There is scope to scale and improve development finance efforts to mobilise private finance, including by scaling models, instruments and structures that have proven effective, and strengthening the impact of this additional finance.
Guarantees, insurance, structured funds, securitisation as well as green, social, sustainability and sustainability-linked (GSSS) bonds are examples of models, instruments and structures that can effectively mobilise private finance through concessional or non-concessional development finance.
Standardisation of blended finance instruments can increase transparency, accessibility and replicability of blended finance models, and reduce transaction costs and information asymmetries.
Country platforms and other multi-stakeholder efforts are conducive enabling conditions to scale private finance mobilisation.
Blended finance transactions must be anchored in a development impact rationale to enable learning, accountability and trust.
The OECD is supporting members to increase development finance efforts to scale up private finance mobilised and its impacts through (1) guidance on more and better use of blended finance, including for adaptation and clean energy, (2) analysis of the use of mobilisation instruments, including guarantees, GSSS bonds, structured funds and for EMDE-led efforts in support of their just clean energy transitions as well as for biodiversity, and (3) impact standards for donors, development finance institutions (DFIs) and private sector actors to generate positive development impacts in EMDEs.
Specifically, this work aims to support members to (1) direct more development finance to mobilisation efforts, (2) allocate more resources to, and standardise, those models, instruments and structures that are effective, and (3) systematically integrate impact considerations into development and blended finance transactions.
Increasing development finance efforts to scale private finance mobilised and its impact
Sustainable development, including through ambitious climate and biodiversity action, in emerging markets and developing economies (EMDEs) presents both significant investment opportunities and urgent needs. Against the backdrop of scarce public finance and Official Development Assistance (ODA), as well as escalating debt sustainability concerns, blended finance1 is gaining attention as a key instrument to mobilise private finance; private capital mobilisation for sustainable development impact is on the FfD4 agenda and UNFCCC COP30 this year (UN DESA, 2025[1]).
While multiple blended finance models, instruments and structures – such as guarantees, insurance, structured funds, securitisation, and green, social, sustainability and sustainability-linked (GSSS) bonds – have demonstrated effectiveness in mobilising private finance, they remain underutilised and lack scale (OECD, Forthcoming[2]). Currently, only 18% of the financial instruments in development finance providers primarily targeted private finance mobilisation as a main objective (OECD, 2023[3]).
To better match ambitions with actual financial flows, development finance should increase efforts to mobilise private finance, including by scaling these models, instruments and structures, and strengthening the impact of this additional finance. Scaling and standardising blended finance must be coupled with the tailored and adequate use of instruments against sectors, technologies and country contexts. To maximise impact, development finance providers should engage in blended finance with a catalytic intention, deploying it in combination with policy support, capacity building and support to country-led efforts to coordinate key stakeholders for the creation of project pipelines.
Despite broad recognition of the potential of blended finance and other tools to mobilise private finance, actual mobilisation remains modest. In 2023, private finance mobilised through official development finance interventions totaled USD 70 billion (OECD, 2023[3]), with OECD DAC countries mobilising USD 15.4 billion (OECD, 2025[4]). The volumes of private finance mobilised remain relatively low compared to overall development finance flows (OECD, 2025[5]; 2025[6]).
To close the gap between ambitions and outcomes, the catalytic and market building function of blended finance needs to be fully leveraged. While blended finance can mobilise private finance through a transaction-based approach, its additional potential lies in de-risking nascent markets and building investor confidence – particularly in higher-risk environments such as least developed countries (LDCs) and emerging technologies. In these contexts, initial mobilisation volumes may be limited, but these early investments are vital in enabling private investors to gain exposure and for a track record of investments in EMDEs to develop, thereby creating the conditions for market development and future scale (see also Figure 1) (OECD, 2018[7]).
