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Farmers and agribusinesses at risk under COVID-19: What role for blended finance funds?

Food and Agriculture Organization of the United Nations

Reaching out to the underserved segment of small and medium agribusinesses has been one of the objectives driving the development of blended finance funds and facilities in the agrifood sector. While many operators will be focusing on managing their portfolio through these turbulent times, there is an opportunity to step up blended finance's contribution to mitigate COVID-19 negative impacts and accelerate the recovery, including Build Back Better efforts.Blended finance is naturally not expected to solve all the problems, but it can make a significant contribution thanks to its capacity to mobilize much-needed additional capital, its ability to reach small and medium enterprises (SMEs), its development mission, public-private nature and integration of technical assistance. In this crisis, low- and middle-income countries need more patient investors that can help bridge critical funding gaps and sustain investors' capacity to address the impacts of COVID-19 and keep agrifood systems functioning. Options to achieve this include:

i) offering additional liquidity to existing clients in need of working capital financing;

ii) deploying specific COVID-19 windows, including targeted technical assistance, to attract potential investors or philanthropies willing to support Sustainable Development Goal (SDG)-aligned agrifood companies operating under a sound business model, as well as those that are willing to transition towards more sustainable models; and

iii) enhancing cooperation with development finance institutions (DFIs), donors, funds and banks.

The financial support of blended finance could be pivotal in de-risking DFIs and other financing institutions and encouraging them to do more to support farmers and agribusinesses in developing countries now but above all during the recovery.

    Date
    07 Jul 20
    Region Focus
    Global
    Sector Focus
    Agriculture
    Sub-Sector Focus
    Agricultural Inputs / Farm Productivity, Agriculture Finance, Agro-Forestry, Agro-Processing