Philantropic Foundations and Multilateral Aid Institutions like the World Bank: Increased Opportunities for Collaboration in ACP Agriculture

Philanthropic Foundations and Multilateral Aid Institutions like the World Bank:
Increased Opportunities for Collaboration in ACP Agriculture
Olga Sulla
World Bank

Outline
Global Development Finance: Private and Official capital flows
Philanthropic Foundations in international development
World Bank and Agriculture in Africa
Collaboration based on relative advantage – existing mechanisms and questions for discussion

Private Net Capital Flows $590 bln to Developing Countries are Concentrated in Middle Income, with only $40 bln to Africa

Official Aid Net Flows (aid+debt) are Most Important for Africa Official Grants to Africa are up to 1/3 of total ($104 bln)

Philanthropic Foundations
Foundations play increasingly important role in development assistance, their potential is significant . Financial capacity: t otal assets of the US foundations account for $950 billion ;
~700 billionaires in the world.
International development activities represent a small part of the foundations’ work. Of ~100,000 foundations only 1% is currently active; total amount estimated between 5-7 bln ). How does it compare with official ODA grants $104 billion and with the total private capital flows to developing countries ( 600 billion)?
The phenomenon of philanthropy for development is US dominated (experience since 1920s)
The poorest countries are not yet the main direct recipients of aid, due to mechanisms of foundations’ operations

Foundations based in the United States : 90% of grants support Domestic activities
3,8 billion international grants
68,000 grant-making foundations
Top 12 account for 50%
Types: independent (Gates, Ford, Moore), corporate (CitiGroup, Coca-Cola), community…
The Gates disbursed $1 bln in 2006 and plans to increase to $3 bln

Grants-Distribution Scheme, US Foundations US foundations annual total grant-giving ( 30bln ) International giving (10%, $3 bln ) Domestic giving (90%) Foreign recipients (1/3, $1 bln ) US-based recipients, (2/3, $2 bln ) Developed countries/organizations Developing countries (60-70%, $600-800 mln )

Main Direct recipients of the Foundations' aid are a few emerging economies, not the poorest countries…
Channels of Foundations’ Aid Implementation :
Direct work in developing countries:
Ford, Kellogg, MacArthur, and Soros Foundations through offices (12 foundations have offices in IDA countries
Through existing organizations:
Gates, Hewlett Packard Foundations and the Rockefeller Fund
Hybrid models (eBay, Aol, Google)

European foundations developed slower : greater propensity to state over private action, a stronger welfare system. In 2003 the EFC launched Europe in the World Initiative, calling foundations to donate 5 percent outside Europe or for global projects. I nternational grants at about $600 million annually. European Foundations Center lists about 200 foundations . Concentrated in Sweden, Denmark, Britain, Germany and Switzerland. Education, research and health care are the main sector
Asian Foundations play an increasingly important role in their Region. International giving by Asian foundations can be estimated at $400 million. Asian foundations are in Australia, Japan , China, Korea, but also found in Vietnam, Malaysia, Philippines, Thailand
Japan Foundations Center reports about 60 million of international grant making
European and Asian Foundations

Sectors of Foundations’ International Grants and of the Official Development Grants
Foundations:
Health ~50% of the total
(Gates accounts for 1.2 of 1.4 billion)
International development (11-13%)
Environment ( 6%)
Education (5%)
Human rights, art, religion

Foundations’ work in Agriculture still small but increasing
Aga Khan Foundation Programs typically link elements such as rural savings and credit, natural resource management, productive infrastructure development, increased agricultural productivity and human skills development with a central concern for community-level participation and decision-making.
Gates Foundation invests across the complete agricultural value chain. It focuses on small farm households, mostly headed by women. A particular focus since 2006 is the foundation’s support, in a partnership with the Rockefeller Foundation, of the Alliance for a Green Revolution in Africa , which brings a wide range of African partners together to spearhead new agricultural programs for small farmers.
The William and Flora Hewlett Foundation The Global Development Program make grants that attempt to reform multilateral trade rules that limit market access for agricultural products from developing countries.

Foundations work in Agriculture still small but increasing (cont.)
Novartis Foundation for Sustainable Development The Millennium Villages Project (MVP) was founded with the goal of helping impoverished communities in rural Africa achieve the Millennium Development Goals. The project operates in seventy-eight villages, reaching around 390,000 people.
Syngenta Foundation for Sustainable Agriculture improves rural livelihoods in semiarid parts of the world in sustainable ways. It promotes innovative methods and technologies to help farmers increase their food production and make a profit.
In 2006, SFSA established the Syngenta Foundation India to develop its projects across India: agricultural extension services, trial/demonstration crops, seed production, development of horticulture and building low-cost greenhouses.

World Bank Agriculture in Africa
Bilateral and multilateral donor aid for development of Africa agriculture declined from $1.921 mln in 1981 to $997 mln in 2001, rebounding slightly after. OECD data show that although bilateral donors together gave 52% (Japan and the US top), the World Bank was the single largest donor to African agriculture between 1990 to 2006 (20% IDA) with $2.8 billion in investment lending in agriculture,
8% of total Bank investment lending to the Region.