Given that only a small share of development finance is currently directed toward private finance mobilisation, it is important to define clear ambitions and expectations for its role. In 2023, DAC countries disbursed USD 10.8 billion in support of mobilisation activities, through concessional and non-concessional activities, towards public and private sectors as well as in the form of contingent liabilities such as guarantees or insurance (OECD, 2025[5])2. While not all development finance is intended or suited to mobilise private finance, development finance that targets private finance mobilisation should be clearly defined and disbursed as such, into instruments, mechanisms and approaches that scale or build markets. This clarity is essential to guide the design and deployment of mobilisation strategies, and to assess their effectiveness over time.
Source: OECD (2018[7]), Making Blended Finance Work for the Sustainable Development Goals, https://doi.org/10.1787/9789264288768-en..
Increased use and efficiency of blended finance and other risk mitigation instruments can play a critical role in making transactions bankable and unlocking private investment for development, climate and biodiversity. Blended finance and other risk mitigation instruments can attract different types of investors and support risk allocation and mitigation as well as credit enhancement. Different types of instruments can target specific risks at different stages of a project life cycle. To support scale, more evidence is needed to identify success and enabling factors as well as key bottlenecks and barriers to their effective use and uptake.
In addition, there is a need to standardise financial instruments, to increase transparency, accessibility and replicability of blended finance models, and decrease transaction costs and information asymmetries (OECD, Forthcoming[2]). Innovative, first time and bespoke transactions remain critical in supporting market building efforts and experimenting new approaches. Yet a shift to implementing models that have proven to work effectively and at large scale is needed. There is a need to allocate more resources to – and standardise – the models, instruments and structures that have proven effective in mobilising private finance, including guarantees, insurance, GSSS bonds, structured funds, and securitisation.
Guarantees are among the most effective risk mitigation instruments, offering a low-cost approach, as well as high capital efficiency and high mobilisation volumes (Garbacz, Vilalta and Moller, 2021[8]). In 2023, guarantees extended by official development finance providers mobilised USD 17 billion in private finance – second only to syndicated loans which stood at USD 19 billion (OECD, 2024[9]; OECD, Forthcoming[2]))3. The recent decision of the OECD Development Assistance Committee (DAC) to account in ODA for the donors' effort in issuing guarantees is expected to further incentivise the deployment of such instrument. Today however, there is still limited availability of guarantees, particularly for higher risk countries (OECD, Forthcoming[2]). Guarantees can attract new types of investors and financiers, allocate risks efficiently and contribute to credit enhancement, including for smaller businesses that are delivering climate solutions to different economic actors (OECD, 2024[10]). Different types of guarantees can target specific risks at different stages of a clean energy project life cycle. For example, partial risk guarantees and credit guarantees can be useful during the construction phase, while local currency or performance guarantees during the operational stage (OECD, 2022[11]). Several de-risking instruments can be implemented in parallel, to complement each other. Deploying these instruments, however, involves complexities and costs that require accurate pricing and management. While such instruments can be effective in kickstarting and supporting the scaling of clean energy markets, strategic policy support is necessary (Bellesi, Denis and Schenk, Forthcoming[12]).
Insurance policies fulfil a similar role than guarantees but often require specific conditions to be met before payment is issued (Bellesi, Denis and Schenk, Forthcoming[12]).4 These conditions can often take the form of particular risks, situations, types of damage and contingent damages and losses. For example, energy savings insurance5 and energy efficiency insurance products6 have proven successful in unlocking investment in energy efficiency in a range of EMDEs.
GSSS bonds7 are market-based instruments that OECD members and their development finance partners can use for development outcomes, generating scale, being attractive to institutional investors, and raising capital for sustainable projects (OECD, Forthcoming[13]). However, GSSS bonds have to-date not been issued in the countries or regions with the greatest financing needs. In 2022, only 13% of the overall GSS bond market came from issuers in developing countries, or 5% in developing countries excluding the People’s Republic of China (OECD, 2023[14]). The same pattern can be seen with regards to newer sustainability-linked bonds (SLBs): in 2022, only 5% of overall SLB market came from issuers in developing countries (OECD, 2024[15]).
