Public Development Banks: A Key Force in Transforming Global Food Systems

PDBs wield significant financial influence, with investments reaching up to US$1.4 trillion annually—surpassing both the microfinance sector and all official development assistance (ODA).

Representing two-thirds of formal agricultural financing, Public Development Banks (PDBs) have a pivotal role in transforming global food systems that currently struggle with sustainability and leave millions hungry. Alvaro Lario, President of the United Nations' International Fund for Agricultural Development (IFAD), emphasized this as he attended the Finance in Common Summit (FiCS) in Cape Town, South Africa, from February 26 to 28.

The Financial Power of Public Development Banks

PDBs wield significant financial influence, with investments reaching up to US$1.4 trillion annually—surpassing both the microfinance sector and all official development assistance (ODA). Globally, the 522 PDBs hold assets amounting to US$23.2 trillion, representing 10-12 percent of worldwide financing. These institutions play a critical role in making food systems more sustainable, resilient, and equitable.

Despite their financial capabilities, PDBs currently underinvest in agriculture, particularly in low- and middle-income countries, where the agricultural sector continues to be a primary contributor to GDP. The need for agricultural investments is urgent, as today's food systems leave over three billion people unable to afford a nutritious diet. Small-scale food producers, who form the backbone of global food production, frequently face poverty and hunger, with approximately 730 million people suffering from food insecurity today.

The Urgent Need for Increased Agricultural Investment

To transform food systems, an estimated additional US$300-400 billion annually is required until 2030. However, agricultural ODA has stagnated at 4-6 percent of total ODA for the past two decades, reaching just US$10.5 billion in 2022—far below the necessary levels. Moreover, small-scale producers receive only 0.8 percent of global climate finance, despite their essential role in food security and sustainability.

In response to this challenge, IFAD and the French Development Agency (AFD) initiated a groundbreaking coalition of PDBs investing in agriculture in 2020. This coalition led to the establishment of the PDB Platform for Green and Inclusive Food Systems, which IFAD has hosted since 2021. The platform has rapidly gained traction, now bringing together about 140 national PDBs investing in agriculture, four regional PDBs, and eight regional networks spanning over 95 countries in the Global South.

Empowering PDBs for Greater Impact

The PDB platform is designed to support these banks in expanding their investments and aligning with global development and climate objectives. It facilitates knowledge exchange, capacity building, peer-to-peer learning, and technical support. PDBs participating in the platform benefit from training in agroecology and resilience-building techniques. Additionally, they gain access to environmental assessment tools to enhance their ability to evaluate risks and the impacts of green investments.

Building on the platform's success, IFAD is actively mobilizing additional resources, including US$1 million from the Global Environment Facility (GEF) through the Food Systems Integrated Program, co-led by IFAD and the Food and Agriculture Organization of the United Nations (FAO). Since its inception, the platform has received continuous support from AFD and financial backing from both AFD and the European Union.

Strengthening Partnerships for a Sustainable Future

At the Finance in Common Summit, IFAD will further its commitment to sustainable agricultural investment by signing a Memorandum of Understanding (MoU) with the Development Bank of Southern Africa (DBSA). This partnership aims to leverage additional resources and expertise to enhance development, poverty reduction, and climate resilience across Africa.

Finance in Common Summit 2025

The Finance in Common Summit (FiCS) 2025, held in Cape Town from February 26-28, convenes global leaders, PDBs, and key stakeholders to reshape sustainable finance. As hunger and poverty rise and climate change accelerates, this summit provides a critical platform for strengthening financial support for development and climate action. The discussions will focus on enabling developing nations to achieve the Sustainable Development Goals (SDGs) and meet the objectives of the Paris Climate Agreement.

With the collective financial power of PDBs and international cooperation, the path to a more sustainable and food-secure world is within reach. The strategic mobilization of resources and partnerships will be key in ensuring that food systems are resilient, inclusive, and capable of feeding the global population sustainably.