COVID-19: In a first, public development banks pledge to end hunger, poverty

For the first time in history, 13 public development banks (PDB) made a joint commitment to strengthen investments in food and agriculture in the wake the novel coronavirus disease (COVID-19) pandemic and changing climate, with more signatories expected in the coming days.

Strengthening small-holder farmers as well as agricultural small- and medium-enterprises (SME) is essential in the realisation of the 2030 Agenda for Sustainable Development and the Paris Agreement, the PDBs said at Finance in Global summit.

It was held from 9-12 November, 2020.

This is the first global summit of 450 PDBs held virtually to address the common need for building new forms of prosperity in a resilient manner in the post-COVID-19 pandemic scenario.

These include agriculture and rural banks from Sub-Saharan Africa, Asia and Latin America and regional rural and agricultural credit associations. African Rural and Agricultural Credit Association (AFRACA), Near East-North Africa Rural & Agricultural Credit Association (NENARACA), Tanzania Agricultural Development Bank Limited (TADB) were among the 13 signatories.

The PDBs have demonstrated their will to contribute for Sustainable Development Goals No 1 and 2 on eradicating poverty and hunger.

The move comes when 265 million people are projected to face extreme hunger by the end of 2020 because of the pandemic, according to the latest estimates of the World Food Programme. Climate change is among the leading causes of rising global hunger.

While these banks may be diverse in terms of capital base, mandate and instruments, the statement signed by them laid emphasis on the critical role they play in financing future sustainable and inclusive food systems.

Easy access of finance to small-holder farmers

The smallholder farmers and agri-SMEs can be much more productive and contribute to broader food security and prosperity with easy access to finance, said the signatories in their joint statement.

They agreed to support development of financial products and services tailored to needs of these farmers. They gave their consent to addressing the market failures, especially in times of crisis such as the current COVID-19 pandemic. More signatories are expected in the coming days, according to International Fund for Agricultural Development, an international financial institution and a specialised agency of the United Nations.

PDBs have jointly emphasised their role as catalysers of private sector investments which are often hindered by a variety of risks, costs, and poor economic returns.

“COVID-19 and climate change are putting enormous stress on our food systems,” said Gilbert F Houngbo, president of IFAD, which convened the PDB discussions.

“We need to act now and step up financing if we want to free the world from hunger and poverty by 2030, and offer a sustainable future to the two billion rural people who grow much of our world’s food. PDBs can be leaders in in unlocking opportunities, building a more resilient world and ensuring more equitable societies,” he said.

Transitioning to more sustainable practices in food systems may require $3-3.5 trillion by 2030, but deliver an “economic prize” of $5.7 trillion saved in “hidden costs” associated with current practices, according to the Food and Land Use Coalition, community of organisations committed to transform production and consumption of food and land use. It could unlock $4.5 trillion annual opportunities for businesses as well.

IFAD has claimed to have enhanced its engagement with the private sector to attract investments in small-scale agriculture and rural SMEs.

The IFAD became the first UN organisation to receive a public credit rating in October, making it easier to raise funds from public and private lenders.

Commitment by PDBs 

Smallholder farmers are a crucial part of the food value chain in Africa and India, as well as a critical element of the global food system.

The commitment by PDBs is significant for over 500 million small holders (defined generally as farmers having less than 2 hectares of land) in need of support. They produce 70-80 per cent of the world’s food but are largely food-insecure and poor.

The PDBs have underscored the need to effectively integrate climate resilience and environmental sustainability into their work ahead of the Food System Summit to be held in September / October 2021. 

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