Recognising the potential that GSSS bonds hold to mobilise private finance and drive development outcomes, OECD members and development finance providers have a role to play in supporting issuances in developing countries – and doing so in a co-ordinated manner. In particular, efforts should focus on intervening in five key policy areas: issuance, investment, insurance, (market)-infrastructure and impact (OECD, 2023[14]; 2024[15]). This can include, for example, risk-sharing mechanisms such as guarantees provided to specific issuances, or technical assistance to support the broader enabling environment necessary for a functioning bond market. More broadly, support to GSSS bonds, especially in developing countries, must be subject to debt sustainability considerations: issuers must be able to take on more debt. Additionally, subnational governments, can be empowered to issue their own green bonds and attract private investment.
Structured funds8 blend development and commercial resources, and can attract additional financing at both the fund and project levels (Basile, Bellesi and Singh, 2020[16]). Despite the potential, institutional investors contribute only about 4% of total capital (Dembele et al., 2022[17]). Standardisation, consolidation, and scaling of these vehicles will be essential to meet institutional investors’ requirements and unlock greater private finance flows.
Securitisation9 enables development finance providers to pool and tranche illiquid assets, transforming them into investible securities and making them accessible to institutional investors while sharing risk (OECD, Forthcoming[2]). For example, outstanding loans issued by development banks or local financial institutions can be tranched with different degrees of credit risk, and investors can buy parts of this portfolio (OECD, 2021[18]). In doing so, risk-sharing is enhanced and the capital market is leveraged into financing critical sectors such as infrastructure and SME financing (Box 1). It encourages the development of new financial instruments in which institutional investors can invest, signalling to the market that EMDE assets are investible. Securitisation in development finance provides an opportunity for development finance providers and other market players to learn from each other, collaborate, and build a market (OECD, Forthcoming[2]).
In 2023, Bayfront Infrastructure Management, supported by the United Kingdom's MOBILIST programme, executed an innovative securitisation of infrastructure loans and bonds to address the financing gap in developing regions. The transaction involved the issuance of USD 410.3 million in infrastructure asset-backed securities. Listed on the Singapore Stock Exchange, these securities provided investors with exposure to a diversified portfolio of project and infrastructure loans and bonds sourced from across multiple regions, including Asia-Pacific, the Middle East, Africa and the Americas. The loans supported various large-scale infrastructure projects, such as energy projects, transportation, utilities, and green and social assets. The loans were primarily originated by commercial banks, but the portfolio also included loans originated or co-financed by multilateral development banks (MDBs). The transaction is an example of market creation through demonstration. It uses an innovative financial model that can be replicated for mobilising private capital through securitisation. It exemplifies how public funds can mobilise institutional investment at scale while investing pari passu with private capital, particularly for climate-resilient infrastructure.
Source: OECD (Forthcoming[2]), Blended Finance Guidance Second Edition: From Ambition to Action.
Country platforms provide an increasingly important framework to coordinate and mobilise private finance for EMDEs’ development priorities, including just energy transitions and building sustainable energy systems. These partnerships bring together key stakeholders, including bilateral donors, MDBs, other development banks and development finance institutions, international organisations, industry associations, private sector and civil society, to support partner countries in their transition pathways. In particular, Just Energy Transition Partnerships (JETPs) established in South Africa, Indonesia, Senegal and Viet Nam, along with other country platforms such as Egypt’s Nexus of Food, Water & Energy (NWFE) Program and Bangladesh's Climate and Development Platform, offer practical models for multi-stakeholder collaboration.
Beyond energy, country platforms are evolving to address a broader range of development priorities through integrated national planning processes aligned with NDCs and long-term strategies. They rely on strategic planning work carried out at national level, which paves the way for appropriate transition pathways, and is interlinked with Nationally Determined Contributions (NDCs) and Long-Term Strategies (LTS). Mirroring the need to go beyond a transaction-based approach, towards systemic action, country platforms often involve a mix of concessional financing, technical assistance, policy reform and capacity building to help EMDEs achieve transition priorities.
