Nutrition virtually “invisible” in global finance architecture, warns FAO expert

Nutrition’s invisibility in the financial system has created barriers to enhancing global nutrition, according to FAO economist Giovanni Carrasco Azzini. He also underscores that the system favors inaction over innovation while proposing solutions to bring development closer to finance and link return on investment with the UN Sustainable Development Goals (SDGs).

Nutrition Insight sits down with Azzini from the Agrifood Economics and Policy Division to discuss what nutrition invisibility in the financing system says about global priorities — the most significant risk appears to be trying something new rather than failing to feed people.

“This reveals a deep gap between the priorities of the current financing architecture and the urgent needs identified on the humanitarian and developmental side.”

“One of the issues explored during the development of our background paper is the highly technical language used in the financial world, which often hinders efforts to bridge the differences between the commercial-oriented and development-oriented stakeholders of the financing system.”

Azzini previously discussed nutritional invisibility in the fragmented financial system that reinforces inequality by opting for inaction over innovation, along with the government, international, and private sectors’ responsibilities.

Bring development and finance closer 

Many stakeholders in the financial sector often overlook the significant cost of inaction, as highlighted in The State of Food Security and Nutrition in the World 2024. 

The FAO warns that current financial systems prioritize risk avoidance over addressing hunger and malnutrition.“This cost is not limited to the persistence of hunger, food insecurity, and malnutrition but also encompasses the consequences in terms of increased health expenditures, environmental degradation, and lost human capital potential,” Azzini explains.

“These long-term costs could exceed by far the amount of funding needed to meet the SDGs 2.1 and 2.2 [ending hunger and malnutrition]. Therefore, the financial sector should consider that investing in food security and nutrition today may be more efficient than addressing the consequences of inaction later.”

He calls for stronger links between the development and finance worlds that require shared narratives, political will, and better data and evidence.

“For instance, FAO has modeled scenarios where countries can achieve better outcomes, with the same available funding, by repurposing policy support toward more optimal expenditures, which could reduce trade-offs and improve the achievement of better results in terms of agrifood output, poverty reduction, and affordability of healthy diets.”

“Such evidence can make the case for a better integration of food security and nutrition objectives into investment decisions,” believes Azzini.

Pairing return-on-investment with SDGs

In countries with high hunger and debt, donors justify continued emphasis on return-on-investment models over basic human needs. However, Azzini says that in countries with high levels of hunger and malnutrition and a limited ability to access financing, such models “reflect the misalignment between the current financing architecture and broader development, climate, and humanitarian needs.”

Aligning development goals with investment strategies can make funding for nutrition more effective and efficient.“Many development finance actors are bound by mandates that prioritize financial returns and risk reduction, limiting the possibilities of directing financing flows to these countries.”

Azzini believes that combining investment returns while meeting the SDG 2.1 and 2.2 resolves contradictory objectives. He says this requires the right political will backed by data.

“This can lead to a shift in traditional return-on-investment models, which may incorporate the long-term economic benefits of eradicating hunger, food insecurity, and malnutrition. However, advocating for this perspective could be particularly challenging in countries with high levels of debt, which are often struggling with food insecurity and malnutrition. It is in these contexts that innovative finance is most needed and can make a difference.”

Azzini highlights the importance of debt swaps, which allow outstanding debt to be swapped with a different type. 

“In highly indebted countries, innovative financial tools like debt swaps could be particularly adequate. Debt-for-nature swaps have already shown positive results in climate finance and can be leveraged toward food security and nutrition objectives.”

“Donors can play a catalytic role, not only supporting these debt relief agreements, but also complementing debt swaps already implemented with concessional financing and technical assistance to de-risk investments and unlock additional flows,” he says.

Involving public and private sectors

Meanwhile, advocates are urging the decolonization of food systems to promote independence over aid-based systems, addressing financing fragmentation and the limited government influence in determining donor priorities.

Innovative tools like debt swaps and stronger local ownership are key to closing the nutrition financing gap.“This concern is closely related to one of the central issues raised in the background paper,” says Azzini. “The background paper strongly advocates for placing recipient countries in the ‘driver’s seat’ and significantly improving the integration of national and local priorities into financing decisions. Enabling this shift could be the key to building a more coordinated and coherent financing architecture that enables the development of context-specific solutions for countries’ financing needs.”

“Nevertheless, achieving this requires important improvements in several areas. At the international level, reforms in the governance of development finance are needed to address possible power imbalances and promote a better integration of the priorities of low- and middle-income countries.” 

“At the same time, at the national level, strengthening of national institutions, governance, and accountability is essential, not only for incorporating national and local priorities into development finance decisions but also for increasing countries’ ability to access financing.”

Azzini also calls for greater involvement from both the public and private sectors to address the gaps in financing nutrition security that are not covered by donors or the private sector. They could invest in public goods, enhancing social values.

“To this end, further mobilizing domestic tax revenues, including sound policies to reduce corruption and tax evasion, could increase the domestic financing available for food security and nutrition, which can be optimally spent to achieve better outcomes and put the world back on track to meeting the SDG targets 2.1 and 2.2,” Azzini concludes.