FRATERNAL ECONOMY SESSION UN Finance for Development Summit “How to Ensure that Financing Reaches the Poorest of the Poor” Remarks

Ladies and Gentlemen,

Dear Colleagues,

With the upcoming 4th International Conference on Financing for Development this year, we have an opportunity to ensure that finance for development reaches the poorest - who are most often rural people, smallholders, women, indigenous communities, youth and other vulnerable groups – and are most likely to be those suffering from hunger, malnutrition, less public services, and multi-dimensional poverty.

Providing additional financing for the transformation of global agrifood systems to be more efficient, more inclusive, more resilient and more sustainable can help to prevent and mitigate food crises and ensure that financing reaches the poorest.

Across all regions, 80 percent of the extremely poor live in rural areas and nearly two-thirds are engaged in agrifood systems. Rural poverty and food insecurity are closely linked. In 2023, around 733 million people globally were affected by hunger.

The key challenges that prevent poor and rural farmers from accessing financing include:

One: High risks and lack of guarantees. The frequent natural disasters, fluctuating commodity prices, and other unpredictable factors can make agricultural income unreliable, further discouraging lending institutions from extending financial support to these farmers.

Two: High costs and low profitability. Reaching poor communities in remote areas is very expensive, due to poor infrastructure networks and the distance between rural areas and financial institutions make it difficult for farmers to access banks, micro-finance institutions, or credit programs.

Three: Low literacy and lack of skills. Many rural farmers are not literate and adopt very basic and less efficient agricultural practices.

FAO plays a pivotal role in facilitating access to formal financial services for rural poor and farmers, including by working with International Financial Institutions to support the establishment and the strengthening of small financing at community level, such as that based on the Grameen Bank model created by the Nobel prize laureate Professor Mohammad Yunus.

This helps the poorest farmers to graduate into a first form of financing, after having been supported through social interventions, such as cash-transfer programs and vocational training.

For poor farmers who can potentially become bankable, FAO promotes and introduce the adoption of innovative financing models, including crop insurance schemes, climate-smart agriculture financing, and digital finance.

These models are designed to reduce the risks for lenders and make financing more accessible to smallholder farmers.

Access to finance is about more than just capital—it is also about building capacity and strengthening institutions.

A significant part of FAO’s work is aimed at increasing financial literacy in rural communities by educating farmers and empowering them with knowledge about financial tools and services.

FAO actively fosters partnerships between smallholder farmers and the private sector, including agribusinesses, banks, and other financial institutions.

By connecting farmers with buyers, markets, and financial services, FAO helps create sustainable, profitable value chains that improve farmers' access to finance and markets.

Ladies and Gentlemen,

Dear Colleagues,

For a truly inclusive transformation of agrifood systems, we need targeted integrated public policies aimed at removing the barriers and discriminations that prevent marginalized groups from accessing finance and facilitate them to market accessibility.

This implies directing flows of capital towards projects and initiatives that are sensitive to the needs of these groups and that do not widen existing inequalities.

Women play a vital role across all segments of agrifood systems – with approximately 36 percent of working women engaged in agrifood systems globally - and meeting their financing needs can help support financing the poorest.

Yet, despite their essential role, women are more impacted by multi-dimensional poverty than men, with gender disparities driven by structural inequalities and discriminatory social norms.

There is currently a large gap in the amount and quality of development finance channeled towards projects and investments that seek to actively promote gender equality and women’s empowerment across agrifood systems of developing countries.

A larger, more efficient, equitable and innovative financing landscape for agrifood systems transformation is key to address the most pressing global challenges and to reach the poorest of the poor and reduce hunger and poverty.

We must urgently address these needs by influencing the ways in which public, private and innovative finance reach the poorest.

Together, we can build a financial architecture that leaves no one behind, and that ensures that every investment contributes to a future where food security, economic development, environmental sustainability and social equity go hand in hand.

FAO is committed to continue working closely with all partners on this ambitious agenda, to achieve the aspiration of the Four Betters as set out in the FAO Strategic Framework 2022-31: Better Production, Better Nutrition, a Better Environment and a Better Life, leaving no one behind.

Thank you.