The UN’s State of Food Security and Nutrition in the World 2024 (SOFI 2024) confirms that hunger and malnutrition continued to rise for a 7th year in a row, albeit at a slower rate.  With approximately 733 million people living in hunger, we are far from the global goal of ending hunger and malnutrition by 2030. Since 2019, 152 million more people face hunger, highlighting the continued impact of the Covid-19 pandemic

This is a stain on humanity and a disaster that could have been avoided.  We know how to end hunger, and we know how much it will cost. The evidence is clear and the additional spending is minuscule when compared to large public budgets on armament, subsidies and the continued exploration of fossil fuels.  

We hence welcome that 2024 re-opens the global debate on the fundamentals of financing food security and nutrition:   

• How to define the current levels of financing.  

• How to calculate the additional financing needed.  

• How to mobilize the additional financial resources needed.  

Defining the current levels of finance

To understand how much money is spent on ending hunger, a definition on finance for food security and nutrition is needed. As discussed in SOFI 2024, a systemic mix of criteria must be considered in developing this definition; further details will be provided in the forthcoming FAO and Shamba Centre paper, Towards a common definition of aid for food security and nutrition.  

In our recent article, Tracking G7 aid to food security and nutrition, we further argue that despite an agreed definition for food security and nutrition and a shared database to track official development assistance (ODA), a common framework to measure ODA for food security and nutrition will be extremely valuable. For example, estimates of G7 countries' contributions to food security and nutrition in 2022 ranged from as little as USD 3.8 billion to USD 54 billion in 2022, depending on the definition applied (see Figure 1). 

Figure 1. Comparisons of the G7 member states disbursements of ODA grants according to different definitions, 2007 - 2021  

Adapted from FAO and Shamba Centre for Food & Climate. (forthcoming). Towards a common definition of aid for food security and nutrition. Background note. Rome.

SOFI 2024 provides the much-needed leadership to build consensus on how to define both public and private financing for food security and nutrition.  In addition, it integrates finance to a core and extended definition of food security and nutrition and thus helps move towards a shared understanding of the scale of financial resources being spent.  As a result, we can now make a stronger case for increasing the quantity and quality of investment towards ending hunger and malnutrition. 

Calculating the additional finance needed to end hunger and malnutrition 

The research community must take responsibility for the confusion surrounding the multiple and widely different estimates on cost to end hunger and malnutrition. Researchers use different targets, baselines and data sources for their projections and modelling approaches to develop their cost estimates. This results in cost estimates ranging from USD 7 billion to USD 680 billion per year until 2030. This huge difference creates confusion among governments, donors and policy makers and is an obstacle to effective action.  See our technical note for further information. 

Mobilizing the additional financial resources 

We are delighted that the findings and recommendations from the enquiry on sustainable finance conducted by the Shamba Centre and Global Donor Platform for Rural Development (GDPRD) are echoed in SOFI 2024.  

The Shamba Centre also convened a Financial Technical Advisory Committee to SOFI 2024, which advised the SOFI 2024 writing team on innovative public and private financing for food security and nutrition. The Committee was comprised of financing experts from private and public funds, insurance, smallholder financing, academia and think tanks, and sovereign wealth funds. SOFI 2024 discusses many ideas debated by the Advisory Committee including blended finance strategies, debt-swaps, green and sustainable bonds and parametric insurance.   

However, SOFI 2024 could have been bolder in making the case for donors and development finance institutions (DFIs) to take higher risks with their grants and lending, as every donor dollar has the potential to mobilize four dollars in commercial finance. As discussed in the summary report and technical note stemming from the enquiry, food and nutrition are largely financed by public money and financial risks associated with food production are considered to be very high. Solutions to bring in more private financing require clever thinking on sharing risks, supply chain financing, lending to producers who work in local currencies and supply domestic markets, and increasing the appetite of domestic lenders to venture into agrifood and nutrition markets.   

This, in turn, requires better sharing and coordination amongst donors. Early success is underway with the launch of the GDPRD’s new thematic working group on sustainable and blended finance. The recommendations from our enquiry are also echoed in the words of Qu Donyu, Director-General of the FAO, who calls for “greater financial coordination between partners, increased activities to de-risk the agrifood sector and more blended financing”. 

Moving from rhetoric to action 

Building on the momentum around SOFI 2024, we challenge ourselves and the wider development community to innovate further in five areas.  

1. Outcome payments 

Outcome payments, also known as impact-linked finance or results-based finance, reward the achievement of pre-agreed outcomes. Its additionality lies as donors and private investors pay for outcomes that may not otherwise have been achieved at the same pace, scale or timeframe. Additionality increases as the revenues of farmers and producers diversify, and food security and nutrition improve at a much cheaper cost.  The Shamba Centre is exploring a partnership with Quantified Ventures to design and broker outcome payments in developing countries.  

2. Increase the appetite of domestic lenders 

Given their localized networks and knowledge, domestic investors are uniquely positioned to enable small- and medium- sized enterprises (SMEs) in the agrifood sector to access much-needed capital. However, they need incentives to increase their expertise and appetite in these markets so that they can distinguish between real and perceived risks. To build this appetite, Aceli Africa offers grants in the form of incentives to domestic lenders to cover portfolio first loss and origination risks associated with services agrifood and nutrition SMEs.  

3. Use sovereign wealth funds to anchor investments  

Sovereign wealth funds combine purpose with profit and invest in domestic industries and large infrastructure projects. Given that they tend to prioritize long-term returns over short-term liquidity, these funds in developing countries can serve as important stakeholders to partner with donors and development financial institutions (DFIs) to de-risk projects. Together with EHA Advisory, the Shamba Centre will explore how sovereign wealth funds can use under-utilized public assets as an anchor investment to crowd in donors and development finance institutions.   

4. Credit risk assessment scorecards 

Credit risk assessment scorecards provide rating methodologies and loan-specific details to help domestic lenders, as well as DFIs and impact investors, assess the risk of agrifood businesses. With a better understanding of the real risks - including financial, climate and sector specific – creditors will be able to accurately price the risk of loans and distinguish between real and perceived risks in agrifood lending. UNECA stands ready to explore the development of such a scorecard for agriculture, working in partnership with banking and financial market regulators.  

5. Increase the risk-tolerance of DFIs 

DFIs are governed by prudential rules and statutes that prevent them from lending to high-risk projects. However, by providing them with dedicated and ring-fenced funds, DFIs could offer higher-risk loans that have well-defined targets on sustainable food and agriculture. The World Bank is making strides to explore the use of its callable capital as guarantees and bond obligations to increase their lending to high-risk ventures. In 2022, the Swiss Investment Fund for Emerging Markets (SIFEM) launched a  USD 832 million portfolio of low-cost lending to impact and micro-finance ventures. 

We applaud SOFI 2024 for reopening the debate on the complexities in financing food security and nutrition. It is a timely, urgent and overdue call to action to increase the quality and quantity of investment towards ending hunger.