The Asian Development Bank (ADB) and leading impact investment management firm BlueOrchard Finance Ltd have signed a $50 million risk-sharing agreement to expand microfinance coverage in ADB’s developing member countries (DMCs).
BlueOrchard is the first impact investing asset manager to partner with ADB’s Microfinance Program. Under the program, the company’s flagship fund, the BlueOrchard Microfinance Fund, will invest in selected microfinance institutions (MFIs) and banks. ADB will share the default risk of these investee entities to help expand the fund’s risk appetite and deployed capital into DMCs, and encourage greater flow of private sector funds to deepen financial inclusion.
“Loans provided by microfinance institutions are a lifeline to underserved clients such as low-income households and small businesses, including those which are owned or led by women, to help them withstand and rebound from the hardships imposed by the COVID-19 pandemic,” said ADB Director General for Private Sector Operations Suzanne Gaboury.
“This partnership will strengthen microfinance as a tool to build economic resilience, reduce gender disparities, and support recovery across our region,” added ADB Microfinance Program Lead Anshukant Taneja.
“We are honored to be the first impact investing firm to partner with ADB’s microfinance program and look forward to working together to promote financial inclusion across Asia,” said BlueOrchard Chief Executive Officer Philipp Mueller.
The agreement will focus on expanding ADB and BlueOrchard’s microfinance coverage and facilitate entry to new markets and segments, including financing for climate change adaptation and resilience building. Over the next 4 years, more than 150,000 borrowers and microenterprises across India, Indonesia, the Philippines, and other developing countries are expected to receive financing under this partnership.
The risk-sharing arrangement will help MFIs access funding for on-lending activities amid liquidity and funding challenges. This will expand financial inclusion, helping drive the achievement of Sustainable Development Goals, such as reducing poverty and gender inequality and improving access to clean water and sanitation.
BlueOrchard, headquartered in Switzerland and with regional offices in Asia, Latin America, and Africa, was founded in 2001 as the first global commercial manager of microfinance investments. It has invested over $8 billion in more than 90 countries and provided access to financial services for 216 million people. The company is a member of the Schroders Group.
Launched in 2010, ADB’s Microfinance Program has supported $1.8 billion in loans and helped mobilize $881 million in cofinancing. It has provided access to microloans for more than 8 million borrowers, 98% of whom are women. Microfinance has helped improve livelihoods, reduce poverty, promote gender equity, and promote growth of microenterprises and employment.
World Bank Supports Cabo Verde to Build a Sustainable and Equitable Recovery
The World Bank approved a $30 million Development Policy Financing Operation on December 6 to support the Government’s efforts to strengthen policies for a sustainable, equitable, and greener recovery from the COVID-19 crisis in Cabo Verde.
“As Cabo Verde is recovering from the largest economic contraction in history and leveraging the moment to embark in an ambitious reform agenda, this operation supports policy action to lay the foundations for economic recovery by reducing fiscal risks and improving debt transparency, strengthening the resilience of poor and vulnerable households, particularly women, and enabling a sustainable private sector-led recovery,” says Nathan Belete, World Bank Country Director for Cabo Verde.
This operation, the first in a series of two, is closely aligned with the priorities the Government outlined in its recovery strategy, Cabo Verde Ambição 2030.
The program supports reforms to reduce fiscal risks and improve debt transparency by strengthening fiscal risk management and improving the quality, frequency, and coverage of public debt reporting, including from State-Owned Enterprises. It also builds on the COVID-19 response program to strengthen the social protection system to enable a faster and better targeted response to external shocks. Finally, the operation promotes socially and environmentally responsible private investment in tourism, aquaculture, and tourism.
In sum, the program of reforms supported by the operation is expected to have positive effects on poverty, positive social and environmental impact, and increase the resilience of the economy to external shocks.
The World Bank supports Cabo Verde through 9 national IDA/IBRD projects for a net commitment of $186 million, one regional project for an amount of $15 million along with a comprehensive program of analytical services. These activities contribute to the country’s overall economic growth and development through the implementation of economic reforms related to transport, governance, private sector development, tourism competitiveness and diversification, social and productive inclusion, debt management capacity, human development, and digital transformation.
With 1.3 million annual road deaths, UN wants to halve number by 2030
Road accidents are still responsible for 1.3 million annual deaths and 50 million injuries all over the world, but the United Nations has a Global Plan to halve road deaths and injuries by 2030.
The plan is a key part of the Decade of Action for Road Safety 2021-2030 and was discussed, on Friday, at an event supporting the High-Level Meeting on Global Road Safety at the General Assembly in New York.
“Road accidents are entirely preventable, and our priority must be exactly that, to implement preventive measures”, he continued.
Mr. Shahid highlighted the importance of the Global Plan, but warned that “unless it is implemented, it is nothing more than a plan of action.”
Looking ahead, he said implementation by national and local governments will require two main elements: financing and the engagement of relevant actors.
