BNDES and FIDA launch project to benefit rural producers in Brazil’s semi-arid Northeast
RIO DE JANEIRO, BRAZIL – An internationally backed R$1 billion (US$202.5 million) project intends to train rural producers and increase food security in the Northeastern semi-arid region. The project intends to benefit 250,000 families (1 million people) in up to 4 Brazilian states.
Launched last week by the International Fund for Agricultural Development (FIDA), in partnership with the National Bank for Economic and Social Development (BNDES) and the Ministry of Economy, the Sowing Climate Resilience in Rural Communities of the Northeast (PCRP) project aims to promote sustainable development in the Northeastern backland and mitigate climate change impacts in the region.
The project aims to benefit 250,000 families (1 million people) in up to 4 states in the Northeast, yet to be determined. Combining the FIDA and BNDES’ contributions and the state governments’ counterparts, investments may reach US$202.5 million.
The funding negotiations were completed last week. In December, FIDA’s executive board had unanimously approved the allocation of resources.
The project will finance initiatives for sustainable water management and for addressing drought and climate change. Among the main actions are the introduction of water collection, storage and recycling technologies and the adoption of product diversification strategies in the backlands.
The program intends to cover an area of 84,000 hectares, restoring degraded ecosystems to provide services in the environmental area. One of the goals is to eliminate the emission of over 11 million tons of carbon dioxide in 20 years.
A United Nations initiative that allocates resources for climate change adaptation projects in developing countries, the Green Climate Fund (GCF) will provide US$100 million through FIDA. Of this total, US$34.5 million will come as donation and US$65 million through loan operations.
The BNDES will grant US$73 million in financing as the GCF’s executing entity from national resources. The remaining US$29.5 million will be invested by the state governments.
Next steps
After GCF and FIDA’s approval at the end of 2020, BNDES, the Ministry of Economy and the international fund last Wednesday, June 30, completed negotiations on the loan agreement.
The next steps include the completion of the project’s implementation arrangements and its vote by the BNDES Board of Directors. The Senate will need to authorized the federal government’s guarantees. The first financing is expected to be granted in 2022.
Discussions began in 2018, when the federal government appointed BNDES as a potential partner of FIDA in the financing and development of sustainable rural development projects. In 2019, the Ministry of Economy’s Secretariat of International Affairs and the portfolio’s Commission for External Financing endorsed the operation.
With the specific mission of fighting hunger and rural poverty, FIDA has been supported by the Brazilian government for over 40 years. The international financial institution is based in Rome, where the United Nations Food and Agriculture Fund is located.
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