Build Malawi Window: A Specialized Structured Blended Finance Vehicle for Agribusiness
Allocated by Joint SDG Fund (USD)
Total Funding (USD)
Financial Leverage (USD)
Malawi records one of the lowest rates of investment in Africa with an average of only 15 percent of GDP invested from 2000 to 2018, compared to 24.5 percent in Tanzania and 34.7 percent in Zambia. Such an environment obstructs small and medium enterprises' (SMEs) access to finance. This means that many businesses run by women and other vulnerable groups are unable to grow, and Malawi's economy is unable to become inclusive. Malawi’s low rates of impact investing are primarily due to the relative infancy of the market, particularly for non-Development Finance Institution investors, coupled with falling levels of Foreign Direct Investment.
The programme will reduce poverty, hunger, and inequality by creating jobs and supporting small businesses in the country’s severely undercapitalized agricultural sector. A structured blended finance vehicle, the first of its kind in Malawi, will aim to mobilize US$35 million. The Fund will invest patient capital. A technical assistance facility will help source an investable pipeline, assist businesses to improve quality of their growth and SDG impact, and reduce associated risks and costs.
The Joint Programme will work to end poverty and hunger by increasing investment in agriculture and other manufacturing and service supply-chains, as well as increasing productivity within these supply-chains through technology and innovation; and achieving gender equality by supporting business where women are significantly represented in boards, management, staff, suppliers, or buyers. Targets for the programme include: 3,000 jobs (30% minimum for women and youth) created; 75,000 small-scale producers integrated into investees supply chains; participating small-scale producers’ income increased by 30%; expanded fiscal space with aggregated income taxes of $19.3 million; and 15 supply chains streghtened.
Resilient infrastructure is not only about building roads or bridges or power plants, but it also addresses the fundamental needs of people, enabling them to live a dignified life. Infrastructure faces increasing risks from natural disasters and a changing climate, leading to systemic failures that result in people being unable to go to work or receive timely medical care or education. These disruptions caused by natural and man-made hazards, as well as poor maintenance and mismanagement of infrastructure, cost at least USD $390 billion a year in low- and middle-income economies.
The need to adapt and invest in resilience is an urgent priority. On average, the net benefit of investing in resilient infrastructure in low- and middle-income countries would be $4.2 trillion with $4 in benefit for each $1 invested. Investments in resilient infrastructure systems are only possible if the right financing is made available at the right time.
People and Health
The effects of the pandemic hit all developing countries, but specific characteristics make some countries more vulnerable than others. The World Health Organization recognized that the conditions in which people are born, grow, work, live and age significantly shape and affect their health. To achieve the 2030 Agenda, governments need to accelerate economic development in a way that will allow better access to healthcare and other basic services. To ensure people stay healthy, it is essential to address the social determinants of health and empower vulnerable groups from minorities to adolescents and women.
Access to essential services for vulnerable groups, and particularly women, can be facilitated through solutions that promote entrepreneurship and self-empowerment. Improvements in health security can be achieved by strengthening core public health functions, but also by smartly investing in systems that cater to preparedness and response, as well as innovative approaches (like telemedicine and digital access, energy-efficient vaccine cold chains, to name a few).
Agriculture and Food Security
With rapid economic growth and increased agricultural productivity, the number of undernourished people has dropped by almost half in the new Millenium. However, after years of steady decline in malnutrition, numbers are on the rise once again. Current estimates show that nearly 9 percent of the world population is still hungry. The impacts of climate change and conflicts take an even higher toll - resulting in an estimated 135 million people suffering from acute hunger. The COVID-19 pandemic could almost double that number, adding 130 million more people at the risk of suffering acute hunger by the end of 2020.
“Persistent and chronic hunger is the result of poverty, inequality, conflict, poor governance and marginalization of the most vulnerable,” - Gilbert F. Houngbo, President of IFAD. Poverty is deeply intertwined with successes or failures in agriculture and food security, with the majority of the rural poor depending on agriculture and natural resources for their livelihoods. Yet, because they lack the resources or knowledge to invest, they cannot benefit from new technologies or access to markets that would boost their income and resilience. We need solutions that transition agriculture into something that can be a part of a new, sustainable future. Still “... we have enough wealth in the world to feed everybody” - WFP Chief David Beasley.
Natural Ecosystems and Climate Action
The world’s growing global population demands more food, fuel, fiber, and feed. This demand drives the expansion of industrial-scale agriculture, infrastructure and extractive industries, resulting in massive deforestation, conflicts over land, overfishing, and human rights violations. Investment in fossil fuels continues to be higher than investment in climate action at a scale of about USD $100 billion. Financing that promotes deforestation outpaces funding for forests by 40 to 1, according to the Climate and Land Use Alliance. With the appropriate financing and investing, and backed by the right policies and practices, the world could protect nature and mitigate and adapt to climate change.
Since the 1880s, the average global temperature has risen by 1.1 degrees Celsius, driving substantial physical impact around the world with unknown severity and frequency. Global temperatures are projected to rise by up to 3.2°C by 2100, which is only 80 years away. With average temperatures on the rise, catastrophic hazards including heat waves, floods, droughts and rising sea levels will only intensify. These risks pose the largest socioeconomic risk. Combatting these risks requires policy makers and business leaders to collaborate and catalyze investment. Already, global markets for climate-smart businesses and technologies have expanded at the pace of USD $1 trillion annually. IFC shows 21 emerging market economies promise USD $23 trillion in climate-smart investment opportunities through 2030.
Oceans are getting warmer, stormier and more acidic, impacting the health of sensitive marine ecosystems, such as coral reefs. Changes to the ocean’s temperature, chemistry, flow and food webs have broad implications for the global economy. The monetary value of the world’s oceans has been estimated at US$24 trillion by the World Wide Fund for Nature. This wealth is at risk because overfishing, pollution and climate change put an unprecedented strain upon marine ecosystems.
While some countries are set to maintain or improve catch and profits, others around the world who rely on healthy oceans and marine resources will see decreases in fishing, food and prosperity. Ocean reefs contribute to the livelihoods of at least 500 million people worldwide, mostly in less-developed economies, generating US$36 billion per year for the global tourism industry. Coral reefs are home to some of the planet's most biodiverse ecosystems. They provide vital protection from coastal flooding and storm surges. Investing in scalable businesses that build resilience in coastal ecosystems and create jobs not only allow us to save our planet, but also to build more resilient economies.