By Charlotte Petri Gornitzka, Chair of the OECD Development Assistance Committee
Spending last week at the World Economic Forum in Davos and today in the Private Finance for Sustainable Development conference, my head is spinning with financing for development issues.
Chairing the OECD Development Assistance Committee (DAC), I often find myself reminding members to uphold their aid levels and to use their public finance resources to stimulate private capital for sustainable development.
It’s a balancing act. Governments risk being accused of shying away from commitments when we talk too much about the “innovative financing tools” and about involving the private sector for development outcomes. It is true that upholding aid levels and directing them to countries most in need will continue to be important to leave no one behind. However, OECD countries must continue to move from talking to taking action when it comes to stimulating private finance.
Why? Faced with an estimated USD 2-3 trillion annual funding gap for achieving the Sustainable Development Goals, public or philanthropic capital will be able to meet only half of it; opportunities for the private sector, thus, are significant.
By Chris Clubb, Managing Director, New Products and Knowledge, Convergence
The 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 , 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. Continue reading “Blended Finance: Critical steps to ensure success of the Sustainable Development Goals”
Some 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. Continue reading “What does the evidence on blended finance tell us about its potential to fill the SDG funding gap?”