|GAFSP is Financial Intermediary Fund set up at the World Bank to respond to a request from the G20 Summit in Pittsburgh in September 2009 to establish a financial coordination mechanism to operationalize the commitments to agriculture and food security in poor countries made by the G8+ at L’Aquila in July 2009. The vehicle is a multilateral trust fund under external governance, designed to scale-up agricultural assistance targeted to the food security of low income countries. The Framework Document for GAFSP was approved by the Board of Executive Directors of the Bank on January 12. The Coordination Unit for GAFSP is housed within ARD, with participation from CFP and LEG.
The Bank consulted widely with interested donors, UN agencies, Multilateral Development Banks, potential recipients, Bank regional staff, and CSOs. It was clear from these discussions that the objectives of GAFSP should include six elements:
The World Bank Group will serve as Trustee for a larger group of “Supervising Entities”. Potential Supervising Entities are international financial institutions with a capacity to supervise recipient executed projects in developing countries and a fiduciary standards agreement with the World Bank for such activities. Two windows will be created under the Trust Fund to hold targeted donor contributions for either the public or private sectors.
The public sector window will be available for Supervising Entities, including the World Bank, other MDBs, IFAD, FAO, and WFP. Selected Supervising Entities will apply their own policies, procedures, and guidelines. The Trustee has no further supervisory capacity or responsibility once funds are transferred to a supervising entity for a specific purpose, and all investment activities must be appraised, supervised, evaluated and reported on by a Supervising Entity following its internal procedures.
The private sector window will be managed by IFC, following its usual lending criteria and procedures. It will involve debt and equity placements, initially confined to the poorer developing countries. Proposals will be considered in agribusiness, food and beverage value chains, input and service providers, related infrastructure from private companies, and financial intermediaries.
Eligible countries for all GAFSP financing will be eligible members of the International Development Association (IDA). Where there is a compelling case and when and if additional funding becomes available, the GAFSP Steering Committee (for the public sector window) and the IFC (for the private sector window) may each decide to approve proposals for IDA blend countries*, and those non-members of the World Bank where the Executive Directors of the World Bank have determined that assistance from the Trust Fund is in the interests of the membership as a whole.
The governance framework is external to the World Bank and is designed to follow a phased approach. An external Steering Committee is the decision-making authority of GAFSP. It will initially comprise the initial three founding donors to the Trust Fund (Spain, Canada, USA) and an equal number of representatives from recipient countries, self-selected under the auspices of the World Bank Board, from two to three regions of the world, as voting members. All decisions will be made on a consensus basis of the voting members.
Potential GAFSP Supervising Entities and other notables—including the World Bank (IBRD/IDA) and IFC, the UN Rome-based food agencies, the United Nations Secretary General’s Representative for Food Security and Nutrition, and CSO representatives, will be non-voting members to add expertise and provide transparency.
An external Technical Advisory Committee will provide technical expertise and due diligence in reviewing funding requests, and make recommendations to the Steering Committee on indicative allocations of financial support to countries and regional organizations (through the selected Supervising Entity) and appropriate Supervising Entity. A Coordination Unit that also serves other trust funds on Food Crisis Response will support the overall coordination of the GAFSP Fund, and will be housed at the World Bank.
Next steps include finalizing Trust Fund agreements with donors, selection of the Steering Committee members, finalization of an operations manual, and commencement of operations. The latter is thought to be likely to occur in late Spring.
*Blend Countries: IDA-eligible but credit-worthy enough to borrow from IBRD.