Promoting rural development in poor regions (IFAD) II

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The International Fund for Agricultural Development (IFAD) is an international financial organization and specialized agency of the United Nations. The aim of the IFAD is to mobilize resources to increase food production, particularly in the Heavily Indebted Poor Countries (HIPC), the group of developing countries with the greatest obstacles to development. The Fund grants these countries loans on preferential terms, which are primarily intended to flow into development projects for small farmers and the landless. Global demand for food will double in the next 50 years, while the natural resources required for agricultural production are becoming scarcer, particularly due to degradation. Climate change also increases production risk and reduces production potential. The ongoing transformation of global and local food markets is creating new and increasing challenges, especially for small farmers. In order to achieve an improvement in food production and the nutritional situation, a massive expansion of investments in agricultural development measures and the corresponding financing volume is necessary. At the same time, the great need for support in the Middle Income Countries (MICs) ties up concessional resources that are lacking in the poorer countries. In this context, IFAD was asked by its Governing Council to identify new and innovative sources of financing. For this purpose, the Additional Resource Mobilization (ARM) initiative was created in 2012. Against this background, KfW has signed a framework agreement with IFAD with a basic refinancing intention of EUR 400 million. The total volume is expected to be issued to IFAD in four partial loans of EUR 100 million each on the basis of separate Individual Loan Agreements (ILA). The promotional loan (FöK) enables IFAD to cover the identified additional financing needs, expand its development activities overall and at the same time concentrate the more concessional resources on the poorest countries, particularly in Africa. This can significantly increase IFAD's contribution to combating rural poverty and improving food security.