By FRANCIS KOKUTSE, in Kigali, Rwanda
$150m in from Swedish, Japanese pension funds
55% IFAD funding to go to Africa
Incoming President Lario targets private sector finance for projects
Ahead of his taking over office as the new president of the International Fund for Agricultural Development (IFAD), Alvaro Lario, has promised to improve the conditions of Africa’s smallholder farmers by improving their working conditions as well as lifting them out of poverty, with about $150 million funds raised from Swedish and Japanese Pension Funds, which he said has set the tone for a new form of investment to improve the lives of farmers across the continent, he said in an interview.
Lario, who will take office as the seventh president of IFAD on October 1, 2022, said, “I have been with the International Fund for Agricultural Development for the last four years, and therefore know exactly what must be done to boost smallholder farming in Africa.”
He said there is also a programme in place to mobilise a $1billion private sector investment, which is a new trend, adding that, “this is happening because these investors want to join IFAD to improve the lives of smallholder farmers because they want to make a social impact.”
IFAD is a specialised United Nations agency created in 1977 and is engaged in providing grants and loans, and works with marginalised and vulnerable groups, such as farmers with small holdings, foresters, pastoralists, fishermen and small-scale entrepreneurs by giving them disaster preparedness, access to weather information, technology transfer and social learning.
The shift to mobilise funds from pension funds is part of Lario’s plans to bring in private investors and private sector finance to help fund IFAD’s projects. It is his experience in the private sector, academia, and international financial institutions, including his past position as associate vice-president, chief financial officer and chief controller of the Financial Operations Department at IFAD, which is the driving force behind the new move. Lario has acknowledged that it is private investors and the private sector that will help change the way smallholders are supported to grow.
Before joining the Fund in early 2018, Lario was the treasury capital markets lead and principal portfolio officer at the International Finance Corporation, an arm of the World Bank Group. Earlier positions include various roles in the private sector asset management industry and in academia.
He said IFAD was the first UN’s specialised agency to receive credit rating, and that this was what helped the Fund to mobilise $150 million from the Swedish and Japanese Pension Funds. With this success, he said, “we want to continue doing this to bring in the private sector to support the agendas of the smallholders; with respect to Africa, my commitment is to continue to give support to Africa’s smallholders as the biggest recipient of the Fund’s contribution.
“Right now, IFAD has targeted at least 55 percent of its funding to be directed to the African continent,” Lario said, adding that, though the IFAD works in almost 100 countries and other global institutions, “Africa continues to be our priority.”
He explained that the Fund works with governments by providing grants and loans at highly concessional rates to them, but it is more involved with farmers’ organisations and people on the ground through whom they decide what programme that suits them.
“We have farmers organisations on the ground helping us to decide and we supervise these programmes, but it is with governments that we have the relationships,” Lario said, adding that, “IFAD has been working for more than 40 years in this area.”
He is not just making promises because he said, “we work with universities and scientists to develop seed and storage mechanisation. When we design a project, we bring this to the people together with the knowledge that we have. We also collaborate with other UN agencies.”
On the recent food crisis, he said this has shown that African countries can prevent food insecurity by boosting local production with locally grown crops to ensure local consumption which Lario said is very fundamental. In addition to this, there is also the need to have inter-regional trade to make food move from one country to the other.
He said the Fund is also aware of post-harvest losses which has been estimated to cost the smallholder farmers across the continent between 20-30 percent from the time of harvest till they get to the market.
“These post-harvest losses are why the farmers’ incomes have been reducing. It is for this reason that we are working with Rwanda, where we launched a programme with them to bring the post-harvest losses down by 70 percent,” Lario said.
He said the Fund has also taken notice of the effect of Climate Change on the farmers and is putting in place programmes that will help them to adapt to climate shock. In addition, storage has also become a big problem and every effort is being put in place to find a solution to these problems.
“What we are seeing is that the smallholder’s assets; the soil, the land and biodiversity are under threat and without these they also cannot even feed themselves. Accordingly, IFAD has put together the biggest adaptation plans. The Smallholder Adaptation Programme, which started in 2014 is currently working to mobilise resources from the Climate Fund like the Green Climate Fund and other environmental facilities and expertise, because we have found that climate change is leading to many of these farmers falling into poverty,” Lario said.
On how the Fund is able to ensure that its resources go to the farmers who are beneficials, he said, “one of the things we track carefully is how much the smallholder’s income grows between the time of IFAD’s intervention and after, to ensure we have really brought some changes to their lives. Another area that is also important to the Fund is whether the farmers get access to the market, in addition to how much they can withstand shocks after our intervention.
“We also track our investments even though these are co-financed by local governments. We monitor the money we put in, which we have found do not have difficulties with how these are spent as with other institutions in the sense that our investment goes to the ground. We don’t buy big cars or big factories, for this reason, anytime we see anything going wrong, we stop the project, and the government will have to reimburse us and if they don’t, we end the project,” Lario said.