Washington DC, October 8, 2010
– IFC, a member of the World Bank Group, the Government of Canada, and the United States Department of the Treasury announced today an initial pledge of $100 million for a private sector facility within the Global Agriculture and Food Security Program to strengthen food security in low-income countries and increase private sector investments in agriculture.
Canada has pledged $50 million Canadian dollars, the United States $25 million, and IFC is expected to contribute $25 million, to support the growth of competitive agribusiness sectors in low-income countries, with a special focus on smallholder farmers.
The facility will leverage more than three times the initial contributions.
“The agricultural sector accounts for the majority of the labor force in many poor countries, but only receives a small fraction of total commercial bank lending,” said Jim Flaherty, Canada’s Minister of Finance. “The innovative Global Agriculture and Food Security Program can help fill this important financing gap and support sustainable private sector development. I am pleased that Canada is among the first to contribute to the new facility.”
"This investment in agriculture will make a substantial contribution to strengthening food security and the agricultural sector in many developing countries," stated Beverley Oda, Canada’s Minister for International Cooperation. "The financing instruments and technical assistance offered are a cost-effective way to provide significant benefits to smallholder farmers, many of whom are women, and their communities."
By providing financing for small and medium agribusiness companies and farmers, the facility will raise farm productivity, improve access to markets, mitigate risks of food price volatility. It will use financing instruments such as equity, debt, and risk-management tools along with advisory services to support agribusiness small and medium size enterprises and small farmers through intermediaries.
“In poor countries, smallholder farmers, especially women, are the backbone of the agriculture sector. If they can have better access to new technologies, seeds and soil, they can grow more crops. If they can get credit and forge stronger links with markets, they can earn more. As President Obama’s new development policy recognizes, private sector led solutions are critical to achieving these goals,” said U.S. Treasury Secretary Tim Geithner. “This facility will increase private sector investments to help transform small farmers into successful entrepreneurs.”
The private sector facility
will issue an open call for proposals from private sector firms and financial institutions operating in low-income countries, and select financially viable projects that demonstrate the greatest development impact. A Project Investment Committee that will be established by donors will decide which proposals to fund and in what amount on behalf of the facility. A Consultative Board comprised of experts from civil society organizations and the private sector will help promote innovation. The facility will cooperate with other multilateral development institutions.
"For many developing countries, the food crisis of 2008 has never gone away. Recent rises in food prices are a serious cause for concern," said Robert B. Zoellick, the President of the World Bank Group. “Supporting developing countries in agriculture through advice and financing is central to finding ways to avoid food crises becoming the new normal.”
The Global Agriculture and Food Security Program was established to help implement some of the $22 billion in pledges made by G8 leaders at the 2009 meeting in L’Aquila, Italy. The program is a response to the call by G20 leaders last year in Pittsburgh for the World Bank Group to work with interested donors to establish a multi-donor trust fund to address global hunger and poverty and help boost agricultural assistance to poor countries. It will have both public- and private-sector components to provide financing to countries that have robust agriculture strategies. The program’s public sector component was put in place in April 2010, with $880 million in initial contributions from Canada, South Korea, Spain, and the United States as well as the Bill & Melinda Gates Foundation.
About IFC
IFC, a member of the World Bank Group is the largest development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives—by providing financing to help businesses employ more people and provide essential services, mobilizing capital from others, and delivering advisory and risk-management services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit
www.ifc.org
.
For more information about the Department of Finance Canada, please visit
www.fin.gc.ca
For more information about the US Department of the Treasury, please visit
www.ustreas.gov
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