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Why Finance Agriculture?

Salina Abraham

The Eiffel tower was lit green last Friday to commemorate the entry into force of one of the fastest and most comprehensive environmental international agreements. Lighting a prominent monument green does help to raise climate awareness, but quite frankly, it can be hard for many people to keep track of what is going on in this sphere.

I’d like to claim that if we pay attention to anything this year, it is the issue of climate finance – the financial flow of capital directed to environmental projects.

Undeniably, the most difficult aspect of climate finance is not the availability of capital but leveraging private and public finance into this sphere.

While high-level policy makers are gathering in Marrakech to increase global goals, this conference is diving into the details of how to achieve them. This #blending4ag Conference is bringing together stakeholders and specialized professionals to debate, share information, and carve a new path and framework for financial investments and collaborations into the future. The focus is particularly ‘blended finance’, the idea that public finance can leverage private finance by mitigating the risks that generally impede investors and prevent reasonable returns.

Why Finance?

A broad and ambitious 2030 agenda requires a broad & ambitious financing strategy.

As you may know, the United Nations (UN) has set a new agenda for the next fifteen (15) years – seventeen (17) Sustainable Development Goals (SDG’s) that will be achieved by 2030. Along with the SDG’s, we have the Paris Agreement that sets another highly ambitious commitment of maintaining global temperature rises below 2 degrees Celsius, ideally 1.5. The international community has acknowledged that business as usual – public and philanthropic funding – will not work and we will need additional development finance.

This additional development finance must come from encouraging private sector participation.

Why Agriculture?

Most victims of poverty and hunger are smallholder farmers in developing countries.

This #blending4ag conference is especially vital because the agricultural sector accounts for 1/3 of greenhouse gasses, ½ of employment, ¾ of water use but is perceived to be high-risk and low return. There are unique challenges with high price-sensitivity and general market distortions from years of public financing and subsidies, yet there is huge potential for this sector. Agriculture has a profound impact on many social and environmental factors and yet also provides a great opportunity for productivity increases and profit generation.

Over the last two days, we have heard about the importance of financing smallholder farmers, lessons learnt from prior public financing efforts, and developments in defining criteria and a certification scheme for this new era.

Copyright © 2016, CTA. Technical Centre for Rural and Agricultural Cooperation

CTA is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.