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Blended Finance Principles

OECD DAC Blended Finance Principles

Unlocking Commercial Finance for the Sustainable Development Goals

Quotes
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
The private sector recognises that donors need an effective framework in order to take blended finance forward to the next level, these Principles provide the step in that direction, which now needs to be taken. Julia PRESCOT Head of Strategy, MERIDIAM
The OECD DAC Principles are another important step forward to align the international community, and especially, the key development participants, around mobilizing the funding that can help deliver the SDGs. H.E. LUHUT PANJAITAN Coordinating Minister for Maritime Affairs,
REPUBLIC OF INDONESIA

Blended finance can help bridge the investment gap for the SDGs, but requires a common framework.

Delivering the 2030 Agenda and the Paris Agreement will require all sources of finance - development and commercial  - to be scaled up.  Official Development Assistance (ODA) continues to play an indispensable role in financing the Sustainable Development Goals (SDGs). We need to move from 'billions to trillions' to meet the volume of resources needed, well beyond the USD 146.6 billion provided as official development assistance (ODA) in 2017. Development finance helps unlocking and channelling finance from other sources towards development uses.

Mobilising additional capital that would not otherwise support development outcomes is increasingly required in the deployment of development finance. In this context, blended finance attracts commercial capital towards projects that benefit society while providing financial return to investors.

Ensuring that blended finance delivers on its promise. The OECD DAC Blended Finance Principles for Unlocking Commercial Finance for the Sustainable Development Goals are a policy tool for all providers of development finance - donor governments, development co-operation agencies, philanthropies and other concerned stakeholders. They build upon already established commitments on ODA targets, leaving no-one behind, development effectiveness, and aid untying.

Definition

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

 

Putting Principles into Practice

OECD is currently working on more detailed guidance for policy makers to support the implementation of these Principles. The guidance will provide best practice examples, support the development of effective policies and facilitate accountability. The OECD blended finance work aims to further deepen the analysis of blended finance practices, with a practical orientation on performance, and focus on developmental and financial metrics.

Work on blended finance stands to benefit substantially from further analysis and guidance on issues such as effectively targeting economies and sectors that ensure blending delivers on its potential to mobilise capital, deliver impact and transform economies. To achieve this, greater transparency is needed both for blended finance and other development interventions – e.g. common and harmonised results frameworks, performance measurement and product standards.

The Blended Finance Principles will be further used to inform our key partners such as the UN, EU and World Economic Forum in progressing blended finance best practices, as well as through forums such as the G20 and G7. We therefore look forward to further engaging with key stakeholders in order to deliver the SDGs.