Impact beyond Agriculture
The causes of poverty and food insecurity are complex and vary between countries and regions with no ‘one size fits all’ solution. Our flexible model allows countries to customize investments to meet multiple needs and cross-cutting national priorities to have profound impacts beyond the agriculture sector.
Access to Finance
Financial institutions often face challenges in providing services and lending to the agricultural sector, in particular to smallholder farmers who are the bulk of farmers in developing countries. Shut out from traditional forms of banking, these farmers have little access to formalized financing. Many have undocumented credit histories, unstable incomes, and limited collateral, as well as exposure to extreme uncertainties in weather, production, and markets. Access to financial services allows these farmers to raise productivity, enable better access to markets, and promote better management of risks. Financing helps them access better inputs and invest in new technologies, contributing to longer term food security, and allowing farmers to move from the subsistence/semi-commercial level to the commercial. Access to finance also helps increase their resilience to the effects of climate change. GAFSP works to help connect smallholder farmers with financial intermediaries on the ground in developing countries. Through GAFSP financing, these financial intermediaries, including local banks, small, and medium enterprises, can offer loan facilities with affordable rates to small farmers.
Agriculture is one of the most climate-sensitive sectors as it is both a major contributor of greenhouse gas emissions and highly susceptible to its effects. The frequency of extreme weather events such as floods, droughts, and storms has doubled since the 1990s from once every 12 years to once every 2.5 years, which further threatens crops, fisheries, and livestock, and pushes poor people deeper into poverty. If such adverse climatic trends continue, more than 100 million additional people could be in poverty by 2030.
Our investments directly address climate change through mitigation and adoption technologies such as resilient seed varieties, more efficient irrigation, drought resistant mulching, increased intercropping and other mechanisms.
It is estimated that close to half of the world’s extreme poor will live in countries affected by fragility, conflict, and violence (FCV) by 2030. While the agricultural sector can be adversely affected by conflict and violence, it is often also the most agile in helping FCV countries by rapidly absorbing large amounts of labor, rebuilding household economies, providing access to food, and providing decent employment. We help address both immediate needs and long-term development and stability.
Women are key players in the smallholder agricultural sector around the world. 60-80% of economically active women work in agriculture in Africa, making it the largest employer of women. However, women are more at risk of being food insecure across all regions. Persistent cultural, legal, and economic inequalities continue to ensure that women’s agricultural productivity is less than that of men.
Our investments directly target the underserviced sector of women smallholder farmers through diligent planning, gender mainstreaming, and the continuous monitoring of gender-disaggregated achievements and outputs at the project level.
Over one and a half billion people across the world are engaged in smallholder agriculture. They include seventy-five percent of the world’s poorest people who live in rural areas, toiling on tiny plots of land that yield barely enough to support their family’s basic needs and necessities. Despite their critical role as food producers, the commercial prospects for millions of poor smallholders remain challenging due to poor infrastructure, inadequate financial services, high transfer and transaction costs, and price volatility in food markets. This creates food-surplus areas that are unable to sell produce as well as food-deficit areas unable to access food from markets. Studies from several countries in Africa and Asia show that 50-70 percent of smallholders are not transitioning from subsistence to commercial farming.
GAFSP supports countries, farmers, and businesses in efforts to overcome these challenges and to accelerate smallholder farmers’ access to markets. Farmers who are linked to larger local/national and global value chains can not only have more stable incomes but increase their competitiveness in the long run, gaining a better understanding of market standards, developing relationships with other buyers and securing access to improved inputs and technology. At the farm level, a more stable and efficient farmer supply chain can help secure stable supplies that leads to improved operations and new opportunities. These projects can help transform farmers from subsistence and semi-commercial producers into commercial farmers, thereby increasing both livelihoods and food security.
Jobs and Income
Agricultural productivity growth has the potential to create jobs not only in the rural farm sector, but also in the rural non-farm sector and in the broader economy. Agriculture-based economic growth has been two to four as effective at reducing poverty than growth originating in other sectors. The rural sector, both farm and nonfarm, is critical for creating wage jobs and self-employment and for encouraging the emergence of entrepreneurs.
Promoting remunerative farm and non-farm jobs is one of our priority areas. Our financing supports the entire agriculture value chain across both the public and private sectors to improve the incomes for the rural poor. 62% of public sector investments are related to creating direct jobs. Sixteen of these projects are in Africa.
Hunger is on the rise in almost all regions globally, with low-income countries in Africa and Asia continuing the bear the greatest share of malnutrition. Undernutrition in children accounts for 45% of all child deaths and contributes to the stunting of children. Additionally, obesity is on the rise, contributing to 4 million deaths globally. Agriculture has an important role to play in improving nutrition by increasing access to healthy and nutritious food and ensuring dietary diversity through farming activities.
We support both nutrition-specific and nutrition=sensitive agricultural activities, including the distribution of micronutrient supplements (such as folic acid and iron to pregnant women, women of reproductive age, and adolescent girls, or sprinkles for children), behavioral change campaigns, and improving home conditions.