With a notable funding gap in most countries, 90% of road deaths happen in low and middle-income countries.
For Mr. Shahid, this means that achieving the targets will require increased support to these countries.
Road traffic crashes are also the leading killer of children and young people worldwide, aged five to 29.
As things stand, they are set to cause a further estimated 13 million deaths and 500 million injuries during the next decade.
During Friday’s event, Member States heard from families who lost loved ones, politicians that led the way, grassroot youth working on advocacy programs, and both government and non-governmental organizations.
For the President of the General Assembly, “each is a story that will foster greater understanding and knowledge on how we can better engage on global road safety.”
Mr. Shahid invited Member States, civil societies, and the international community to use these exchanges “as an opportunity to build collective commitments and strengthened partnerships”.
“Global road safety is a shared responsibility that must be prioritized and integrated”, he argued.
For him, achieving safety would contribute to the achievement of Sustainable Development Goals under education, health, and the environment, among others.
The High‑Level Meeting on the topic will be held in July next year, under the theme “The 2030 horizon for road safety: securing a decade of action and delivery”.
Strong Producer Organizations Key to a Vibrant Farming Sector
Scaling up agricultural production among small farmers through clustering and organizing them into cooperatives and various types of producers’ organizations, and forging partnerships with agribusiness firms can help raise their incomes and subsequently spur the socio-economic transformation of the Philippine countryside.
A report titled “Realizing Scale in Smallholder-Based Agriculture: Policy Options for the Philippines” – launched jointly by the World Bank and the Department of Agriculture (DA) – said that there are rich lessons in the country and abroad for these clustering and consolidation of activities on-farm and along the value chain to succeed and transform the agricultural sector.
One notable example of this approach, the report said, is the Philippine Rural Development Project (PRDP), which is currently implemented by the DA. The PRDP clusters or organizes producers into enterprises that take a business-oriented approach to farming and fishing, supported through complementary investments in infrastructure such as farm-to-market roads, irrigation, post-harvest facilities, and cold storage.
“To succeed, efforts at clustering and consolidation needs to be voluntary, built on trust and confidence, and collaborative relationships among stakeholders—whether they are farmers, communities, municipalities, other local government units, or small and larger agribusiness enterprises,” said Ndiame Diop, World Bank Country Director Brunei, Malaysia, Thailand, and the Philippines.
“Where different approaches to clustering land management are not feasible, support for the mechanization of farming and post-harvest operations may be an alternative or complementary strategy for smallholder-based systems to increase farmer productivity and incomes, both on and off the farm,” Diop said.
Philippine agriculture is dominated by small farmers and fishers who operate independently, mostly using traditional production practices and earning low incomes. A typical farmer earns an average of P100,000 pesos each year, well below the poverty line (based on 2015 PSA figures).
Average farm size declined from three hectares (ha) per family per holding in the 1980s to only 0.9 ha per family per holding in 2012. These increasingly smaller farms are often split into more fragmented blocks. The country has some 5.56 million farms, totaling 7.2 million hectares, of which more than half (57 percent) are one ha or less, 32 percent are one to three ha, 9 percent are three to seven ha, and only two percent are seven ha or larger.
Agriculture Secretary William Dar has highlighted that using modern technology, schemes like block farming, trust farming, and contract farming can make farming more efficient and profitable for farmers and their partners in agribusiness ventures. With higher and better-quality production, linking agriculture to the domestic and global manufacturing sectors and accessing markets become easier, he said.
“Finding opportunities for clustering and consolidation of small and medium-sized farms as well as partnerships with agribusiness enterprises – to bring about economies of scale (and lower per-unit cost of production), particularly for crops that require mechanization and extensive use of technology – is part of the ‘new thinking’ of the Department of Agriculture,” said Secretary Dar.
“We want to collectively empower farmers, fisherfolk, and the private sector to increase agricultural productivity and profitability, taking into account sustainability and resilience,” the DA chief added.
Global experience shows that forcing collaboration among farmers and agribusiness enterprises through decree or subsidies (top-down approach) usually does not work but those that emerge from farmers’ bottoms up collective initiatives yield good results.
The report says that the country can explore various arrangements based on global experiences, including:
- Realizing scale in primary production. In the Philippines, perhaps the most promising areas to pursue clustering can be among selected irrigation schemes where water user associations are already well established; and within Agrarian Reform Communities supported by the Department of Agrarian Reform.
- Supporting market-oriented producer organizations. Encouraging the growth of cooperatives and producer organizations. In the East Asia region, Japan, South Korea, and Taiwan have had especially rich experiences promoting farmer groups or cooperatives.
- Fostering contract farming, productive alliances, or other linkages between farmers groups and agricultural enterprises. These are well understood in the Philippines and can be scaled up.
Elsewhere in the region, contract farming has become increasingly common in some value chains, including value chains for specialized rice varieties or rice production systems.
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