The Role of Development Finance Institutions in Addressing Food Security in Vulnerable Contexts

The challenges of food security and economic development in fragile contexts have become urgent. This report asks what more can be done to address food security in such contexts using private sector solutions.

The challenges of food security and economic development in fragile contexts – low- and middle-income economies frequently subject to conflict, political instability, macroeconomic deficits and natural disasters, the effects of which commonly interact – are difficult to address. Fragile economies can grow, but all too often the gains from a growth spurt are lost to recessions. Running businesses can be difficult; business failure is more likely in settings of fragility, violence and conflict. Countries in fragile and conflict-affected situations thus tend to have fewer and smaller investment opportunities. They have fewer sponsors that meet the scale, standards and financial backing of commercial investors and lenders.

This report focuses on 14 countries (also called the 10+1 group) seen by the UK Foreign & Commonwealth Development Office (FCDO) as especially at risk of food crises, emergencies and famine: Afghanistan, Central African Republic (CAR), Democratic Republic of Congo (DRC), Ethiopia, Nigeria, Somalia, South Sudan, Sudan, Syria and Yemen and the region of Burkina Faso, Chad, Mali and Niger. It examines DFI practices and investments, and discusses the ways in which DFIs can become more interested in investing in the 10+1 countries, especially to address food security.

Key findings focus on investment channels for increased food security; DFIs as capital influx to food value chains; diversifying the portfolio of recipients of DFI investments; incentives for DFI investment; further research on the most appropriate activities to be suppported by DFI finance.