Additionality is central to the mandate of IDB Invest and is embedded in its founding documents and Impact Management Framework. In 2025, IDB Invest updated its additionality framework in line with its New Vision and Business Model, aiming to deliver greater impact on a larger scale.
IDB Invest’s additionality assessment framework
Abstract
Despite being absolutely essential, assessing additionality is one of the most difficult and contested aspects of blended finance. The challenge lies in the fact that additionality is counterfactual by nature; it requires proving that something would have happened without the intervention. This makes it conceptually tricky, methodologically complex, and politically sensitive. Using a set of guiding principles and defined means of verification, IDB Invest has established a robust framework for assessing additionality.
Additionality is central to the mandate of IDB Invest and is embedded in its founding documents and Impact Management Framework. Its approach responds to two fundamental questions:
Would IDB Invest participation make the transaction feasible or improve the conditions for its implementation?
Would IDB Invest participation contribute to enhancing the operation’s impact and/or building the client’s capacity for long-term sustainability?
In 2025, IDB Invest updated its additionality framework in line with its New Vision and Business Model, aiming to deliver greater impact on a larger scale. The framework – which is aligned with the Multilateral Development Banks' Harmonized Framework for Additionality in Private Sector Operations that IDB Invest jointly developed with other MDBs in 2018 - is guided by the following principles:
1. Additionality is embedded in the project’s theory of change. The analysis of additionality should identify the specific barriers in the country and sector that are impeding the investment and how IDB Invest’s involvement will address these barriers to unlock private investment (i.e. reducing information asymmetries, technological, regulatory or macroeconomic risk, etc.).
2. Additionality is based on a deep analysis of country contexts and client profiles. The assessment should consider the country and sector context (e.g. availability of private sector financing and sector maturity), market conditions, the client’s risk profile and level of preparedness to implement the project, and a counterfactual scenario where IDB Invest does not participate in the investment. This allows IDB Invest to pinpoint the essence and scale of its additionality. In other words, some projects would not go ahead without the involvement of a development finance institution whereas others would go ahead but with weaker financing conditions or in a less timely manner.
3. Additionality is maximised through a long-term approach that leverages IDB Group synergies. A strategic approach to additionality in countries and sectors in the long-term, leveraging synergies with the IDB Group, increases the chances of achieving higher additionality.
4. Additionality is assessed based on available evidence and market knowledge. Demonstrating additionality requires providing a justification and evidence (e.g. financial market information, sector/ industry reports, sensitivity analysis, academic research) to the extent possible, which will be complemented by expert judgement from IDB Invest’s Development Effectiveness team.
5. Additionality is assessed throughout the project cycle from origination to supervision and final evaluation. The ex-ante additionality assessment helps identify projects where IDB Invest brings the most value to enhance the delivery of impact. During supervision, the additionality assessment helps IDB Invest track progress towards expectations and identify areas for improvement. At the final evaluation stage, the additionality assessment analyses to what extent IDB Invest’s contribution proved to be additional to achieve the expected results and captures lessons learned to inform future operations.
6. IDB Invest is committed to enhancing the transparency of its additionality assessments. As part of an IDB Invest institutional initiative, the aim is for the organisation to improve the consistency of the disclosures of both the expected and actual financial and non-financial additionality of its operations. IDB Invest recognises that there are challenges involved, particularly when it comes to sharing client information, and it is actively working to address these challenges while ensuring that its disclosures remain accurate and meaningful. IDB Invest's goal is to strike a balance between transparency and confidentiality, thereby fostering trust and accountability in its processes.
All projects are assessed and scored in terms of their financial and non-financial additionality following explicit guidelines in the DELTA Impact Rating System.
Financial Additionality
Financial additionality refers to the terms and conditions offered by IDB Invest and the resources it mobilises from third parties. The terms and conditions offered, such as the type of innovative financing instrument or structure, vary depending on the client’s profile, the economic context, and availability of financing in the country of operations, resulting in different degrees of financial additionality. IDB Invest financing must exhibit a measurable degree of financial additionality by offering terms and conditions that surpass those currently available in the market.
The Terms and Conditions element includes a contextual component (Country, Sector, and Client Profile) and three components related to financing characteristics (Financing Structure, Innovative Financing Instruments, and Own Account Equity). The Resource Mobilization element focuses on direct mobilisation (core mobilisation) and indirect mobilisation, both of which include a range of products with distinct features (e.g. different degrees of risk bearing).
Demonstrating Financial Additionality
Providing robust supporting evidence to demonstrate financial additionality can be a complex task due to limited publicly available information to establish benchmarks. Due to this limitation, estimates of additionality have traditionally been based on rigorous qualitative assessments. In addition, additionality assessments should be accompanied by some sort of evidence or means of verification and proper documentation of the baseline situation. Examples of means of verification include:
Terms and Conditions:
Financial statements, financial models, economic reports, letters from the client, communications with commercial banks on financing terms and conditions available in the market.
IDB Group country and sector diagnostics.
Analysis of the economic context and external factors that may impact the project. The additionality of improved structures often resides in how well they manage or mitigate some of the project’s identified risks that prevent access to finance, such as political instability, market uncertainty, climate or technological risks.
Resource Mobilisation:
Evidence of an active and direct involvement may include mandate letters, contracts such as loan syndication agreements and guarantee contracts, memorandums of understanding, fees linked to financial commitment, or other auditable evidence that private investors have made their participation in a project conditional on the participation of IDB Invest.
Non-financial Additionality
Non-financial additionality refers to non-financial products and services provided by IDB Invest to maximise the impact of projects and reinforce clients’ capabilities, including promoting the adoption of high environmental, social and corporate governance (ESG) standards, mitigating non-financial risks, and strengthening markets and business environments through upstream support. It also includes generating knowledge and supporting innovation and capacity building to enhance the scale, quality, timing and/or sustainability of the impact delivered.
Demonstrating Non-financial Additionality
The effects of upstream non-financial additionality products and services are typically visible at the project approval; however, the effects of downstream non-financial products and services may not be observable until the supervision and evaluation stages of the project. Evidence of non-financial additionality may be justified by providing market information on identified project risks expected to be mitigated by IDB Invest’s involvement such as country rating reports, documented expected changes in sector/market regulation relevant to the project, loan agreement provisions regarding the implementation of non-financial services, among others.
The IDB Invest example presents a robust additionality assessment framework that follows a set of guiding principles and defined means of verification to ensure rigour and consistency. Additionality is embedded in each project’s theory of change and is assessed throughout the project cycle based on qualitative and quantitative measures, as well as a counterfactual scenario. Assessing additionality throughout the project cycle, including at the final evaluation stage, allows IDB Invest to test assumptions and accumulate knowledge and lessons learned which may serve to inform future operations. IDB Invest’s additionality assessment framework serves as an inspiration to other providers of blended finance.
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