UNCDF Explores Blended Finance for LDCs, Proposes Action Agenda


The UN Capital Development Fund (UNCDF) has published a report that explores how to implement and adapt blended finance approaches in the least developed countries (LDCs) in order to maximize effectiveness in crowding in private capital, while minimizing risks. The publication proposes an Action Agenda to guide decision-makers in approaches to blended finance.
The report titled, ‘Blended Finance in the Least Developed Countries,’ was prepared by UNCDF in collaboration with the Organisation for Economic Co-operation and Development (OECD), Southern Voice on Post-MDG International Development Goals, Convergence and the UN Foundation. The publication draws on an evidence base, data analysis and case studies.
The authors note that many LDCs are facing “the steepest paths” to achieve the SDGs and to mobilize the needed private finance. To address that, the report seeks to spark discussion on questions including:
* Can blended finance be part of the solution in getting more finance to where it is needed most?
* What challenges and risks should be considered and mitigated?
* How can blended finance be effectively and efficiently deployed, so that projects support national ownership and generate additionality?
* Can blended operations in LDCs crowd in investors, especially domestic investors, while also creating demonstration effects that support commercial replication?
The authors stress the need to “see blending for what it is”: not a cure-all, but a complement to purely public or purely private financing options. Blending can help catalyze needed additional resources for the SDGs if deployed correctly, they write, with support for national ownership and with caution to ensure the fair sharing of risks and rewards between public and private partners. Moreover, the report argues that international public finance will continue to remain essential for LDCs, highlighting the importance of donors meeting their official development assistance (ODA) commitments and providing other support measures to LDCs.

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