Increasing funding flows to nutrition
Market constraints – key among them a lack of access to capital – have impeded innovation and limited the scale-up of promising approaches to bring affordable, safe and nutritious foods to market. The GIIN Annual Impact Investor Survey found that in 2017 only 7% of total impact investing assets were allocated to food and agriculture, comparatively 22% were dedicated to housing.
The idea of a fund focused on improving the quality of food resonates well with investors, but viable deal flow for nutritious and safe foods provided by SMEs is lacking or too risky and investors are looking for agencies which can work alongside the investee to help de-risk investments from both thematic and financing perspectives. Blended financing approaches can expand the impact of nutrition interventions by leveraging additional sources of capital and reducing market constraints.
GAIN’s Nutritious Foods Financing Program catalyses private sector finance to help scale up locally produced nutritious foods in Africa and Asia. It aims to fill gaps in capital and debt markets available to small and medium sized food producing companies, and facilitates the cooperation between governments and companies to build a more enabling environment required to speed up the roll out of new nutritious food products.
The program facilitates multi-stakeholder engagement processes, knowledge of capital markets and financing tools, and broad networks within the investment and finance communities to attract investment capital and design initiatives that will contribute to reducing malnutrition through:
- Alleviating constraints and creating incentives for large and small companies to focus on and invest in nutrition;
- Building on and maintaining the medium- and long-term sustainability and predictability of resource flows to the nutrition sector; and
- Creating an opportunity for investors seeking new themes for investment which improve development outcomes.
Since its establishment in 2002, GAIN has sought to strengthen market-based approaches and private sector engagement in improving large-scale and sustainable access to nutritious and safe foods among vulnerable populations in developing countries. GAIN has built several finance modalities, including a suite of nutrition investment funds. Lessons learned from these funds provide a foundation for scaling them up and channelling greater flows of capital into the nutrition sector.
The Nutritious Food Financing Program builds on GAIN’s significant capacity in private sector engagement and support for nutrition, and more than a decade of experience in blended finance. The program will develop an investable pipeline, and work with partners to build a Nutritious Foods Financing Facility (N3F). It will consolidate GAIN’s current private sector engagements with over 1,400 companies in Africa and Asia to build a pipeline of viable, investable opportunities and the establishment of a new mechanism(s) which provide access to private sector investment for SMEs producing safe nutritious foods. It thus builds on, strengthens and, where appropriate, works through existing GAIN programs targeting the private sector.
While the project is intended to mainstream a way of doing business by all GAIN market-based projects contributing to coverage, ambitions for the N3F will be to attract sufficient capital to reach 5 million people over 5 years.