Blended investments in Climate-smart agriculture paves the way for a more prosperous Africa
Investment in Climate-smart agriculture has a big potential to make the African agricultural sector more prosperous and more climate resilient in the coming years, but funding has to come from both the private and public sector.
If the sustainable development goals for food and agriculture production in Africa are to be met before 2030, we need to speed up. There are only eleven growing seasons left to try to solve the many challenges still standing. To fund this development it is clear that public sector money will not be enough. Private sector investments has to be brought in to spark the transition to a Climate-smart agricultural sector in Africa.
Climate-smart Agriculture practices (CSA) are generally perceived to be key in sustainable development in tropical countries, but they require funds for research, innovation and extension.
To inform and incite these kinds of blended private and public sector investments, we need science. If we don’t pull in evidence-based analysis to support investment plans, the money will be stuck in the banks, because the risks are too high. Thereby both public donors and private investors miss a great opportunity for supporting agricultural growth and building climate change resilience.
CIAT has in partnership with the World Bank worked on a series of Climate-smart Investment Plans for ten African countries. In the plans we lay out prioritized CSA practices most relevant and beneficiary for the specific country. The investment plans are meant as a strategic road map for governments, donors and investors where they have evidence-based analysis of the multiple trade-offs that each investment might bring.
The idea with the Climate-smart Investment plans is essentially to make plans for a longer term process, where key areas that are priorities for investment both from public and private sector side are identified and followingly working on fleshing out what might these investments look like by structuring the finance pattern.
One of the main obstacles for drawing in private sector money is that risk is a barrier to investment. And in Africa there are risks in investing If we can find ways to reduce that risk, we can unlock investment. And here the importance of structuring blended public and private money in a way, where the public sector takes the first major risks.
But in order for these new and blended kinds of investments to work, we need to bring in the science that can show how do we reduce risk and ensures good investments that promote the desired the impact for smallholder farmers. This technical assistance is needed to avoid so-called ‘pipeline development’ where development money just waiting for high potential projects to go in to. In the Climate-smart Agriculture Investment plans we identify, what are they key high interest high potential projects for each country that could be supported with low-risk.
The blended finance model allows for the public sector to have more of an enabling role in the development process, where public and private investments complement each other. But this requires a tailored process where researchers, public donors and private investors come together to co-design what these investments might look like in the specific context. That changes our role as researchers to become facilitators of this process and essentially holders of the evidence that shows what investment might lead to for everybody involved.
An example of blended finance model backed by CIATs science is the newly launched The Althelia Biodiversity Fund Brazil that combines public sector money USAID, expertise from CIAT with investments from the private sector in order to drive sustainable development at a large scale in the Amazon.
And scale is a key argument in the need to become smarter in agricultural investments: If we succeed in translating these Climate-smart investment plans into concrete projects and long-term investments in agriculture, I believe we will see a much more prosperous agricultural sector in Africa in the coming decade. But to get there, the public sector and the NGOs has to be willing to take risks in order to get a strong private sector with markets involved for maximum impact.
About Climate-smart Agriculture
Climate-smart agriculture (CSA) embodies the ambition to improve integration of climate change responsiveness into agriculture development planning. Widespread adoption of CSA can create sustainable landscapes and build momentum towards climate-smart food systems, but achieving this requires integration of CSA across levels from farmer fields to national and regional planning.
About Climate-smart Agriculture investment plans at COP25
The CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS) and CIAT has in partnership with the World Bank worked on the Climate-Smart Agriculture Investment Plan series that will be presented at a side-event at COP25 on November 5. The investment plans has so-far been developed in ten different African countries and will be launched at the event. (if possible link to press release from World Bank)
The Alliance of Bioversity International and the International Center for Tropical Agriculture (CIAT) delivers research-based solutions that harness agricultural biodiversity and sustainably transform food systems to improve people’s lives. Alliance solutions address the global crises of malnutrition, climate change, biodiversity loss, and environmental degradation.
The Alliance is part of CGIAR, a global research partnership for a food-secure future.