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Principle 3

TAILOR BLENDED FINANCE TO LOCAL CONTEXT

All development finance interventions, including blended finance activities, are based on the mandate of development finance providers’ to support developing countries in achieving social, economic and environmentally sustainable development.

3A - Support local development priorities.

Achieving positive development impact means meeting people’s needs. Blended finance can fulfill local development priorities by enabling the financing of businesses that serve local consumers and create decent jobs. Blended finance should support investments that are aligned with national priorities as is the case with all development finance interventions.

3B - Ensure consistency of blended finance with the aim of local financial market development.

The emergence of efficient local financial markets will be essential to sustainable financing for development. Hence, blended finance should seek opportunities to work with local financial sector actors, where possible, and should avoid approaches that discriminate against the local financial sector.

3C - Use blended finance alongside efforts to promote a sound enabling environment.

A sound enabling environment is a vital condition for mobilising private investment. Blended finance can be a means of achieving development impact in challenging environments, but it can also be an important complement to reform efforts, and should seek to be supportive of them where relevant.

« The need for the effective delivery of finance for development is a critical issue and a core component of achieving the billions to trillions objective; the OECD DAC Blended Finance Principles set out a useful framework which will provide a strong enabling environment. Their adoption by the DAC is an important milestone. »

BERTRAND BADRÉ, CEO, BLUE LIKE AN ORANGE SUSTAINABLE CAPITAL

This guidance is a collaborative effort. We encourage you to send us your questions and comments at: DCD.BlendedFinance@oecd.org