Creating an enabling framework for subnational governments to mobilise private finance is also essential to unlock sustainable investments. Subnational governments are pivotal actors in driving economic development and addressing climate and biodiversity challenges at the local level. Yet their access to private finance remains limited due to regulatory, fiscal, and institutional constraints. Strengthening subnational capacity to mobilise private finance requires targeted reforms to fiscal and regulatory frameworks that facilitate access to capital markets—including the issuance of green, social, sustainable, and sustainability-linked (GSSS) bonds—and clear rules for managing private finance responsibly at the subnational level (Chatry et al., 2025[19]). When such conditions are in place, capital markets can effectively support development projects (United Republic of Tanzania, 2024[20]).
More broadly, macro-level technical assistance also has a key role to play in allowing private capital to flow effectively and at scale. Such technical assistance – which focuses on interventions that drive long-term, systemic change in the investment environment of EMDEs rather than supporting specific, ring-fenced projects – can help EMDEs obtain the necessary technical capacities or develop the policy and regulatory environment which in turn mobilise the private sector effectively (OECD, 2025[21]). Macro-level technical assistance can therefore relate to capacity building of official sector authorities, e.g. to strengthen investment promotion at both national and local levels, and policy and regulatory reforms (aimed at supporting private sector development and mobilisation) (OECD, Forthcoming[22])). Despite its advantages, macro-level technical assistance remains underutilised; there is a need for development actors to work together to scale and harmonise its use (OECD, Forthcoming[22])
Mobilising private finance is not only about scale and leverage, but about ensuring that investments deliver development, climate and biodiversity outcomes. Development impact must be systematically integrated from the design stage of blended finance transactions, not merely assessed ex-post (OECD/UNDP, 2021[23]). Recent progress on impact management frameworks and common indicators is encouraging, but evaluations remain limited (OECD, Forthcoming[2])). Strengthening transparency, accountability, and learning will be essential to build trust and credibility.
The OECD is supporting members to advance private finance mobilisation through multiple workstreams:
The OECD DAC Blended Finance Principles and the forthcoming updated OECD DAC Blended Finance Guidance (OECD, Forthcoming[2]))10, together with the forthcoming OECD Blended Finance Guidance for Climate Change Adaptation and OECD Blended Finance Guidance for Clean Energy offer practical frameworks to scale blended finance efforts for climate, energy, and broader sustainable development priorities (OECD, 2018[24]; OECD, 2021[25]; OECD, 2022[26]; OECD, Forthcoming[27])).
Through the Clean Energy Finance and Investment Mobilisation (CEFIM) Programme, the OECD is generating targeted analysis on guarantees and other risk mitigation instruments for clean energy investments in EMDEs, and providing broader support to EMDEs and development partners to scale up clean energy finance and investment mobilisation.
Convening platforms to foster knowledge-sharing and coordination, including at key international milestones such as FfD4, COP30 and others, and participating in global initiatives such as the Global Blended Finance Alliance.
The OECD-UNDP Impact Standards for Financing Sustainable Development provide a comprehensive guidance for donors, development banks, DFIs and their private sector partners for embedding development impact into financial decision making and project design (OECD/UNDP, 2021[23]).
With this work, the OECD Secretariat is working to support OECD members to:
Direct greater development finance resources towards mobilisation-focused models, instruments and structures, ensuring clear mandates and effective structures. For example, DAC countries disbursed USD 10.8 billion in 2023 in support of mobilisation activities, through concessional and non-concessional activities, towards public and private sectors as well as in the form of contingent liabilities such as guarantees or insurance.
Standardise and scale proven models, instruments and structures – such as guarantees, insurance, structured funds, securitisation and GSSS bonds – while addressing fragmentation and investor needs (OECD, Forthcoming[2]). EMDEs, along with OECD members, need to take stock of emerging lessons from Just Energy Transition Partnerships (JETPs) and other country platforms, and identify (i) opportunities for improving impact in terms of development finance use and private finance mobilisation, as well as (ii) priorities to enhance participatory governance. This is a key issue for FfD4.
Mainstream development impact considerations across all mobilisation efforts, leveraging existing standards and frameworks to ensure accountability, transparency and learning.
