IFAD's role in transforming Africa's food systems

Africa's agricultural sector stands at a pivotal moment, faced with the choice of either perpetuating poverty and hunger or becoming a catalyst for prosperity and growth. The International Fund for Agricultural Development (IFAD) has emerged as a key player in unlocking the vast agricultural potential of the continent. In a recent interview with CNBC Africa, Donal Brown, Associate Vice-president Of Programme Management Department at IFAD, shed light on the organization's transformation and strategic initiatives aimed at revolutionizing Africa's food systems. IFAD has undergone significant changes in recent years, transitioning from a grant financing institution to embracing a new financial model in 2020. By obtaining a double A plus credit rating from standard agencies like Standard & Poor and Fitch, IFAD has been able to access more affordable borrowing options from financial institutions. This has led to the successful issuance of sustainable bonds, raising approximately $650 million since 2022. The heightened interest from impact investors and pension funds underscores the global recognition of IFAD's impactful work, providing the organization with increased financial resources to support agricultural projects across Africa. Furthermore, IFAD has diversified its financial instruments by introducing partial credit guarantees for governments, national development banks, and the private sector. These guarantees serve to mitigate risks associated with financing agriculture in Africa, making investments in the sector more attractive and accessible. By exploring innovative funding mechanisms and forging strategic partnerships, IFAD is fortifying its commitment to driving sustainable agricultural development on the continent. The Malabo Declaration, a pivotal agreement aimed at boosting agricultural investment in Africa, has set the stage for transformative change in the sector. While the declaration signaled a collective commitment from African governments to prioritize agricultural development, the implementation has fallen short in many cases. Brown emphasized the importance of translating good intentions into tangible investments, particularly at the governmental level. Governments play a crucial role in creating an enabling environment for agriculture by investing in critical infrastructure such as roads and electricity. To ensure accountability and measurable progress, the post-Malabo era calls for robust frameworks that track and evaluate government actions in advancing agricultural initiatives. Private sector partnerships have emerged as a vital pillar in driving agricultural growth in Africa. With a shifting global landscape that sees a decrease in development assistance, the private sector holds immense potential in filling the financing gap for agriculture. IFAD's strategic pivot in 2021 to invest directly in the private sector reflects a proactive approach to leveraging private sector investments into the agricultural space. By aligning its investments to attract additional private capital, IFAD aims to multiply the impact of its funding, unlocking five dollars of private sector investment for every dollar invested. Brown reiterated the importance of creating an enabling policy environment that incentivizes private sector participation. Governments must move away from heavy subsidies on agricultural inputs like fertilizers and seeds to encourage private sector innovation and competition. By fostering a conducive regulatory framework, governments can attract private sector investments, driving technological advancements and market efficiencies in the agricultural value chain. As Africa's agricultural landscape undergoes a profound transformation, IFAD's strategic initiatives and collaborative partnerships are poised to shape the future of the continent's food systems. By harnessing the power of innovative financing, sustainable practices, and private sector engagement, IFAD is paving the way for a more resilient, inclusive, and prosperous agricultural sector in Africa.