Nutrition Investing

While SMEs play a substantial role in bringing foods to market, their success is hindered by several constraints, including a lack of financial and technical capacity to improve and grow their businesses.

Most of the food that is produced, processed, transported, and sold in the Global South is handled by small- and medium-sized enterprises (SMEs). While SMEs play a substantial role in bringing foods to market, their success is hindered by several constraints, including a lack of financial and technical capacity to improve and grow their businesses. Women-led enterprises face additional constraints, as there is a large gender gap in access to business finance across many world regions, exacerbating the already challenging act of securing financing for a business in the agri-food sector.

According to the IFC, the estimated global gap in SME funding is $5.2 trillion. "Owners and entrepreneurs report access to capital to be one of their toughest challenges, one that sometimes outranks electricity shortages and other concerns". Without sufficient access to financial services, SMEs are unable to expand operations and market reach, enhance the nutritional value of their products, improve on their food safety standards or start working more sustainably.

Further, there is a lack of awareness within investment communities on the importance of nutrition and of the additional impact that nutrition investing can contribute to, beyond SDG2, including gender equality, children growth and development.
To ensure that all people can access a safe, healthy and diverse diet, there is a need for: i) global influencing on nutrition investing; and ii) innovative methods of resource mobilisation that focus on nutrition and SME.

With the global influencing work, we aim to improve awareness, capacity, and commitment among investors to support the development of nutrition as an investment theme. Our goal is to scale the impact of our work beyond our remit, seeking to influence others (investors, donors, governments, and Development Finance Institutions (DFIs)) to adopt a nutrition lens to the work that they’re doing. We will lead on evidence-based advocacy on the link between gender and nutrition in the investment space, as well as child lens and nutrition investing. We will also leverage the approaches and learnings from the Nutritious Foods Financing Facility - N3F.

The N3F is an innovative blended finance approach that aims to overcome the SMEs' constraints by providing financial support and building technical capacity within SMEs that produce foods available to lower-income consumers in Sub-Saharan Africa (SSA). The goal is to transform the capacity of SMEs to deliver nutritious foods in Africa through a blended finance approach comprised of a financing facility with requisite technical assistance and reshaping investment approaches. N3F will act as a proof-of-concept, aiming to prove that financing nutritious foods through SMEs works and providing a pathway forward for larger scale transformation.

The three components of N3F are:

The N3F Fund: an impact-first fund with consumer nutrition at its core and a blended finance structure, which will provide debt financing to SMEs providing safe and nutritious foods to local consumers in Sub-Saharan Africa. Managed by Incofin Investment Management, with GAIN providing nutrition expertise. 

Technical Assistance: Provision of technical assistance to the Fund's investee SMEs, focusing on 1) general business management practices, to support SMEs to becoming more efficient and financially sustainable, such as business planning and strategy development; and 2) impact enhancement and food safety, such as product formulation, labelling and supply chain strengthening, to ensure, improve and oversee SMEs’ nutrition impact, as well as gender equality and environment. Through this technical assistance, the N3F aims to help SMEs reach their potential and become more effective and efficient, thereby increasing their ability to serve domestic markets. Managed by GAIN.

Monitoring, Assessment and Learning: This component will focus on convening and influencing stakeholders, knowledge dissemination and the development and validation of metrics for targeting nutrition-sensitive investments. Managed by GAIN.  
The technical assistance and monitoring, assessment and learning component are grant-funded separately from the N3F fund.

Beyond the N3F, we aim to explore other opportunities for innovative financing to scale nutrition impact, i.e. outcome-based financing and incentive-based impact-linked finance.

  • Global influencing on nutrition investing
  • Innovative methods of resource mobilisation that focus on nutrition and SME.

 

  • Benin
  • Global
  • Burkina Faso
  • Ghana
  • Kenya
  • Mali
  • Mozambique
  • Niger
  • Nigeria
  • Rwanda
  • Senegal
  • Tanzania
  • Uganda

 

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Polly Mwongera