From global commitment to local impact: scaling up development finance

As the world grapples with rising protectionism, volatile markets and persistent geopolitical tensions, the stakes for developing countries have never been higher. The future of inclusive, sustainable development – and with it, the prospects for billions of people – hinges on affordable, long-term financing. Against this urgent backdrop, the Fourth International Conference on Financing for Development (FfD4), taking place in Seville, Spain, from June 30 to July 3, presents a vital opportunity for coordinated global action.

Multiple crises have reshaped the global financing landscape over the past two decades since the first International Conference on Financing for Development in Monterrey, Mexico, in 2002. Financing gaps have widened, official development assistance is declining, and private capital is retreating. Debt burdens are soaring: Nearly 40 percent of developing countries spend over 10 percent of their revenues on interest payments. Developing economies, especially those of the least developed and low-income countries, are increasingly being left behind. As a result, even as the cost of inaction mounts, the space for investment in critical areas like rural transformation, food systems and climate resilience is shrinking.

The international community, particularly international financial institutions (IFIs) such as the International Fund for Agricultural Development (IFAD), plays a critical role. As a UN specialized agency and an IFI in its own right, IFAD brings a unique perspective that connects the multilateral development agenda with tailored, country-level financing solutions focused exclusively on agrifood systems and rural development. We work where the needs are greatest and the returns are highest. But like other institutions, we face the challenge of doing more with less in an increasingly constrained environment.

FfD4 must deliver solutions that go beyond business as usual. Key emerging priorities in the process, such as domestic resource mobilization, increased private sector engagement, stronger multilateral development banks (MDBs) and systemic reforms of the international financial architecture, speak directly to IFAD's strengths. Our track record in fostering inclusive financial ecosystems, expanding market access, and building rural resilience positions us to be a central player in shaping a forward-looking financing agenda.

Among the key solutions to creating a fairer and more inclusive financial architecture are three closely interlinked priorities. First, we must unlock greater private and public investment in rural development by supporting governments in creating stable, predictable environments that attract private capital to high-impact sectors.

IFAD partners with public development banks (PDBs) through the AgriPDB Platform to strengthen their role in rural finance. With 522 PDBs holding $23.2 trillion and providing two-thirds of agricultural financing, IFAD supports innovative financing, such as on-lending in West Africa, and has made its first direct loan to Brazil's National Bank for Economic and Social Development to promote small-scale agriculture and climate finance.

Since 2006, IFAD has also supported over 70 remittance-linked projects in 50 countries, launching initiatives with Italy and the EU to enhance remittances for rural resilience, inclusion and climate adaptation. Viewing remittances not just as private flows but as de facto public goods, IFAD urges governments to integrate them into development plans, foster competitive services and expand rural access to remittance-linked financial products. Scaling successful models through partnerships is crucial to expanding their impact.

Second, we must address the current debt crisis and structural barriers that constrain sustainable development. IFAD supports countries in freeing up fiscal space through innovative instruments, while aligning investments with country-level strategic priorities.

By channeling resources into rural areas, we help reduce debt-to-GDP ratios through initiatives that generate decent jobs for young people, support local food production and markets, build resilience to climate shocks and expand inclusive economic opportunities. Central to this effort is better leveraging concessional finance. IFAD's mandate is to mobilize and deliver concessional resources for agricultural investments in the poorest and most fragile settings.

As an assembler of finance, we blend local, regional and global public and private funds to deliver grants and loans on highly concessional terms, ensuring that critical investments are responsive to local needs and reach those who need them most.

Third, we must strengthen impact measurement and accountability by first supporting decision-makers in tracking, allocating resources and optimizing financing flows for food systems transformation, and second, ensuring accountability for the use of resources through systematic tracking and reporting on results and impact.

IFAD leads in this area through its "3FS" methodology – Financial Flows to Food Systems – which aims to direct more and better financing to the food systems that underpin rural livelihoods, climate resilience and sustainable economic growth. This approach strengthens the case for coordinated investment in food security, nutrition and inclusive rural transformation, particularly in the face of widening financing gaps.

Complementing this, IFAD systematically conducts rigorous impact assessments on a representative sample of at least 15 percent of its portfolio per replenishment cycle, making it the only international financial institution to apply such a comprehensive and consistent approach. We can demonstrate that our investments improved the incomes of 77.4 million rural people by at least 10 percent over a three-year period.

The Global South is increasingly shaping the international financing for development landscape, not only as recipients of grants and concessional finance but also as emerging donors and knowledge partners. Through South-South and Triangular Cooperation (SSTC), countries such as China are helping generate and scale up evidence-based solutions across developing regions.

China has positioned itself as a global champion of SSTC, particularly within IFAD's framework. Its leadership is exemplified by a $20 million contribution to the IFAD-China SSTC Facility, which supports the exchange of innovative, context-relevant solutions across countries of the Global South. This facility has become a vital mechanism for mobilizing expertise, technology and practical approaches to rural transformation.

Beyond financial support, China is actively facilitating global learning and peer exchange. A recent example is the SSTC learning event held in Fenghuang County, Hunan Province, where technology-driven, innovative solutions for rural women's empowerment, developed under IFAD-financed projects, were shared with a global audience. This underscores SSTC's potential as a catalyst for innovation and scaling up in digital agriculture and rural development.

These grassroots experiences in Fenghuang are not only revitalizing local communities but also offering practical lessons for other developing countries. As China deepens its contribution to SSTC, such stories of inclusive rural transformation will resonate far beyond its borders and provide valuable inspiration for global conversations at FfD4.

Now is the time to intensify our collective efforts and unlock the full potential of rural economies through scaled-up investment. The Addis Ababa Action Agenda adopted in 2015 explicitly recognized IFAD's vital role in mobilizing investments that enable rural people living in poverty to improve food security, nutrition, incomes and resilience, affirming IFAD as a key partner in shaping the international financing for development architecture.

As we approach FfD4, there is a critical opportunity to agree on policies that close the financing gap, not just by increasing funds, but by ensuring finance is long-term, predictable and meets the needs of the most vulnerable. IFAD is ready to work with governments, including China, partners and the private sector to make development finance more inclusive, effective and resilient.