What's needed from Addis: 'A mandate to do more and to do better'

A farmers’ cooperative uses techniques approved by the International Fund for Agricultural Development to improve the yield and quality of produce of farmers in Rwanda. Many smallholder farmers do not have the resources to improve their productivity because of difficulty accessing credit. Photo by: Bread for the World / CC BY-NC

Discussions around how to finance the sustainable development goals shouldn’t only focus on finding enough funds — because they are there. Instead, questions should revolve around how to unlock these already available resources, maximizing them to create the largest impact.

How do you invest the money to get the results that you need?

That is the key challenge for development stakeholders gathered this week in Addis Ababa, Ethiopia, for the third International Conference on Financing for Development, which aims to build consensus on the means to implement the post-2015 development agenda.

In an exclusive interview with Devex done a few days before leaving Rome for Addis, Josefina Stubbs, associate vice president and chief development strategist at the International Fund for Agricultural Development, expressed confidence in future advancements in the fight against hunger. But she’s expecting more from this week’s conference.

“What I expect is a commitment from governments, from the international community, from the private sector to dedicate the necessary resources to achieve zero hunger by 20130,” she told Devex.

And investing in agriculture is crucial to meeting that target.

The draft of the agreement governments are expected to endorse this week emphasizes rural development and recognizes the central role rural transformation plays toward achieving sustainable development. IFAD welcomes this inclusion, given that the majority of the world’s poorest people the post-2015 development agenda aims to help live in rural areas.

Donors, nongovernmental organizations, the private sector, governments and all other development stakeholders should therefore go beyond just money and provide these poor people in rural areas opportunities to produce more and better, according to Stubbs. Many smallholder farmers and people in rural areas still lack access to essentials, such as land and water, for instance. Nor do they have enough resources to improve their productivity given difficult access to credit. And in many rural communities, there aren’t even enough roads connecting smallholder farmers to markets.

Engaging the banking sector

What’s promising about the Addis process, according to U.N. experts, is its participatory approach, which engages a large group of different actors, including the private sector.

Indeed, private sector representatives — coming from different financial institutions, insurance companies, banks and even agribusiness corporations — are convening Tuesday for the International Business Forum, an official #FFD3 event that provides a platform for multiple stakeholders to engage in strategic dialogue and forge partnerships with the private sector.

Governments have a role in unleashing private capital

Businesses are gathering Tuesday in Addis Ababa, Ethiopia, to discuss how they can invest in the sustainable development goals, support economic growth, foster innovation and operate using responsible business practices. But they can't do it alone — governments are critical in creating strong enabling environments that make a business case for private capital in development.

The private sector has been engaged “from the very beginning” in the SDGs, Stubbs said, citing Unilever and Nestle as examples. Further, she believes the fact many companies have mainstreamed social responsibility in their business models is a positive step for the sector.

“It doesn’t mean that the work is finished,” IFAD’s chief development strategist stressed, noting how mining companies still do not have business practices and that land grabs — especially from indigenous communities — are still common. “[But] we have seen a lot of progress.”

The hope is that Addis will help attract more private actors — the banking sector, in particular — to get involved in helping meet the post-2015 development agenda. IFAD works with thousands of cooperatives around the world and, according to Stubbs, banks play a key part in financing those cooperatives. But the private banking sector continues to hesitate to take the risks necessary to finance many of these smallholder farmers.

“All these cooperatives are struggling to get loans. Yet [banks are] not fully committed to provide the new instruments,” she said.

But this doesn’t mean no bank has risked supporting these smallholders. Several midsize banks have created financial instruments specifically to support these farmers and their cooperatives, Stubbs said, citing Dutch banking and financial services company Rabobank as an example.

“We need to engage these [proactive banks] and see how much more they can do,” the IFAD official said. “But there is a need for more bank to join [the discourse].”

Do more of the same, but better

The Addis conference is expected to produce strategies and means to capture and mobilize the resources needed to finance development. Analysts have suggested that Addis doesn’t need to come up with something new, but could instead focus on improving what already exists and scaling up financial facilities that have proven to be successful.

And that’s how Addis could have a major impact on organizations like IFAD. At the U.N. specialized agency, solutions to mobilize resources are already in place — but how can they work better? How can their performance be improved? How can financial inclusion be emphasized even more? And, perhaps crucially, how can they incentivize more people to invest?

Stubbs said IFAD will have to do more of the same, but better.

“We have to reach out to more communities and more people, we have to put more people in the market, and we have to coordinate better with other agencies, doing investments in areas which are fundamental for rural transformation,” she explained.

One such solution Stubbs cited as an example is IFAD’s Adaptation for Smallholder Agriculture Program, which funds and supports the streamlining of climate-smart practices in all of the agency’s projects. But greater resources need to be invested in ASAP, whether from IFAD or from other sources, so that the program can reach more communities.

Addis also offers an opportunity to address a critical issue in development: coordination.

While Stubbs believes IFAD has achieved a lot, she also recognizes that working with partners is essential for rural transformation. One partner she’s eyeing? The African Development Bank.

“[AfDB] invests in a significant way in productive infrastructure. They have resources like we do. We have to find ways in which we can collaborate closer with them so that while we work with the cooperatives they can help us build the roads,” she said. “That is what is going to come out of the Addis forum: a mandate to do more and to do better.”

Devex is in Addis to give you the inside track on #Fin4Dev. Check out our running blog, and follow @Devex, @richard_devex and @AlterIgoe to get the latest news and developments from #FFD3.

About the author

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    Elena L. Pasquini

    Elena Pasquini covers the development work of the European Union as well as various U.N. food and agricultural agencies for Devex News. Based in Rome, she also reports on Italy's aid reforms and attends the European Development Days and other events across Europe. She has interviewed top international development officials, including European Commissioner for Development Andris Piebalgs. Elena has contributed to Italian and international magazines, newspapers and news portals since 1995.