IFAD President: 'We shouldn’t shy away from engaging the private sector'

NEW YORK — The United Nations should not shy away from engaging with the private sector, the International Fund for Agricultural Development’s president said Monday. Instead, U.N. agencies should move toward engaging in due diligence, weighing reputational risks and above all avoid developing a distrustful mindset.

On Monday IFAD and Mars Inc. signed a memorandum of understanding to work together to improve the livelihoods of smallholder farmers through better access to training, technology and tools. The agreement, IFAD President Gilbert Houngbo told Devex, is a good example of how U.N. agencies can work with the private sector.

The MOU grew out of a collaboration in Indonesia where the U.N. agency and the candy brand worked with smallholder farmers through a cocoa development academy to train farmers on new agricultural practices. Reviews showed that farmers were increasing yields and improving livelihoods, and the new agreement will take some of that work to scale — first in Indonesia and then in other countries as they choose to participate.

“Obviously we do have our reputational risk, you need to have strong due process, strong review about our agreements or our MOUs but at the end of the day you need to look at ways to step up working with the private sector,” Houngbo said.

With the Mars partnership, IFAD is looking at providing farmers with training but also at how it will help those farmers access markets — in particular, Mars’ supply chain. Partnerships, said Houngbo, should look to engage companies in different ways.

That will include building trust and a willingness to work together.

“If you wait for everything to be clean and prosper before engagement you will never engage,” Houngbo said. “The development business is always a risky business so you need to do due diligence but at same time we shouldn’t shy away from engaging the private sector” out of fear of criticism at the expense of smallholder farmers.

While IFAD is seeking to work more with the private sector, it may not be the most natural fit considering the organization works with the poorest communities, in the most fragile places, in the most remote areas, with a focus on women, he said. So IFAD must do more outreach and look to leverage private capital through co-financing arrangements. The agency is also creating a smallholder investment fund that will aim to invest in projects in the $25,000 to million dollar range.

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