provide better financing on more favourable terms and have the right instruments to support emerging challenges.
“Developed countries must also ambitiously replenish multilaterals so that they can effectively deliver development results, reduce hunger and poverty and build resilience within country programmes.”

Lario observed that, “When fully replenished, institutions like IFAD can leverage significant additional financing to really make a difference in rural areas.
“The private sector has a responsibility and critical role to play in development and climate action. We need to develop the financial instruments and create the right regulatory and policy environment that reduce risks and incentivise the private sector to invest.”