World Bank Agriculture in Africa cont.
IEG report “World Bank Assistance to Agriculture in Sub Saharan Africa” 2007: “ Agriculture has been neglected by both governments and the donor community. The Bank’s strategy for agriculture subsumed within a broader rural focus and technical skills declined. The lending support from the Bank “sprinkled” across various activities: (research, extension, credit, seeds, transport and policy reforms in rural space), but without synergies. In partnership with others, the Bank could take the lead in fostering a multifaceted approach, based on its comparative advantage as multisector lending institution. “

WBG new focus on Agriculture:
1. Total lending for agriculture will go up from USD 4 to 6 billion in the coming year
2. President Zoellicks’ 10 points plan for food crisis (including stimulation of agricultural supply response by immediate provision of seeds and fertilizers);
3. 2007 saw increase in lending for agriculture in Africa to 2.7 bln;
4. Reorganization of departments working on rural and agriculture;
5. Regional projects expansion
6. Diversification
Stimulate private sector led investment across the value chain
World Bank Agriculture in Africa cont.

Foundations and the World Bank working together
1. Trust Funds: The World Bank as a multilateral attracts some of the foundations through its Donor Funds mechanism (more than $400,000 like AK, Gates, Aridius, Ford). WBG is the top Trust Funds holder among all the multilaterals (7 bln vs. 3.8 bln UNDP, 1.7 UNICEF, 1.1bln IADB).
2. Co-financing arrangements: arrangement under which funds form the Bank are associated with funds provided by other sources outside recipient country for a specific lending project: parallel and joint co-financing is available.
3. The Development Grant Facility (DGF): its goal is to encourage innovation through seed money for new development approaches on a global or regional level, to catalyze partnerships. Available for new activities about 10-15 million per year.

Foundations and the World Bank working together cont.
4. CGIAR
5. New study “Evolving Aid landscape in Africa and the role of Private Philanthropy” WB in partnership with Norway and Kellogg Foundation: mapping the aid landscape, private actors – how and where; dynamics at the country level.
6. New Gates – World Bank Group partnership on agriculture (meeting in April 2008) :
WBG: intellectual and policy advocacy leadership; in country-relationships, processes, understanding of public investment priorities, due diligence, financial rigor..
BMGF: long term commitment, ability to take risks/experiment, work through partnership
7. WBG is deepening relationship with Aga Khan which is active in SME development and promotion of aro processing. Currently partner in Uganda, Mali, Cote D’Ivoire. IFC has 300 mln exposure with AK.

Strengths of Multilaterals that Foundations find valuable for cooperation
Presence on the ground
Influence/leverage with governments
Ability to convene multiple government actors across and within countries
Ability to scale up innovations to the level of systemic change

Topics for Discussion
Philanthropic foundations and Official Developm. Aid
Sectors (production/ social sectors, research/projects)
Forms of aid (grants/loans)
Beneficiaries (public institutions/communities)
Accountability and Governance (public/private)
Aid implementation (country-based/global funds)
Scale: regional vs. local
Approach: Pilot vs. Mainstreaming
Partnerships (official agencies, foundations, private sector)
Aid effectiveness and results measurement systems
Monitoring and Evaluation

The World Bank’s contribution to an integrated global response to Food crisis
The response is articulated around 4 main pillars : policy advice , expedited financial support , financial market insurance products , and research to address critical knowledge gaps.
1. The Bank is engaging in policy dialogue with over 40 countries to help them address the food crisis, as well as assessing food security and trade implications of the crisis at the regional level.
Instruments used include: rapid country diagnostics, high-level dialogue and public communications, as well as in-depth analytical work.

The World Bank’s contribution to an integrated global response to Food crisis cont.
2. In expediting financial support , the Bank has launched a Global Food Crisis Response Program (GFRP), an umbrella facility that will provide up to $1.2 billion of accelerated financial support and technical advice to countries affected by the food crisis. As part of this facility $200 million dollars in additional grant funding was made available for the most vulnerable and fragile states.
Grants for Djibouti ($5 million), Haiti ($10 million), and Liberia ($10 million) were approved in May, while Tajikistan ($9 million) and Yemen ($10 million) were approved in May and June. In July, the World Bank expects to approve grant support to Togo, Sierra Leone, Niger, Guinea Bissau, Central African Republic, and Afghanistan. Furthermore, a pipeline of low-income affected countries has already been identified for further grant support in July and August.
Proposals for fast-track IDA funding under GFRP have been approved in Kyrgyz Republic and are moving forward for Nepal, Afghanistan, and Burkina Faso, and are being developed under fast-track IBRD funding for The Philippines.

In terms of creating financial market insurance products , IBRD and IDA will offer index-based weather derivatives to help transfer the financial risk of severe weather events to financial markets. Malawi will be the first client – should the country suffer a drought it would receive a payout to offset the price of imported maize.
The Bank is also collaborating with other agencies and institutions on research addressing critical knowledge gaps. in the following areas: global food markets; poverty, distributional and nutritional impacts, fiscal and macroeconomic implications and responses, trade responses and impacts at country and global level; facilitating an agricultural supply response, role of safety nets.
The World Bank’s contribution to an integrated global response to Food crisis cont.

Philantropic Foundations and Multilateral Aid Institutions like the World Bank: Increased Opportunities for Collaboration in ACP Agriculture

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Philantropic Foundations and Multilateral Aid Institutions like the World Bank: Increased Opportunities for Collaboration in ACP Agriculture — Presentation Transcript