Blended

Blended Finance – OECD

Blended Finance – OECD










 

 

 


Blended finance is the strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing countries.

Understanding the indispensable role of Official Development Assistance (ODA) in financing the SDGs, the international community acknowledged the need for significant additional development finance – and accorded a prominent place to private sector participation. The vision underpinning the 2030 Agenda is broad and ambitious, calling for an equally broad and ambitious financing strategy. 

 

The OECD Development Assistance Committee (DAC) in February 2016 agreed to develop ‘an inclusive, targeted, results-oriented work programme’ on blended finance :

  • Evidence based: Collate evidence and lessons learned on blended finance with a focus on targeting private finance and the use

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Blended Finance

In addition to providing commercial financing, IFC uses complementary tools to crowd in private sector financing that would otherwise not be available to projects with high development impact. One such approach is to blend concessional funds—typically from development partners—alongside IFC’s own commercial funding.

Blended finance uses relatively small amounts of concessional donor funds to mitigate specific investment risks and help rebalance risk-reward profiles of pioneering, high-impact investments so that they have the potential to become commercially viable over time.

IFC uses a disciplined and targeted approach to blended finance governance, including by following five
key blended finance principles
agreed to by development finance institutions. This strategic use of blended finance allows IFC to use the smallest
amount of concessional funding
possible to fill financing gaps in areas of strategic importance.

From fiscal year 2010 to 2019, IFC has deployed $1.2 billion of concessional donor funds to support 212 high-impact projects

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