References
[16] Basile, I., V. Bellesi and V. Singh (2020), “Blended Finance Funds and Facilities - 2018 Survey Results Part II: Development Performance”, OECD Development Co-operation Working Papers, No. 67, OECD Publishing, Paris, https://doi.org/10.1787/7c194ce5-en.
[12] Bellesi, V., B. Denis and C. Schenk (Forthcoming), Guarantees and other risk mitigation instruments for clean energy: Harnessing blended finance to scale investments in emerging markets and developing economies, OECD Publishing.
[19] Chatry, I. et al. (2025), “Mobilising sustainable finance for regions and cities”, OECD Regional Development Papers, No. 132, OECD Publishing, Paris, https://doi.org/10.1787/2af8dadb-en.
[17] Dembele, F. et al. (2022), “Blended finance funds and facilities: 2020 survey results”, OECD Development Co-operation Working Papers, No. 107, OECD Publishing, Paris, https://doi.org/10.1787/fb282f7e-en.
[8] Garbacz, W., D. Vilalta and L. Moller (2021), “The role of guarantees in blended finance”, OECD Development Co-operation Working Papers, No. 97, OECD Publishing, Paris, https://doi.org/10.1787/730e1498-en.
[30] MOBILIST (2023), Research note: Securitisation for sustainable development.
[4] OECD (2025), Mobilised private finance for development, https://www.oecd.org/en/topics/sub-issues/leveraging-private-finance-for-development.html (accessed on 10 April 2025).
[6] OECD (2025), ODA trends and statistics, https://www.oecd.org/en/topics/oda-trends-and-statistics.html.
[29] OECD (2025), OECD DAC Statistics on Mobilised Private Finance, http://data-explorer.oecd.org/s/12p.
[5] OECD (2025), OECD Data Explorer - CRS - Private: Mobilised private finance for development, http://data-explorer.oecd.org/s/n2.
[21] OECD (2025), Supporting emerging markets and developing economies in developing their local capital markets, OECD Publishing, Paris, https://doi.org/10.1787/4456de62-en.
[10] OECD (2024), Financing SMEs and Entrepreneurs 2024: An OECD Scoreboard, OECD Publishing, Paris, https://doi.org/10.1787/fa521246-en.
[9] OECD (2024), Leveraging Private Finance for Development, https://www.oecd.org/en/topics/leveraging-private-finance-for-development.html.
[15] OECD (2024), “Sustainability-Linked Bonds: How to make them work in developing countries, and how donors can help”, OECD Development Perspectives, No. 44, OECD Publishing, Paris, https://doi.org/10.1787/7ca58c00-en.
[14] OECD (2023), “Green, Social and Sustainability Bonds in Developing Countries: The case for increased donor co-ordination”, OECD Development Perspectives, No. 31, OECD Publishing, Paris, https://doi.org/10.1787/1cce4551-en.
[3] OECD (2023), “Private finance mobilised by official development finance interventions”, OECD Development Perspectives, No. 29, OECD Publishing, Paris, https://doi.org/10.1787/c5fb4a6c-en.
[26] OECD (2022), “OECD blended finance guidance for clean energy”, OECD Environment Policy Papers, No. 31, OECD Publishing, Paris, https://doi.org/10.1787/596e2436-en.
[11] OECD (2022), “OECD Blended Finance Guidance for Clean Energy”, OECD Environment Policy Papers, No. 31, OECD Publishing, Paris, https://doi.org/10.1787/596e2436-en.
[18] OECD (2021), “Making Blended Finance Work for Sustainable Development: The Role of Risk Transfer Mechanisms”, OECD Development Co-operation Directorate, Paris., https://www.oecd.org/content/dam/oecd/en/publications/reports/2021/09/making-blended-finance-work-for-sustainable-development_86e69cb7/52138dbb-en.pdf (accessed on 14 October 2022).
[25] OECD (2021), The OECD DAC Blended Finance Guidance, Best Practices in Development Co-operation, OECD Publishing, Paris, https://doi.org/10.1787/ded656b4-en.
