Leveraging flexible investment instruments for impact

Flexible investment in the right balance can cut costs and create synergies for SDGs

By Festus Akinnifesi
Last Updated: Monday 11 February 2019
Sustainable Development Goals
A woman in the Cook Islands in the South Pacific. Credit: Sue Price/FAO A woman in the Cook Islands in the South Pacific. Credit: Sue Price/FAO

The strategic leveraging of multiple financial flows is an important piece of the puzzle when it comes to implementing the Agenda 2030 and its Sustainable Development Goals (SDGs). The funding model, largely dominated by hard earmarking — funds channelled through projects — cannot fully deliver the SDGs. The short-term and sectoral nature of earmarked project funding weakens opportunity for building long-term, sustained and strategic partnerships that can drive transformative change. Flexible investment, when available in the right balance, quality and scale, can help reduce transaction costs, reduce fragmentation, create synergies and coherence. This article highlights some results from a successful flexible multi-partner mechanism (FMM) towards achieving transformative change.

Strategic importance of flexible pooled financial mechanisms

The Flexible Multi-partner Mechanisms (FMM) was established in 2010 as a multi-partner pooled instrument for managing less-earmarked funds support to the Food and Agricultural Organization’s (FAO) Strategic Framework. The fund totalled $75 million (2010-2017), of which $47 million covered 2014-17. The governments of Sweden (2010-21), the Netherlands (2010-2017) and the Kingdom of Belgium (2013-2020) are the main contributors. Others include the Flemish government (Flanders Cooperation Agency) (2011-13), Switzerland (2017-18) and Italy (2019). More countries are negotiating their commitments in the new phase (2018-21).

Key benefits of flexible funds

  • Reduces fragmentation and duplications
  • Reduces transaction costs
  • Enhances flexibility and synergies
  • Enhances coherence and programmatic design and implementation
  • Provides seed money to jump-start innovative and scalable initiatives
  • Promotes catalytic effect and leveraging greater results
  • Increases transparency and targeted resource allocations
  • Fosters funding sustainability and predictability
  • Promotes innovation and learning
  • Enhance the delivery of shared outcomes
  • Facilitate allocation of resources to strategically important areas
  • Reduces risks due to link to corporate results-based management systems
  • Broader financial base and visibility of small contributors

Selected Highlight of Achievements

Over the years, the FMM has supported 32 projects in 70 countries and five regions, and has benefitted hundreds of thousands of people around the world. With these funds, the FAO has successfully leveraged its capacity, at the global, regional and country levels to achieve concrete results and transformative change. Below are some examples from seven of FMM projects.

Zero hunger—food and nutrition security initiatives

As part of the effort to achieve zero hunger, FMM funded the 'Voices of the Hungry' (VoH) project, which FAO developed a global food security and nutrition (FSN) indicator for member countries. VoH measured food insecurity worldwide, using an experience-based food insecurity scale module called the Food Insecurity Experience Scale (FIES). Twenty-two countries incorporated FIES into their national household surveys. FIES has been endorsed as the official indicator to monitor SGD2 — Target 2.1. FIES data from 58 countries contributed to FAO’s State of Food Insecurity in the World (SOFI) Report 2017.

Another good example is the project on 'Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests' (VGGT), in the Context of National Food Security. The VGGT strengthened capacities of civil society organizations (CSO) and grassroots organizations to participate in policy dialogues on the governance of tenure in their countries. It provides countries with a framework for best practices in tenure-related policies, laws, regulations and strategies. This helped advance the mainstreaming of food security and nutrition (FNS) in sectoral policies and investment programmes, and the development of cross-sectoral FNS policy frameworks.

Sustainable agriculture, fisheries and forestry

global initiative on Sustainable Food and Agriculture (SFA) was launched in 2014 to address sustainable development in agriculture, forestry and fisheries. The SFA facilitates the adoption of integrated and multisector approaches at the ecosystem level. Its implementation was piloted in Bangladesh, Morocco and Rwanda. A new SFA Guideline was published in 2018 that outlined 20 interconnected actions to guide decision-makers, each describing approaches, practices, policies and tools that interlink the SDGs, integrate sustainable development, and partnership among key actors. 

As part of the initiatives to combat climate change, three related FMM projects were funded on Climate Smart Agriculture (CSA). A National Adaptation Plans project implemented in Malawi and Uganda provided crucial support to ensure that agriculture is part of the processes on adaptation to climate change at national level. It analysed the effects of climate change on food systems in Malawi and Zambia through a multi-disciplinary team to inform policy makers, and key policy messages emerged. The results provided basis for evidence-based decisions on the adoption of practices, investment plans and the formulation of policies that will contribute to the adaptation to climatic change. A CSA Source Book is also an important flagship product.[4]

Empowering rural communities and producer organisations

As part of a Blue Growth initiative project, bamboo crab-fattening cage innovation was introduced to a group in Dabaso, Kenya. This group produced more than 600 crabs (averaging 400 grams each), which were sold for a total of $1,000 in four months. In the coastal communities of Kwale County in Kenya, the capacity of 140 community members was strengthened to produce and process the seaweed, including post-harvest and market linkages. These smallholder seaweed entrepreneurs sold 41 tonnes of seaweed, fetching them $ 13, 000, which has helped them diversify incomes.

The Forest and Farm Facility (FFF) project strengthened Producer organizations (POs), improved dialogue between them and governments, and facilitated dialogue and networking among rural households. By the end of 2017, the FFF had strengthened 947 POs at the regional, national and local levels, representing more than 30 million producers, resulting in changes in policies, rules or regulations in favour of their interests. It helped poor rural people enhance their business skills, build their own enterprises, increase access to markets, services, knowledge and technologies and improve access to, control over and sustainable management of natural resources.

The Dimitra project improved rural people’s livelihoods, gender equality, and reduce rural poverty. The Dimitra Clubs’ approach is a signature approach that unites women, men and young people in collective action to create better lives. By end of 2017, about 1,600 Dimitra Clubs were established in Africa. It contributed to strengthening rural organisations and institutions in Burundi, Democratic Republic of Congo, Ghana, Niger, Mali and Senegal where more than 50,000 rural women and men are better organised and empowered.

Lessons and looking ahead

The FMM provides a very good example of a well-designed, flexible, pooled less-earmarked fund that are more effective and cost efficient. It provides catalytic funds for strategically important and critical areas. The results above are just examples showing that flexible funding can deliver real value and concrete results. FMM has enabled FAO to test and support the scaling up of proven initiatives that are innovative, and to leverage bigger and more impactful initiatives.  By creating synergies, FMM helps reduce risks and provides better incentives for collaboration across sectors in relevant contexts. It also provides greater coherence and opportunity to leverage other sources of funding to achieve catalytic, synergistic and transformative impacts. Due to its flexibility, FMM offers added advantage of its agility in responding to emerging challenges and opportunities with timely interventions. Moving forward, the success of flexible funds depends on the ability to effectively leverage wide range of partnerships with other actors, including their technical capacity and financial resources to achieve catalytic outcomes.

The author wishes to thank all the resource partners of FMM—Sweden, Netherlands, Belgium, Flanders and Switzerland, as well as the co-funders of all the individual projects supported by FMM.

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