Most of the people suffering from hunger around the world live in rural areas and engage in agricultural activity.

It is not just a coincidence they also often lack basic services, such as energy and irrigation provision, due to a lack of infrastructure. This lack of infrastructure is an important reason for their vulnerability to hunger.

Financing infrastructure, including roads, storage and localized energy grids will help provide food security for the 821 million people estimated to live in hunger worldwide.

Our report, Financing Rural Infrastructure: Priorities and pathways to ending hunger, highlights how new financial instruments can support a decentralized and robust infrastructure base for farmers, food processors and rural communities.

We break down some of the financing approaches below.     

STORAGE INFRASTRUCTURE

About one third of food produced for human consumption is lost or wasted globally, amounting to about 1.3 billion tonnes per year. Storage facilities, including grain and rice silos, warehouses and cold storages, play a critical role in ensuring food security and ending hunger.

Governments should create dedicated funds with a mandate to provide financing for storage infrastructure projects. Loans with preferential terms, either through a dedicated infrastructure scheme or partner bank, can also be provided to farmers or cooperatives for investment in agricultural storage.

Improved storage infrastructure capacity, quality and practices are a crucial to reducing post-harvest loss.

DECENTRALIZED RENEWABLE ENERGY INFRASTRUCTURE

As much as a quarter of the world’s population lack access to electricity. Almost 85 per centof these people live in rural, dispersed communities across sub-Saharan Africa and South Africa.

Increases in energy prices result in higher food prices, reducing access for poorer households.

Tax incentives at different stages of the decentralized renewable energy (DRE) transaction, such as setting up wind turbines, can encourage deployment both on the supply and demand side. Concessional loans are also a viable option. These loans, with preferential interest rates provided either by government or international development agencies, enable DRE projects to have access to finance at a lower cost.

Energy is a game-changer in agriculture. It’s essential for a range of tasks, from operating machinery to powering and lighting facilities to charging communication devices.

FEEDER ROADS

Without access routes to obtain inputs and reach markets, other food security investments, including technical assistance and access to finance, underperform.

One approach to financing roads is under the availability payment scheme, in which governments would pay a predetermined amount for a private party to operate and maintain the roads. Co-financing road projects is another viable option. When municipalities, national governments or multilateral development banks (MDBs) co-invest in a project, it gives a strong signal to investors about the project’s legitimacy.

Investing in feeder roads can contribute to growth, poverty alleviation and food security.

IRRIGATION INFRASTRUCTURE

Agricultural productivity resulting from irrigation can be more than twice as productive on a per-hectare basis than rainfed production.

This is why investing in water distribution is critical. Public-private partnerships are one financing option. This entails engaging with private sector in either the construction or maintenance of irrigation and drainage infrastructure, helping spur agricultural productivity.

Access to reliable water sources positively contributes to women’s empowerment through increased asset ownership and control over resources, better sanitation, local job creation and food security.