The Sustainable Development Goals (SDGs) are all about transformation – transformation driven by partnerships, risk-taking and innovation. Getting the finance piece of the SDGs right is essential. There is a lot of exciting progress being made, with new tools and instruments helping to mobilise resources for sustainable development. But we are still not moving fast enough if we are to get more finance aligned with our collective aspiration to leave no one behind.

While turning the “billions into trillions” is essential to bridge the Sustainable Development Goals (SDGs) financing gaps, there is a need also to focus on the quality of resources mobilised and how they reach those being left behind. While international and domestic public finance remains essential to meet the SDGs, public resources alone will not be enough. The challenge is particularly acute in the least developed countries (LDCs), which have experienced a recent decline in official development assistance (ODA). LDCs also often find it difficult to attract private investment, including foreign direct investment. Increased public and private financial flows must therefore be made to work for the world’s most vulnerable countries, for underserved markets, and for smaller projects in the so-called “missing middle” – those small and medium-sized enterprises that are too big to access microfinance but too small or seen as being too risky to access commercial loans offered by mainstream financial institutions.

Between 2012 and 2015, of the USD 81 billion in private finance mobilised for development, some 7% benefited the least developed countries (LDCs). This chapter looks at the latest situation, extending the analysis to include OECD data covering 2016 and 2017, as well as data on new leverage mechanisms, to explore trends over a six-year timeframe. It describes who the main mobilisers of private finance in LDCs are; the top sources of private finance mobilised; how blended finance is deployed across sectors; and how LDCs fare in comparison to other developing countries.

This chapter contains a curated set of guest pieces by practitioners and experts working in the blended finance space – including from representatives of multilateral development finance institutions, a private impact investor, a research institute, a local intermediary, and a non-governmental organisation.The evidence and viewpoints that emerge from these pieces add colour and nuance to the analysis in the previous chapter by showcasing the opportunities and challenges of applying blended finance solutions in LDCs and in particular sectors. They also raise a number of important questions about how best to deploy blended finance solutions in LDCs.

This final chapter provides a short conclusion to the report – drawing on the latest data presented in Chapter 1 and the expert views from the field in Chapter 2. It summarises the emerging issues, including ideas and guiding principles for handling the risks and maximising the opportunities of blended finance, especially for the “missing middle”. Finally, it asks what’s next for UNCDF’s action agenda, and for the blended finance community more generally, using a series of questions to help shape the next steps.