Bringing global finance to rural development

In 2015, the world’s nations vowed to eradicate poverty and hunger by 2030 and create a future of opportunity for all people – the Sustainable Development Goals (SDGs).

But today, the world's poorest rural people face a reality in which climate change is exacerbating their vulnerabilities, disrupting agricultural patterns and making it harder to earn. Global insecurity and rising prices are making nutritious food unattainable for many.

Globally, the funds available to meet these growing challenges are not enough as governments scramble to respond to multiple overlapping crises.

Today, developing countries face a staggering US$4 trillion gap in sustainable development investment. And rural people will suffer the most because of it.

Yet small-scale agrifood systems in developing countries only receive 0.8 per cent of available climate finance, despite being at the frontlines of climate change.

Governments and official development assistance can’t make up the shortfall. But IFAD is devising new ways of accessing finance that works for rural people and helps achieve sustainable development.

In 2021, IFAD became the first United Nations fund – and the only UN body or specialized agency other than the World Bank – to enter the capital markets and issue sustainable development bonds.

Between 2022 and 2024, IFAD issued eight sustainable bonds, most recently:

• SEK 1 billion bond bought by the Swedish insurance company Skandia and IFAD’s first-ever investor, Folksam.
• AU$ 75 million private placement bought by Meiji Yasuda Life, a Japanese life insurer.
• US$50 million bond, IFAD’s first focusing specifically on nutrition, bought by Zenkyoren, a Japanese agricultural investment cooperative.
• €100 million private placement bought by Morocco’s Bank Al Maghreb, marking IFAD’s first partnership with a central bank.

These funds will reap even more resources: for every dollar financed, IFAD mobilizes US$1.40 from other sources, including from the governments of the countries where we work and from other development partners.

And this is only the beginning. In November 2023, IFAD opened on the London Stock Exchange, reinforcing our reputation as an issuer of sustainable bonds as we continue to work for those who need it the most: rural communities all over the world.

IFAD’s sustainable bonds offer private investors a way to fund our development projects. Through its interventions, IFAD supports 16 out of the 17 SDGs.

These funds support small-scale rural producers in accessing markets and finance, enhancing production and sustainably managing natural resources.

Investors in these bonds know that their money is not only going to eradicate hunger and poverty in rural areas, but they are also assured that they’re investing in a fund with an AA+ credit rating from the two major global rating agencies thanks to IFAD’s strong capital structure.

IFAD publishes a yearly impact report that demonstrates how the proceeds from its bond issuances have been invested in rural people.

The proceeds of loans and bonds are being used for IFAD-supported projects across the world, with the largest part of the loan portfolio in Africa.

The four private placements issued by IFAD in 2022 and 2023 alone mobilized the equivalent of $344 million to finance projects in Member States. These are just some of the positive impacts these sustainable bonds are expected to have on rural people:

• 140,000 people will be provided with climate information services.
• 851,000 households will adopt environmentally sustainable and climate-resilient technologies and practices.
• 1.6 million people will benefit from targeted support to improve their household nutrition.
• 45,600 hectares of farmland will have water-related infrastructure constructed or rehabilitated.
• 117,000 hectares of land will be brought under climate-resilient practices.

The path towards achieving the SDGs has never seemed more precarious. But by using responsible private investment, IFAD is securing prosperity and sustainable development that works for everyone.