Evaluation and monitoring of the AGRI3 fund (2020-2024)

Background
At the request of the Dutch Ministry of Foreign Affairs, SEO Amsterdam Economics conducted a “real-time” evaluation and monitoring of the AGRI3 Fund over the period 2020 to 2024. The AGRI3 Fund (hereafter, AGRI3) aims at mobilising private finance to allow agribusinesses to invest in: 1) sustainable land use, 2) the protection and recovery of forests, and 3) the improvement of rural livelihoods. To this end, AGRI3 provides credit enhancements to financial intermediaries, absorbing part of the risks of making sustainability loans and/or allowing increased loan maturities to bridge  the longer period during which sustainability investments are made but cashflow is not yet generated. AGRI3 also operates a Technical Assistance (TA) facility to support investments and enhance their impact. The evaluation was carried out in four phases: 1) an evaluation of the initial 2020–2022 period; 2) monitoring in 2023; 3) monitoring in 2024; and 4) a final evaluation report, which summarises all previous findings. The work during the first two phases was conducted in collaboration with Hilde van Dijkhorst (formerly MDF) and SEO’s Brazilian partner organisation ERM NINT.

Results
Despite a slow start, AGRI3’s portfolio expanded steadily between 2020 and 2024. The number of annual transactions grew from just two in 2020 to nine in 2024. The cumulative value of catalysed loans reached USD 262 million by the end of 2024, of which USD 113 mln guaranteed by AGRI3, resulting in a leverage ratio of 2.3. During 2020-2024, sixteen investments were made in Brazil, primarily targeting sustainable land use, sustainable agriculture, and nature conservation or recovery. The remaining nine transactions were concluded in Africa (various countries), India, Nicaragua, and China, with a mix of themes and greater emphasis on rural livelihoods. TA gained in importance over time, with most end-clients receiving pre-investment or post-investment TA (or both).

• Effectiveness: AGRI3 mobilised less private finance than expected, but was on track to meeting its targets for sustainable land use and ecosystem protection. Its products generally matched client needs, although the higher-risk instruments remained unused. While some demonstration effects were visible, broader market dynamics were more influential.
• Impact: AGRI3 had not yet achieved its original impact targets by the end of the evaluation period. In particular, the fund’s impact in terms of rural livelihoods and gender was smaller than expected. Although the fund could pay more attention to these areas, its greatest potential impact lies in the field of sustainable land use and forest protection.
• Additionality: Both financial additionality and development additionality were modest, primarily because the fund often worked with well-established agribusinesses that already had good access to finance and already had a sustainability agenda. More could be done to enhance AGRI3’s additionality through the selection of other end-client types, supported by TA.
• Efficiency: The operational efficiency of AGRI3 was strong, but operational costs in the early years were disproportionate to the fund’s capital and portfolio. Reporting and monitoring systems are appropriate, but there are opportunities for refining KPI measurement and ensuring that observed results are used for learning and steering decisions.
• Coherence: AGRI3 aligns with the Ministry’s policy objectives regarding climate change, sustainable agriculture, and ecologically sound food systems. While there is overlap between AGRI3 and other funds in terms of thematic focus and types of instruments, AGRI3 distinguishes itself through its delivery mechanism via partner financial institutions. This makes it complementary to — but not yet necessarily synergetic with — other initiatives.

Methods
For this real-time evaluation and monitoring, SEO applied a rigorous mixed-methods approach, including desk research, primary and secondary data analysis, key informant interviews, focus group discussions, and multiple field visits to partner banks and their end-clients in Brazil, Nicaragua, Malawi and India. These countries were also part of our in-depth review of 14 of the 25 investments supported by AGRI3 during the first five years of the fund. The other investments and TA projects were studied through desk-based research, including a thorough review of investment appraisal and decision reports, as well as progress reports and impact reports.