[7] OECD (2018), Making Blended Finance Work for the Sustainable Development Goals, OECD Publishing, Paris, https://doi.org/10.1787/9789264288768-en.
[24] OECD (2018), OECD DAC Blended Finance Principles: For Unlocking Commercial Finance for the Sustainable Development Goals, Best Practices in Development Co-operation, OECD Publishing, Paris, https://doi.org/10.1787/dc66bd9c-en.
[28] OECD (2018), The OECD DAC Blended Finance Principles, https://www.oecd.org/content/dam/oecd/en/publications/reports/2018/12/oecd-dac-blended-finance-principles_898d3549/dc66bd9c-en.pdf.
[2] OECD (Forthcoming), Blended Finance Guidance Second Edition: From Ambition to Action.
[27] OECD (Forthcoming), OECD Blended Finance Guidance for Climate Change Adaptation.
[13] OECD (Forthcoming), Scaling up public financing and non-financial support for SME sustainability.
[22] OECD (Forthcoming), The Role of Catalytic Technical Assistance in Unlocking Private Sector Capital.
[23] OECD/UNDP (2021), OECD-UNDP Impact Standards for Financing Sustainable Development, Best Practices in Development Co-operation, OECD Publishing, Paris, https://doi.org/10.1787/744f982e-en.
[1] UN DESA (2025), First draft: Outcome document of the Fourth International Conference on Financing for Development I. A renewed global financing framework, https://financing.desa.un.org/sites/default/files/2025-03/FFD4%20Outcome%20First%20Draft.pdf (accessed on 10 April 2025).
[20] United Republic of Tanzania (2024), Tanga Water Green Bond, https://www.uncdf.org/article/8675/prospectus-of-the-tanga-uwasa-bond-financing-clean-water-infrastructure-in-tanga-city.
← 1. The OECD defines blended finance as “the strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing countries” (OECD, 2018[28]).
← 2. This includes private sector instruments (PSI) activities, whether they are mobilising private finance or not, and non-PSI activities that mobilise private finance.
← 3. For the energy sector, guarantees even mobilised 23% of total private finance mobilised in this sector in 2022 (OECD, 2025[29]).
← 4. While guarantees are often financial in nature and result in payment by a guarantor in the event of non-payment by a guaranteed entity to a third party.
← 5. Energy Savings Insurance (ESI) schemes compensate for shortfalls in guaranteed savings. The instrument consists of an insurance product and a package of complementary measures, including standardised contracts, independent third-party verification and financing (e.g. through credit lines from development banks, sometimes supported through grants) (Bellesi, Denis and Schenk, Forthcoming[12]).
← 6. Energy Efficiency Insurance (EEI) products typically addresses risks beyond energy savings performance, covering also equipment damage and shortfalls in revenue (Bellesi, Denis and Schenk, Forthcoming[12]).
← 7. GSSS bonds can be divided into two sub-categories – green, social and sustainability (GSS) bonds and sustainability-linked bonds (SLBs) – based on the different underlying mechanisms. GSS bonds are use-of-proceeds instruments that are tied to underlying assets, whereas SLBs have structural and/or financial characteristics that change depending on whether issuers meet pre-defined sustainability objectives.
← 8. Funds can be structured in different ways – either with a flat structure where all investors share the same risk-return profile (pari passu) or in a layered structure that allocates risks and returns differently across different investor classes.
← 9. Securitisation refers to the conversion of an asset, especially a loan (or a basket thereof), into marketable securities, typically for the purpose of raising cash (and/or transferring risk) by selling them to other investors. It can transform a diversified pool of underlying assets into securities that can be listed and traded, issued with credit ratings that meet a range of investors’ risk-return preferences. The investors who buy these securities receive payments from the underlying assets, while the capital freed up by the originator of the loans or receivables can be recycled into new projects and loans (MOBILIST, 2023[30]; OECD, 2018[7]).
← 10. The updated Guidance will be published in Autumn 2025.