Inclusive markets and impact investment

According to the Food and Agriculture Organization of the United Nations, about 80% of the world's food is produced by smallholder farmers, but they often lack access to climate-smart and nutrition-sensitive products and services. Meanwhile, women, youth, and other marginalised groups face even greater barriers in accessing resources required for adopting innovative climate-smart practices, such as credit and land. Moreover, according to the Organisation for Economic Co-operation and Development (OECD), only one third of total public climate finance in 2020 was allocated for adaptation action.

At SNV, we believe that sustainable and inclusive agri-food markets are essential for the livelihoods of smallholder farmers, youth-led enterprises, pastoralists, and other resource-poor market actors. Our Inclusive Markets and Impact Investment framework approach aims to improve the business performance and diversity of these market actors while also promoting the adoption of climate-smart and nutrition-sensitive products and services.

The challenges in developing inclusive and equitable market systems

However, developing inclusive and equitable market systems is not without its challenges. These include addressing systemic issues related to access to products and services, such as inputs, knowledge and information, markets, and finance, as well as improving the business performance and diversity of market actors. Additionally, creating an enabling environment for GESI-responsive climate-smart agriculture requires advocating for supportive policies and practices of governments and the private sector.

How we achieve our goals

To address these challenges, our work involves four key components that are mutually reinforcing:

• Climate-friendly and nutrition-sensitive market transformation: We support the demand and supply of climate-smart and nutrition-sensitive products and services, practices, and technologies for producing, processing, transporting, and consuming food. We also build capacity and empower smallholder farmers, pastoralists, and their organisations, CSOs, and SMEs to be included and function as empowered actors in formal and informal markets, which account for the majority of food production in Africa and Asia.

• Inclusive business models and diverse market actors: ·         We work with market actors such as input suppliers, agro-dealers, agro-vets, cooperatives, extension service providers, traders, off-takers, processors, and retailers to improve their ESG (Environmental, Social, and Governance) performance, incorporating low-income groups in business models as buyers, suppliers, distributors, or employees. We aim to build on our track record of youth and women's economic empowerment, public-private partnerships, and inclusive business.

• Public-private investment in climate adaptation: We facilitate investment and business growth in climate-smart and nutrition-sensitive value chains and promote investment in climate adaptation/mitigation, sustainable land and water use, and ecosystem restoration. We direct climate financing mechanisms to target small-scale initiatives in adaptation and mitigation activities that have lower barriers to entry for youth, women, and other marginalised groups.

• GESI-responsive agriculture: We advocate for and support the development of supportive policies on market functioning regarding coordination mechanisms and regulatory frameworks issued by governments and private sector. We aim to create a more enabling environment for women's entry into sectors traditionally dominated by men and retain control over their businesses as they become more profitable. We also foster the participation of smallholder farmers, including youth-led enterprises, pastoralists, and civil society, with a special focus on marginalised groups' representation to influence the design and implementation of policies and practices of national and sub-national governments and the private sector.

Connecting the dots: the interconnectivity of SNV's agri-food approaches

Transforming food systems requires addressing multiple interconnected aspects simultaneously and cannot be achieved through a single approach alone.

The Inclusive Markets and Impact Investment approach is a critical component of SNV's agri-food sector. By transforming markets for climate-smart and nutrition-sensitive products and services, this approach promotes the development of businesses that incorporate smallholder farmers and pastoralists in their business models, produce and sell healthy, nutritious products and services to rural and urban consumers, and provide climate adaptation services. Through increasing investment from the public and private sectors and creating an enabling environment for roll-out of GESI-responsive climate-smart agriculture at scale, this approach helps to scale the outcomes of other framework approaches, such as the Resilient and Productive Landscape, Healthy Diets and Sustainable Consumption, and Youth Employment and Entrepreneurship approaches.

By connecting the dots between various approaches, the Inclusive Markets and Impact Investment approach contributes to SNV's overarching goal of achieving a sustainable and resilient agri-food system that delivers food security and adequate nutrition for people in all their diversity while safeguarding the economic, social, and environmental bases for future generations.