Eugenio Diaz Bonilla SPECIAL EVENT Funding Food System Transformation in Developing Countries: An example from Ethiopia UNFSS Side Event -- Co-organized by IFPRI, The Alliance of Bioversity International and CIAT, CGIAR SEP 24, 2021 - 08:00 AM TO 09:30 AM EDT

1. Financing food systems
transformation
A flow of funds approach
Eugenio Díaz-Bonilla
Head, Latin America and Caribbean Program
CGIAR/International Food Policy Research Institute
September 24, 2021

2. Financing the transformation of food systems
▪ Countries need an integrated
program…
oShort term: pandemic recovery
oMedium term: transformation of
FS
oObjectives?
oWhat needs to be done by whom
and how?
oCosts?
▪ How to finance the program?
oConsider 6 flows of funds
o2 “internal” to food systems
and 4 “external” to them

3. “Internal” flows within food systems: consumers and producers
▪ Consumer expenditures represent
sales/incomes for food value chain
operators.
▪ Policy interventions can influence
distribution and allocation of internal
flows
▪ Consumers
o Information, education, labeling
o Taxes and subsidies
▪ Producers/operators in value chains
o Regulations related to health and nutrition;
environment and sustainability; labor
practices; advertisement and promotion;
others
o Taxes and subsidies

4. “External” flows: mostly public
▪ INTERNATIONAL DEVELOPMENT
FUNDS (multilateral, bilateral,
philanthropy..)
o Availability and requirements?
o Coordinate programmatically
o Use them more strategically to mobilize
private capital (blended finance, de-
risking approaches…)
▪ PUBLIC BUDGETS
o Expenditures reviews on food systems
o Amount, composition, effectiveness,
efficiency, and equity
o Agriculture, Forestry, and Fisheries (AFF)
500 million USD in Ethiopia (AOI 0.26)
o Social assistance: in Ethiopia 1% GDP
o Instruments and programs: redesigned
cash transfers programs
o Revenues: internal measures……but
crucial international measures needed

5. “External” flows: mostly private
▪ BANKING SECTOR:
o Levels of analysis: Macroeconomic flow
of funds, Regulations, Institutions,
Instruments, Operations/delivery modes,
Financial inclusion (women, ethnic
minorities, youth)
o AFF: Loan portfolio in Ethiopia ~800
million USD (AOI: 0.26)
o Roles and funding of public development
banks, particularly for financially excluded
groups
▪ CAPITAL MARKETS
o ESG and Impact Investors
o Venture capital
o Institutional investors
o Green, Social, and other thematic bonds
(“pandemic recovery bonds”)

6. Putting all together: operational arrangements
▪ Many Ministries and agencies (agriculture,
social protection, health, environment,
infrastructure, public banks…)
▪ Involvement of economic agents in food
systems
▪ Variety of international organizations
(multilateral and bilateral financial,
multilateral technical assistance,
philanthropy, NGOs…)
▪ How can the government put together the
different parts?
o Unified overall responsibility
o Integrated programmatic approach with
organizational and budgetary
implications

7. ▪Thanks….