Enhancing Food Security through Finance-Enabled Food Systems Transformation

This paper examines the untapped potential of
inclusive finance to help address today’s new food
security challenges. The analysis suggests that the
role of inclusive finance in addressing the pressing
food security challenges of today is two-fold:
First, at the retail level, inclusive finance supports local
financial service providers (FSPs) to tailor their services
to meet investments required by key actors engaged in
specific ‘high-impact’ agricultural value chains (AVCs)
contributing the most to nutrition and sustainability
outcomes in LMICs—mainly smallholder farmers
and agricultural small- and medium-sized enterprises
(agri-SMEs).

Second, at the wholesale level, inclusive finance
supports Development Finance Institutions (DFIs),
donors, and global or regional impact investors to
provide greater flexibility to local FSPs and investors—
i.e., their investees—in adjusting their retail financial
services.

To tackle this, CGAP proposes a multi-step framework
to focus high-level strategies used by local FSPs and
impact investors on more effectively contributing to
food security.

This paper calls on global and local stakeholders—
including FSPs, DFIs, donors, and impact investors—
to act. Together, these actions can help scale nutritious and
sustainable food systems, boost AgTech adoption, and
support smallholders and agri-SMEs who are crucial to
sustainable and nutritious food supply in LMICs.