Blended financing for nutritious food

This solution was shared by Charlotte Pedersen GAIN , 28 May 2021

Print date: 05 September 2022 01:23

Description of the innovative solution

Finance Big data Market access Procurement policy Double-duty action Investment fund

In low-income countries, 70-90% of all food consumed is produced, processed, transported, and sold by Small and Medium Enterprises (SMEs). However, high risk and cost of financing has led to a shortage of finance for agri-food SMEs, particularly for small-ticket SMEs operating in local food markets (vs. export commodity chains) and for early-stage investments in developing new business models and product offerings that can address demand for nutritious foods or contribute to nature-positive solutions in food systems. In Africa alone, there is an annual financing gap of about USD 100 billion for agri-food enterprises with needs between USD 25,000 and 5 million. Blended finance facilities combine concessional financing and commercial funding. Development organizations or philanthropic foundation, provides the concessional catalytic investment to de-risk the investment portfolio and provide a capital in various forms (i.e., first-loss and patient capital, subordinated debt, guarantees, Opex coverage), which then makes it possible to attack other investors with lower risk targets. As part of the de-risking strategy blending financing facilities can provide technical assistance to address capacity gaps the SMEs may have in order to grow their business in a sustainable manner. Impact investment in nutritious food is a new innovation, where generally acceptable KPIs standards and impact evaluation methods still need to be established.

Supply chain segment

Financial aspects

Maturity level

Gaining traction

Criteria

Food availability

SDG target

SDG 2: Zero Hunger SDG 8: Decent Work and Economic Growth SDG 12: Responsible Consumption and Production

Context

Urban Peri-urban Rural Marine/Coastal

Examples and additional resources

Real-world examples

See this solution in action in different contexts and settings around the world

Additional resources

Learn more about this solution through studies, articles, business cases, and other information

The potential of blended finance
Report
Discussion paper looking at how blended finance can help unlock new funds while de-risking investments and stimulating positive social impacts.
Shared by IFSS Research Team

Contacts

Connect to others working on and with this solution around the world

No contacts yet.