We often hear that blended finance is the new frontier for agrifood system. As interest grows, expectations must meet reality. Rodrigo Madrazo of EDFI Management Company shares a practical perspective on its role in agriculture and rural development, and how DFIs can help turn ambition into action.
Maurizio Navarra/GDPRD: Why do you think blended finance for food and agriculture is still taking a long time to take off? And what will make a difference, especially in donor and MDB approaches, to make that jump?
Rodrigo Madrazo/EDFI Management Company: I think you are only partially right, in the sense that blended finance has already taken off. But, as you rightly pointed out, it is still far from expectations.
Remember in 2015, at the Addis Ababa United Nations Conference on Development Finance, when the slogan “from billions to trillions” became very popular. But actually, this is very difficult to achieve. “From billions to trillions” means adding three zeros, a 1,000 times multiplier, which is simply out of reach for blended finance.
This may explain some of the disappointment about the pace of deployment of blended finance instruments. Blended finance can do a lot of things, but it cannot perform miracles, as you mentioned Maurizio.
We need to be very honest and transparent, and set target multipliers and mobilization objectives that are doable. And we know, at least from the experience of the EDFI Management Company — the asset management company of the European Development Finance Institutions (DFIs) — when blended finance is properly used and deployed, it does have the capability to mobilize private capital, but not to that extent. Multipliers of four to ten are already excellent results.
Blended finance can do a lot of things, but it cannot perform miracles. We need to be very honest and transparent, and set target multipliers and mobilization objectives that are doable.”
Rodrigo Madrazo speaking at the session on “Catalysing Finance and Impact for Food Systems” during the 2025 Annual General Assembly.
Maurizio: Building on that, what do you think public and private investors should do to ensure that dialogue turns into effective action, especially at the country level, so that at the end of the day, the farmers we are targeting receive the funding they need?
Rodrigo: This is of paramount importance. To provide blended finance solutions, it is necessary to blend concessional resources with other resources, whether commercial or not, that are more risk averse.
The most valuable resource is concessional capital. Donors and national governments use this scarce resource for very specific public policy goals, and agriculture development and food security are clearly among them.
Once we have identified those priorities, the public-private sector collaboration needs to start. This is the case where many institutions, including DFIs, can play a very useful role.
It is very important also to set up good structures because normally DFIs are banks and they need to take care of their balance sheets, accounts and results. This means it is very important to have not only on-balance-sheet activities, but also off-balance ones. That is to say, donors and governments can grant very specific mandates to DFIs and other institutions to deliver on those public policy goals, including, of course, rural development and food security.
The most valuable resource is concessional capital. We need to get the most out of the scarce resources and take smart risks for a greater result in terms of impact.
Maurizio: That brings me to the last question, which is about the geopolitical context. How do you see the current geopolitical situation, whether favourable, conducive, or unfavourable, to building an environment that allows investments to increase, particularly through catalytic capital?
Rodrigo: Prospects in the international scene are not very promising, and in the future, I think we will witness two deprioritizations.
First, official development aid is likely to be reduced. Second, the agrifood sector is likely to give space to other sectors that are attracting more attention from donors and governments, including energy, critical raw materials, health and pharmaceuticals.
Against this gloomy background, what can be done?
We need to get the most out of the scarce resources and take smarter risks for a greater result in terms of impact. This is the way forward.
Given the international context, we need to look for win-win options, approaches that address two targets at the same time. On the one hand, sustainable development, particularly in rural areas, in host countries, and on the other hand, with clear benefits to donors.
Today, this is closely related to issues such as orderly migration flows, to job creating opportunities on the ground, and to food security supply.
The equilibrium should be there in the future — a win-win situation where both donors and host countries achieve benefits.
Learn more about the 2025 Annual General Assembly on “Investing in the Future of Agrifood Systems: New directions for development finance”.
