IFAD 2023 Report: Innovation Drives Rural Development Amid Challenges

"More than any other group it is rural people who suffer the consequences of today's escalating global crises," said Alvaro Lario, President of the UN's International Fund for Agricultural Development (IFAD), at the launch today of IFAD's Annual Report 2023: Investing in Rural Communities for a Sustainable Future.

The climate and biodiversity crisis, increasing conflicts, economic instability, and worsening inequality disproportionately affect rural inhabitants. Food insecurity is higher in rural areas compared to urban ones, and 80% of extreme poverty worldwide remains entrenched in rural regions.

"Rural people also hold the key to unlocking these challenges: with the right investments they can produce nutritious food for all while sustainably managing our natural resources," said Lario.

IFAD's Annual Report highlights "significant progress" in 2023, noting critical developments and initiatives that address the ongoing global crises and support rural communities worldwide. The report also provides "reasons for optimism".

IFAD Member States committed record pledges for the 13th three-year Replenishment of IFAD's resources. IFAD's ambition is to mobilize US$2 billion in new funding to support a US$10 billion programme of work, and reach over 100 million rural people between 2025 and 2027.

With its solid AA+ credit rating, IFAD continued to leverage its borrowing ability to harness global wealth to make a difference in rural people's lives. The specialized UN Agency and international financial institution issued two sustainable bond private placements in euros-worth €180 million-under its Sustainable Development Finance Framework. IFAD presented its first impact report at the London Stock Exchange, detailing how the proceeds of bonds issued in 2022 are being utilized to invest in approximately 2 million rural households.

As part of its focus on innovation, together with partners, IFAD introduced the Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) at last year's COP 28 in Dubai. ARCAFIM is large-scale model of tailored climate adaptation finance for poor small-scale food producers and rural microenterprises. This innovative risk-sharing model blends donor resources with commercial funds to de-risk the loans made by local banks to small-scale farmers.

IFAD continues to advocate for the urgent need for climate finance for adaptation as the impact of climate change intensifies, meanwhile the gap with finance for mitigation efforts is widening. Through the Enhanced Adaptation for Smallholder Agriculture Programme (ASAP+), the Fund continues to drive climate finance to the most vulnerable rural people, including those living in fragile contexts. IFAD has been blending grants with loans to support climate adaptation for rural communities through nature-based solutions and regenerative agriculture. Almost 7 million smallholder farmers across 41 countries have built resilience through climate adaptation interventions since the start of this programme.

Other highlights in 2023 include pioneering market-based mechanisms to compensate small-scale farmers for ecosystem services, establishing an Innovation Lab, and launching new funding modalities directly to rural organizations for climate-focused projects.

Strengthening IFAD's organizational capacity

IFAD's investment capabilities rely on its dedicated personnel. As part of the decentralization process initiated a few years ago, 40% of IFAD staff are now stationed in the field, closer to the small-scale food producers in developing nations in whom the Fund invests.

"Despite the significant challenges ahead, IFAD is better equipped than ever to collaborate with rural communities on sustainable and effective solutions to hunger and poverty, while equipping them to adapt to climate change," added Lario.

Additionally, IFAD has surpassed 45% female representation in leading positions and senior management and achieved 55% representation from developing countries where IFAD invests. A total of 110 nationalities are represented among IFAD staff.

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