Solutions to hunger exist. What we are lacking is finance

Hunger is not driven by a lack of food or an inability to grow it. Instead, it is primarily caused by conflict, climate change and economic fluctuations. For the 733 million people who were hungry in 2023, this truth must be hard to accept.

The latest State of Food Security and Nutrition in the World Report states that we have the means to end hunger and malnutrition by 2030 – but we are missing the money and the political will to do so.

The estimated cost of ending hunger ranges widely, yet it's clear that the cost of inaction is even higher. The health, nutrition and environmental costs of current food and land-use systems already amount to US$12 trillion a year, while diet-related health costs will surpass US$1.3 trillion per year by 2030.

Moreover, reshaping food systems could generate US$4.5 trillion in new business opportunities every year. This could create over 120 million decent jobs, while slowing down global warming and regenerating natural ecosystems.

Undeniably, investing in food security and nutrition is not only a moral obligation but also an economically sensible decision.

What are the issues?

However, we face various challenges to ending hunger. Firstly, small-scale farmers, who produce a third of the world’s food, bear the brunt of under-investment. We must not only spend more but also spend better. This means directing funds to where they are needed most: rural areas of developing countries.

That’s why in IFAD’s next project cycle, 45 per cent of core resources will go to rural areas of low-income countries. This is where hunger is most prevalent and where there are a lot of gains to be made from investment.

Secondly, the funds currently available are insufficient. Official development assistance (ODA) for agricultural development has remained at just 4 per cent of total ODA. Meanwhile, domestic public expenditure in agriculture is very limited. This is exacerbated by crippling debt in many low-income countries, forcing governments to choose between paying debt or investing in the most basic public services.

Thirdly, due to perceived financial risk, the countries suffering the most from hunger and food insecurity are also those with the least access to a variety of financing.

What are the solutions?

The world needs increased and more cost-effective financing. But there are already financing solutions that could be rolled out on a larger scale for greater impact:

• Blended financing: by combining grants and low-interest loans with technical assistance, risk perception would diminish. Overtime, commercial finance could replace concessional financing. 

• Green, social and sustainability-linked bonds: these can be issued to generate additional finance while promoting a better future for all.

• Solutions based on ability to access financing: countries with limited ability should seek out grants and low- or no interest loans. Those with moderate ability to access financing can increase tax revenues. Countries with high ability can embed food security and nutrition objectives in financial instruments.

• Increase risk tolerance: donors, the private sector and other actors need to increase their risk tolerance and be more involved in de-risking investments in rural communities.

• Remittances: one quarter of remittance flows are saved, invested or used to start businesses. In 2023, remittances reached an estimated US$656 billion, exceeding foreign direct investment and ODA combined.

What IFAD is doing

When it comes to innovative solutions for financing food security and nutrition, IFAD is leading by example:

• We were the first UN fund to receive a credit rating and issue sustainable bonds on capital markets, raising over US$480 million to date.

• Our approach to risk sharing attracts private funding. For example, the Africa Rural Climate Adaptation Finance Mechanism blends different sources of financing to reduce risk and incentivize private financial institutions to lend to smallholder farmers.

• We invest in promising small- and medium-sized enterprises, helping to attract additional investment from the private sector.

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As the clock ticks ever closer to the 2030 deadline for the Sustainable Development Goals, hunger and malnutrition grow. It's high time to put our money where our mouth is and invest in achieving zero hunger.

The State of Food Security and Nutrition in the World (SOFI) is an annual report jointly produced by FAO, IFAD, UNICEF, WFP and WHO.