November 15, 2022

photo credit: EIB

By Lynda Kiernan-Stone, Global AgInvesting Media

The European Investment Bank (EIB) and the UN’s International Fund for Agricultural Development (IFAD) have forged their first agreement for direct capital support. 

Following decades of general cooperation between the two organizations, the  EIB has agreed to commit €500 million (US$515.43 million) in financing to support IFAD in its work to strengthen food security and agricultural investments in the world’s emerging and developing countries. 

IFAD’s latest Strategic Framework 2016-2025 outlines how IFAD will approach its work within the current decade; dictating how the organization will contribute to the 2030 Agenda. The three strategic objectives set forth in the Framework include:

~ Increasing the productive capacity of poor, rural people

~ Increasing the benefits of market participation for poor, rural people

~ Strengthening the environmental sustainability and climate resilience of their economic activities. 

Toward this end, the EIB has agreed to lend €500 to IFAD in support of that organization’s targeted loans that aim to improve food security and reduce poverty. This new capital will enhance IFAD’s urgent response in assisting smallholder farmers in adapting to climate change, and help them deal with the current global food, fertilizer, and fuel crises.

The climate crisis has brought change upon global agriculture through the worsening of soil degradation, severe storms, and shifting weather patterns, threatening the livelihoods of farmers and food security worldwide.

The weight of these changes is only heightened for smallholders due to structural inefficiencies and limited access to credit.

Alvaro Lario, president of IFAD, commented, “IFAD is an assembler of finance for the benefit of rural communities. With global hunger and poverty alarmingly on the rise amid multiple compounding crises, the loan comes at a critical time. It will help IFAD multiply its impact on the ground supporting the poorest people living in rural areas.”

“To meet the growing need for funds, we are diversifying our funding sources and increasing our borrowing program,” he added.

For the EIB, this commitment aligns with its goal of increasing its cooperation with clients, EU member states, development finance institutions, civil society, and other partners under its recently launched EIB Global program.

On the EIB Global website it states, “The great challenges of today are global. Climate change and COVID-19 will be with us all for as long as they are with any of us. By the same token, the opportunities of today must be grasped globally. All our economies are interconnected. Prosperity in one region promotes prosperity everywhere.”

Initially, the EIB will immediately make available €150 million, with the remaining €350 million to be distributed over the next two years. The loan will have a tenor of 20 years, and a grace period of five years.

“The EIB recognizes the urgent need to support vulnerable communities around the world threatened by the risk of famine, unpredictable and extreme weather, food shortages and agricultural challenges,” said Ambroise Fayolle, vice president, European Investment Bank.

“The EIB’s €500 million support for IFAD will help to scale up targeted and sustainable investment to enhance food security, improve farming, tackle poverty and increase agricultural productivity in rural communities most impacted by a changing climate.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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