Blended Finance: Critical steps to ensure success of the Sustainable Development Goals

By Chris Clubb, Managing Director, New Products and Knowledge, Convergence

blended-investmentThe facts are known. Official Development Assistance (ODA) from member countries of the OECD’s Development Assistance Committee (DAC) will not grow at the rate necessary to fully deliver on the Sustainable Development Goals (SDGs). Blended finance, defined as the strategic use of official (public) funds to mobilise private sector investment for emerging and frontier economies [1] , is recognised as an important tool within the development toolbox to mobilise new capital sources to achieve the SDGs. Through blended finance, public funds can target a risk that the private sector is unwilling or unable to take. It also can be used to improve the risk-return profile of an investment to an acceptable level for the private sector. What all this does is attract much-needed private sector investment and know-how to projects.
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What does the evidence on blended finance tell us about its potential to fill the SDG funding gap?

By Harpinder Collacott, Executive Director, Development Initiatives

arrow-upSome argue that blended finance, or the use of public funds to de-risk or leverage private investments in development, has the potential to provide part, if not all, of the solution to the funding gap facing the Sustainable Development Goals (SDGs). This is no small undertaking since it is estimated that as much as an extra USD 3.1 trillion annually is needed until the 2030 deadline. No wonder the appetite is strong to look beyond traditional development co-operation and see how private finance can be better mobilised to eradicate poverty. But when it comes to blended finance, some fundamental issues need to be considered before scaling up official development assistance (ODA) investments in this area.
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