A Bang for the Buck: Leveraging flexible seed money to improve impact

There is consensus that mobilising and managing catalytic investments is an essential part of the solution to implement Agenda 2030 and the Sustainable Development Goals (SDGs). A mix of integrated financial approaches — designed in a synergetic and catalytic manner — is needed to bring about transformative change.

The general funding trend of the United Nations Development System (UNDS) is moving towards reduced flexibility, less predictability and more fragmentation of resources. This makes it imperative to explore effective ways to increase share of flexible, high quality pooled less-earmarked funds.

Flexible programme based funding can help reduce transaction costs and reduce fragmentation, while creating synergies and coherence. There is paucity of information on successful models of flexible investment — less-earmarked pooled funding vehicles.

This article highlights catalytic effects and lessons from two successful, flexible funding mechanisms designed to drive transformative change at global, regional and country levels.

Successful pooled and flexible investment vehicles

The flexible multi-partner mechanism (FMM) was established in 2010, which directly supports Food and Agriculture Organization’s (FAO’s) strategic framework. FMM received $75 million from 2010-2017, of which $47 million covered 2014-17.

The main contributors include Sweden, Netherlands and Belgium, as well as Flanders and Switzerland. Resource partners have started to renew their commitments in the new phase, and new partners are joining. The Fund has supported 32 projects in 70 countries till now.

Then comes the Africa Solidarity Trust Fund (ASTF) which was established in 2013 as an Africa-led vehicle for un-earmarked funding to support Africa-to-Africa development initiatives.

ASTF received $40 million — mainly by the Equatorial Guinea ($30 million) and the Republic of Angola ($10 million), and a symbolic contribution (about $200) by civil society organisations based in the Republic of Congo. It has supported 18 projects in over 40 African countries.

Although both mechanisms differ in scope, volume and operational modalities, they have some commonalities — they are pooled, cost-effective, less-earmarked funding instruments and responsive to priorities.

Leveraging for synergetic results

One of the main tenets of FMM and ASTF is their catalytic investments toward strategic priorities, initiatives and activities that can remove barriers, promote innovation and value for money.

Catalytic effects of ASTF

The ASTF has benefitted hundreds of thousands of farm families across the continent through diverse targeted initiatives that increased productivity, addressed pest and diseases, ensured food security, nutrition and food safety, created jobs and increased income. Several projects have leveraged new partnerships and additional funding from bilateral and multilateral partners. For example:

• In Malawi, FAO mobilised additional funds from two new projects funded by the European Union (EU). The first project received about 7 million euros to replicate the impact of ASTF project; while the second project received $32 million from EU to replicate the efforts in 10 other districts of Malawi (out of a total of 28) over the next five years.
• In Mali, an ASTF funded project helped FAO mobilise additional 1.5 million euros from the Grand Duchy of Luxembourg to replicate the approach in Segou and Sikasso regions. The United Nations High Commissioner for Refugees (UNHCR) also provided $318,000 to support similar interventions in Kayes region.
• In Liberia, FAO raised about $1 million from the Swiss Development Cooperation for scaling up ASTF interventions.
• In Niger, FAO raised $0.8 million from Norway to strengthen resilience of rural communities to scale up ASTF-funded activities.

 Catalytic effects of FMM

• FMM provided “seed-fund” to Forest Farm Facility (FFF), which helped remove critical barriers and leverage other funds. The FFF is shaping new incentive programmes for Forest and Farm Producer Organisations (FFPOs) and businesses in Bolivia, Guatemala and Vietnam collectively worth over $100 million. In Bolivia, the government has allocated over US$ 60 million, with active participation of FFPOs, to strengthen producers of cacao, coffee and amazon products. In Guatemala, FFF has helped FAO to secure $7 million from Korean International Cooperation Agency (KOICA) for a three year integrated programme with FFPOs as primary actors. In 2019, FFF received new funds totaling $18 million for the new phase from three donors.

• FMM funded the global project on Food Loss and Waste Reduction, which has also mobilised $10 million for agriculture development in Myanmar from Korea International Cooperation Agency (KOICA). It’s partnering with China on a new $200 million combined loan/grant project on rice value chain with emphasis on food loses and waste. 

• The Voice of the Hungry Project, including Food Security Monitoring for SDGs was funded by FMM. It mobilised additional $4.5 million from the Bill and Melinda Gates Foundation for the period 2016-2020, as a component of a cross-cutting innovative statistics project, implementation of which commenced in 2017.

• FMM-funded project on restoration of lands served both as seed money to trigger important dynamics and as catalyst to leverage additional funds from both bilateral and multilateral donors. It mobilised a large project from GEF-6 Thematic Program, “The Restoration Initiative” (TRI) for a total amount of $54 million with “child projects” in 10 countries. It supported the inception phase of the French Facility for Global Environment (FFEM) totalling 1.8 million euros on “Restoration of Forests and Landscapes and Sustainable Land Management in Sahel”. 

• The seed money provided to Blue Growth Initiative (BGI) project also played important catalytic roles. This led to the adoption of the Blue Growth Charter and the development of a strategy in Cabo Verde. The African Development Bank (AfDB) has agreed to fund related activities at $1.5 million in Cabo Verde, and $0.9 million in In 2019, the BGI received additional funding commitment for small-scale fisheries from bilateral donors.

• The Dimitra project funded by FMM is another good example of leveraging grassroots partnerships, technical and financial supports, and political will of governments. In Niger, the government has allocated $1.6 million from its World Bank loan to implement the Dimitra Clubs approach under “Programme d’appui à l’agriculture sensible aux risques climatiques” (PASEC).

 Key lessons learnt

A number of important technical lessons were learnt during the implementation of ASTF and FMM funded projects. For example:

• Initiatives with good design and proven approaches tend to attract new additional funds. Government buy-ins and political will are crucial levers to engage at country level
• Successful initiatives promoted capacity development through training materials, and knowledge products that are adapted to local needs and engagement with change agents
• Leveraging partnerships — national, regional and global — and strengthening national capacities is vital, as well as creating synergy between policy and fieldwork
• Integrated and cross-sectoral approaches to development challenges are linked to expanded partnerships, innovation and financial predictability, and breaking of silos
• Several FMM and ASTF projects provided policy support, which led to spin-off effects, synergies, replication and scaling up, as well boosting resource mobilisation

Conclusions and way forward

The ASTF and FMM are robust, flexible and strategically focused resource partnership vehicles for providing flexible and/or un-earmarked funding to accelerate delivery in the context of the SDGs. As programmatic flexible mechanisms, both instruments have proved to be a type of higher quality less-earmarked pooled contributions.

Both instruments are cost-effective, efficient and coherent. They demonstrate value for money, and are more attractive to a broader base of resource partners. They have served as learning instruments, building on the strengths and experiences, while continuously improving the operational modalities to increase their volume and achieve impact at scale.

The author wishes to thank all the resource partners of both mechanisms:i) ASTF—Equatorial Guinea, Angola and Civil Society Organization in the Republic of Gongo; and ii) FMM—Sweden, Netherlands, Belgium, Flanders, Switzerland; as well as co-funders of all the individual projects supported by ASTF and FMM

Also Read: Leveraging flexible investment instruments for impact 

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