The smallholder Investment Case

The Global Landscapes Forum organised an event to explore ‘The Investment Case’ for sustainable landscapes in London on 6 June, bringing together experts from the financial services industry with the corporate sector, government and academia to discuss investment in sustainable landscapes. The SHARP Secretariat has produced a summary of messages and lessons from the perspective of the SHARP partnership.

Some of the key challenges raised were:

  • Although the international banking sector has signed up to sustainability standards, many local lenders are have not (yet) done so
  • It is not yet clear who could/should aggregate smallholder land managers to develop a viable portfolio for investment. Last mile execution demands capable local partners in the field. There are examples of farmer associations/cooperatives, social NGOs working with smallholders, local microfinance institutions (MFIs) and agribusiness playing a role, but few taken to a scale required scale for commercial investment
  • Expectations of commercial investors on return-risk balance and duration of investments are not well aligned with needs for long term landscape resilience. The cost of commercial capital/private equity is still too high (even with today’s low base rates)

 

Positive messages and areas of opportunity also emerged from the discussions:

  • There is every indication that there is capital out there looking for viable projects that can deliver sustainable management and returns from SH production landscapes
  • Conditionality on lending arrangements has positive potential  to leverage improvements in SH production practice
  • Reliable agri-product cash flows derived from responsible supply chains could provide the security for scaling up lending to smallholders without capital assets.
  • Grant/philanthropic capital can serve to unlock impact investment which can in turn pave the way for access to commercial capital

 

Watch a short video summarising the event in London.

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