Location
Global, with a focus on Africa, where it has extended more than half of its project portfolio; It has projects in over 90 countries
Stakeholders involved
Financial services organizations; private investors; small-scale farmers; national and sub-national governments; civil society organizations
Lead organization
Scale
The stakeholders have invested USD $650 million, including one bond for USD $75 million. The project’s scope aims to improve food security, supporting production, nutritious foods and practices, resilience to climate change and improving the lives of 11.5 million rural people and communities in more than 90 countries.
million (USD)
million (USD)
million rural people and communities
countries
Co-investment model
There is demand from private sector investors to contribute to Sustainable Development Goal (SDG)-focused action areas. This program is in line with this demand and the SDG needs to accelerate financing from non-public resources. IFAD partners with private impact investors and asset managers globally as they have explicit environmental, social and governance targets, sustainability policies and support for the SDG agenda.
Impact
million people reached for direct SDG contributions
million people with indirect benefits.
The project has averted food losses or waste and hereby reduced greenhouse gas emissions, increased access to healthy and nutritious food, as well as provided production efficiencies. It addresses food security while aligning with mitigation, adaptation and resilience objectives. Other benefits include monitoring and evaluating the proceeds of sustainable bonds. These outcomes include over 13 million people reached for direct SDG contributions and an estimated 100 million people with indirect benefits.
Levers and enablers
The project’s participants understand that private sector investors want to contribute to SDG-focused action areas, thus it issues bonds in alignment with this demand and what is needed to accelerate financing from non-public resources. Its efforts highlight the importance of nutrition-sensitive agriculture in rural areas. It brings private sector financial institutions to the table to make returns on investments while driving policy and SDG-related objectives. Its investors, including pension funds and insurance companies, who often are mutual companies owned by their members, have social mandates and social responsibilities. The project has brought to light market readiness to accept financial instruments that private sector investors can use to contribute to SDG objectives. Lastly, it uses sustainable bonds to support its mission and measures its impact by applying its specific Core Indicators.
Barriers
While this model is replicable and scalable, it is a heavy institutional lift to create an investment offering for the private sector focusing on SDG-related activities and impacts. There are challenges in issuing only private placements, which are relatively illiquid instruments, rather than some kind of securitized bonds. The overriding barrier this product addresses is how to provide a vehicle to support SDG activities in a manner that enables a return to private sector investors.
Lessons for scaling
- Mobilize non-traditional private sector financing for essential SDG objectives;
- Build awareness and demand to enable more issuances and improve the packaging of project impacts that meet the investment and impact desires of investors;
- Mobilize funding from interested financiers while looking into a securitized instrument to enable greater access to investors.
