The International Finance Corporation (IFC) has launched a US$6bn financing facility in response to global food shortages.
The Global Food Security Platform will support private sector companies along the food value chain and focus on “facilitating trade of food commodities, delivery of inputs to farmers, supporting efficient production in major origins, including Ukraine, and effective distribution of food products in destination countries”, the IFC says.
The IFC has committed US$3bn of its own funding and will secure another US$3bn from the private sector. To disburse the funds, the IFC will work with its existing clients around the world, while companies will also be able to get in touch to enquire about financing.
Speaking to GTR, IFC global manager for agribusiness and forestry Prasad Gopalan explains that the platform will organise how the IFC responds to the food scarcity emergency, focusing on food security and sustainability.
“The food security crisis has given us the impetus to look at how we can respond on a larger scale to address the problems that the food system is facing today. The immediate priority for us is to focus on accessibility and availability of food,” he says.
“We are looking at the whole of trade, from origins to destinations. Since Covid, some banks have retreated from trade operations. How do we fill that gap to make sure that we smooth the overall flow of commodities?” Gopalan states.
“The question is how we intervene in the immediate term to provide access and to make food available for consumers in the markets in which we operate by supporting inputs production, trade, processing and distribution,” he says.
Emphasising sustainability as a business driver, Gopalan notes that the platform will help “support smallholder farmers, women farmers and specifically women in supply chains to create both market access and to see how we can provide financing to them to improve their own livelihoods”.
Ukraine will be a particular focus, but the IFC also wants “to make sure that the short-term response is available to those importing countries that are suffering from lack of available commodities, such as countries in West Africa and North Africa, the Middle East, parts of Asia,” Gopalan says.
The facility supplements the World Bank’s plans, announced in May this year, to allocate up to US$30bn for new and existing projects in agriculture, nutrition, social protection, water and irrigation. The IFC also aims to improve the resilience of the global food system.
“Given the escalation and prices of commodities, every player along the supply chain has faced increased working capital needs. How do we finance those increases without losing sight of the longer-term sustainability issues in the sector?” he says.
Of the US$3bn yet to be secured, Gopalan adds, “we will go into the market to see who else wants to come alongside us.”
“We are slowly reaching out to partners. There are some bilateral and multilateral lenders, for example, that we are already in touch with who may want to come in.”
According to Gopalan, the IFC would also be interested in working with “other like-minded financial partners”, including banks, private equity and venture capital investors, in addition to foundations and governments for blended financing solutions to tackle high-risk initiatives.
“All that is underpinned by making financially sustainable investments. We’re trying to raise some additional funding that can mitigate certain risks,” he adds.
“For example, in certain high-risk countries, we already have access to a couple of programmes that will be useful for us in addressing some of these kinds of situations where credit worthiness is questionable, but if we engage, we produce a significant impact.”