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Making Blended Finance Work for the Sustainable Development Goals

image of Making Blended Finance Work for the Sustainable Development Goals

The global community has spoken loud and clear: more resources must be mobilised to end extreme poverty and mitigate the effects of climate change. Blended finance - an approach to mix different forms of capital in support of development - is emerging as an important solution to help raise resources for the Sustainable Development Goals in developing countries. But scaling up blended finance without a good understanding of its risks could have unintended consequences for development co-operation providers. This report presents a comprehensive assessment of the state and priorities for blended finance as it is being used to support sustainable development in developing countries.  It describes concepts and definitions, presents an overview of actors and instruments, and discusses lessons learned from blending approaches, tracking and data, and monitoring and evaluation. Its findings and recommendations are useful for policy makers and practitioners.

 

'Blended finance will contribute to faster economic growth, but to achieve this it is vital to get donors into alignment.'

Martin Wolf, Chief Economics Commentator, Financial Times

'Official development assistance continues to be a key way to finance efforts aimed at eradicating extreme poverty. However, the challenge is more than governments alone can manage. We must all think, work, finance and deliver development differently to mobilize private-sector resources and expertise to help the world’s poorest and most vulnerable people. Canada continues to promote innovative approaches to finance development and achieve sustainable growth for everyone.'

The Honourable Marie-Claude Bibeau, Canada's Minister of International Development and La Francophonie.

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Executive summary

Delivering the Sustainable Development Goals (SDGs) and the Paris Agreement will require more resources than are currently being spent on development outcomes, not least in developing countries. Blended finance, an approach that mixes different forms of capital to support development, is emerging as a solution to help achieve the “billions to trillions” agenda. Scaling up blended finance without a sound understanding of its potential and its risks, however, may have unintended consequences for development co-operation providers. This report presents a comprehensive assessment of the state of blended finance and priorities for action to improve its implementation, drawing on surveys, case studies, interviews and desk research. It argues that while blending has potential to scale up commercial finance for the Sustainable Development Goals, its deployment by the development finance community needs to be based on a common framing and principles, as well as additional evidence and analysis. While this report is meant primarily for a development co-operation and finance audience, its findings and recommendations are useful for a broader range of policy makers and practitioners pursuing sustainable development in developing countries.

English

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