Broken financing systems stall progress on nutrition security, says FAO economist

Despite rising hunger, nutrition security remains one of the least funded global priorities — held back by fragmented financing, high-risk perception, and a system that struggles to invest where it’s needed most. 

Nutrition Insight speaks to an FAO economist to learn why the current financial system reinforces inequality and what it will take to unlock financing for the world’s most malnourished regions. 

A recent paper co-authored by FAO’s Giovanni Carrasco Azzini, Agrifood Economics and Policy Division, Food, explores issues and solutions to scaling up financial flows for achieving Sustainable Development Goals (SDGs) Targets 2.1 and 2.2 (ending hunger and malnutrition).

Azzini reveals nutrition security lags due to funding spread across multiple sectors. Its lack of a shared definition makes it less politically visible than health or education. Also, fragmented financing systems perceive it as high risk, deterring investments from countries that need them most and reinforcing inequality.

He further reveals that financial systems prefer inaction over innovation despite the greater long-term costs of hunger and malnutrition. 

Definitions and visibility issues

Azzini explains that food security and nutrition are multidimensional concepts that do not fit completely within a single sector, which causes them to fall behind health and education in attracting traditional aid and financing. 

Food security lacks a clear definition, making it harder to fund than health or education.“While health and education are well-established sectors with clearly defined institutional counterparts (such as ministries of health and education), the multisectoral nature of food security and nutrition makes it more difficult to define investment priorities and the appropriate financing tools and mechanisms,” says Azzini. 

“For many years, support for food security and nutrition has largely been channeled through investments in agriculture or, in emergency contexts, through humanitarian assistance. However, while investing in agriculture remains a necessary condition for eliminating hunger and malnutrition, it is insufficient.”

According to Azzini, financing is needed for sectors like health, environment, and social protection — important for addressing food security and nutrition — and are major drivers of current trends.

“One of the main reasons food security and nutrition lag behind other sectors is the lack of a common understanding about what food security and nutrition financing is. As highlighted in the 2024 edition of The State of Food Security and Nutrition in the World, the absence of a common definition has led to inconsistent estimates of both the current levels and the financing gap for meeting the SDG 2.1 and 2.2 targets.”

“Other factors may also help explain this gap. For instance, compared to health and education, food security and nutrition seem to be less politically visible, which can limit financing mobilization for ending hunger, food insecurity, and malnutrition,” explains Azzini.

Government, international, and private sectors’ responsibility 

Researchers found that, during interviews with experts, high-risk food security and nutrition investments often prevent funds from reaching those who need them most.

Risk-averse financial systems avoid investing where hunger hits hardest.“Even if we know where financing is needed and what policies and investments should be supported, financing is not reaching those places due to the combination of sectoral (food security and nutrition considered a risky investment) and country-level (limited ability to access financing) issues,” says Azzini.

“A key challenge for increasing the financing available for these countries is reducing this perceived financial risk. Doing so requires the coordinated action of governments, donors, international institutions, and the private sector.”

A country’s income and debt volume, governance quality, and digitalization levels are factors that may hinder access to financing. Azzini adds that governments have a role to address these factors, but the international community should and can support efforts by de-risking activities that enable better and more financing flows.

“Of course, the private sector is called to contribute to these efforts. Integrating health, environmental, and social-related considerations into investment decisions could be a first step for building a new perspective about the private sector’s contribution to food security and nutrition,” he suggests. 

Fragmented, project-based funding reinforces inequality instead of solving it.“This could contribute to overcoming the current gap between the perceived risk of certain investments and the actual likelihood of that risk happening, a gap that is limiting the possibilities of reaching the population most affected by hunger and malnutrition.”

Preventing financing architecture from reinforcing inequality

The paper blames the fragmentation of the financing system as the main issue. When combined with the overall scarcity of financing for food and nutrition security, this fragmentation perpetuates inequalities.

“The proliferation of small, uncoordinated projects, particularly in an area often perceived as high risk, can create incentives for financing only specific activities and/or geographic areas that are seen as less risky, leaving behind other populations and regions facing greater challenges for ending hunger, food insecurity and malnutrition,” Azzini says. 

“The risk aversion among many financial institutions, including multilateral development banks (MDBs), also contributes to this reality. Their cautious approach can be limiting financing flows in places where they are most needed.”

However, Azzini believes that MDBs and other development finance institutions have an opportunity to play a catalytic role by increasing the risk tolerance and enabling more subsidized loans to countries most impacted by malnutrition.

“This can be a first step for de-risking further investments in these countries, laying the groundwork for reducing the inequalities embedded in the current financing architecture,” he concludes.