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 of blended finance across different regions.
Best practices: Develop best practices for deploying blended finance in key economic systems and sectors, such as sustainable infrastructure, and to address specific issues such as climate change.
Policy guidance: Deliver policy guidance and principles on the use of blended finance to deliver development impact.
These mechanisms will provide the much needed recommendations to bring together public and private investors for the use and deployment of blended finance to achieve the SDGs.