Engaging with the Private Sector

Tony Simons, ICRAF, KenyaAgriculture Advantage, 13 Nov 2017

UNFCCC COP23, Bonn

Public-Private Partnerships, Impact Investments and Blended Finance – increased scope for scaling up climate actions

Public Goods

Private Bads

Private Goods

Public Bads

We need to be smarter at linking public goods with private interests

ODA is not Development ……

$3 in remittances

$6 in FDI

$24 in domestic private sector spend

$35 in developing country Government spending

For every $1 in ODA, there is:

ODA may remain largest revenue stream for some but weneed to better connect it to other finance sources

• Access to information: greater understanding of the issues (allowed in the business conversations)

• Access to expertise and networks: complementary skills to our own

• Fitness for purpose: creating more appropriate products and services

• Cost-sharing/reduction: avoiding duplication, leveraging joint investments

• New paradigms/models: developing novel approaches for complex challenges

• Upskilling staff: enhancing competencies and skills in our staff

• Accelerating impact: scaling up and out

• Reflected glory: partnering with credible businesses

Benefits of engaging with the Private Sector

Risks of the Private Sector?

- Reputation risks of partnering with a questionable company

- Uncertainty of the company motives

- Conflicts of interest

- Upfront losses for longer term pay-off (may not arrive)

- Suspicions from other partners

- Bankruptcy of company (non-delivery, risks to farmers)

Tropical Landscape Finance Facility (Indonesia)

• Launched 26 October 2016

• $1 billion Loan Fund coupled with matching Grant Fund

• Main investors BNP Paribas, USA, ADM

• Domiciled in Hong Kong (ADM Capital)

• TLFF Secretariat in Jakarta (ICRAF/UNEP)

• Eligibility: Renewable Energy & Landscape Transformations

• Evidence-based investments, shared risks, technical support

SmallholderFarmers

Credit

Equity

Govt

SMLE,Coop

LocalNGO

INGO,IARC

Micro-finance

premium, levy, tax,revolving fund

Converters:Money into 5 Capitals

Offtakers:Harvest dividend of 5 capitals

BuyersAggregatorsProcessorsSociety

Repayers:

FARMERS

Technical, social, admin, policy, financial, input support

Performance based, conditional incentives

Goods

&

Services(5 Capitals)

Transformers:5 Capitals as inputs

Produce:5 Capitals Value-added

Various Finance Blending Options Available

Grants

Financing at Landscape ScaleFinancing at Landscape Scale

Grant Financiers

We have so many viable project ideas …..

but so little finance

Credit Financiers

We have so much readyfinance …..

but so few viable projects

Engaging with the Private Sector

Tony Simons, ICRAF, KenyaAgriculture Advantage, 13 Nov 2017

UNFCCC COP23, Bonn

Public-Private Partnerships, Impact Investments and Blended Finance – increased scope for scaling up climate actions