Private Finance Mobilisation Report 2026

3. Challenges and opportunities to scale up mobilisation efforts

Development finance providers should undertake to scale up private finance for sustainable development

Overall, while the trends noted in this report confirm providers’ intention to mobilise additional finance for sustainable development, including for climate action, the amounts mobilised from the private sector remain limited (Chapters 1 and 2). This is mainly because of challenges identified in the architecture of the ecosystem and challenges for providers and private actors when co-investing in developing countries. For instance, the current fragmentation of the ecosystem at the international level hampers the efforts of development finance providers to scale up their mobilisation efforts. Additionally, as shown in Chapter 1, the mobilisation landscape is dominated by several multilateral and bilateral players engaged in several different transactions – through different leveraging mechanisms – to uphold their development commitments and cope with ongoing international crises.

To mobilise private finance at the necessary scale and pace, analysis points to the importance of shifting from individual deal-based investments to broader transformative and systemic efforts (OECD, 2025[1]). Although private finance flows are increasing, shares of mobilised private finance are increasing only gradually, largely driven by isolated opportunities. Tackling long-standing structural obstacles that hinder private investment in developing countries is crucial to convert investor interest into actual investments and tap into global capital reserves to support sustainable development in lower-income countries. The overlap of compounding crises presents new opportunities for development providers to show a well-co-ordinated systemic response, with development partners being urged to maximise the impact of their operations by working together more closely and operating as system (World Bank, 2024[2]).

The lack of robust investment data remains a fundamental obstacle to scaling up private investments, especially in markets where information is relatively scarce

Among the barriers to mobilising private finance for development, data inconsistencies can create a discrepancy between the real and perceived risks related to investment opportunities in developing countries, including in hard contexts and sectors. For instance, in the case of biodiversity and nature-related projects, the weak available data and reporting make it hard to establish a solid evidence base. These obstacles highlight the need for disaggregated investment data based on consistent and harmonised measurement of mobilised private finance. Such data are key to providing private sector actors with the information they need and ensuring effective accountability of their investments.

More data transparency can provide information on how the composition of financing sources for investments in a given sector and geographic context – concessional and non-concessional development finance as well as commercial finance –is evolving, thereby helping to inform decisions on when development finance can eventually exit to avoid a crowding out of private finance. More generally, better data on mobilisation can demystify and dissolve some of the perceived risks associated with investments in developing countries that, alongside real risks associated with such investments, continue to drive decisions of private investors not to invest.

There has been progress in that some development providers are embracing and pursuing more robust evidence and transparency. Yet, some barriers persist. For instance, bilateral institutions have agreed on new rules for the disclosure of data at the activity level, including through PSIs. This is an important step towards the granularity and transparency objectives of the mobilisation agenda. Nonetheless, several remaining challenges hinder progress towards greater transparency and provision of mobilisation data, among them a client confidentiality agreement and the lack of a comparable and harmonised approach to reporting and disclosure. 

The limited availability of robust investment data – reflected in the weak record of transactions in more challenging economic and political environments – hinders private investors’ ability to make informed decisions, given their limited exposure to such contexts.

Development finance efforts to mobilise private finance remain limited relative to the increasing financing needs

Development finance has significant potential to unlock private investment, yet this potential remains underutilised. Almost all bilateral providers and all multilateral institutions responding to a 2022 OECD DAC survey reported that mobilising private resources for development, including for climate action, was to either some or a great extent a strategic objective for their respective institutions (OECD, 2023[3]). The prioritisation of private mobilisation for climate action drew similar responses, with 64% of multilateral providers and 42% of bilateral providers saying it was primarily a strategic objective. Although there have been strong political commitments, advances in blended finance instruments and some growth in private capital mobilisation, overall progress towards scaling up private finance mobilisation has been slow. In particular, the amount of private finance mobilised by bilateral providers has seen only a marginal increase since 2019 (OECD, 2025[4]). Similarly, blended finance has mobilised a relatively low share of private finance in more challenging sectors like education and social sectors as well as in more risky contexts like those facing high and extreme fragility, conflict-affected contexts, LDCs, and LICs.

At the same time, amounts allocated to blended finance schemes remain limited, constraining their ability to drive meaningful market transformation. When deployed effectively, blended finance can play a transformative role, mitigating risks, attracting private capital at scale and fostering deeper, more resilient financial markets. However, for blended finance and other mobilisation tools to achieve their intended impact, they require stronger and more targeted support through development finance.

Standardising financial instruments and structures is critical to strengthen transparency, improve access and scalability of blended finance models, reduce transaction costs, and mitigate information asymmetries (OECD, 2025[4]). While innovative and tailor-made transactions continue to play an important role in market development, it is important to shift the focus towards scaling models that have demonstrated success. This requires greater investment in, and standardisation of, proven instruments and structures for mobilising private capital such as guarantees, insurance mechanisms, GSSS, structured funds and securitisation (OECD, 2025[5]).

Strengthening policy frameworks for investment and institutional capacity is key to facilitating domestic and cross-border private capital flows into developing countries

Investors encounter a range of commercial, financial and political risks in developing countries that hinder capital flows into these geographies. These challenges include macroeconomic instability, currency risk, weak legal and regulatory systems, high transaction costs, and limited access to sustainable project pipelines. Additionally, the high costs of due diligence compared to the relatively small size of deals, along with elevated capital costs, further reduce investor willingness to engage in more sensitive contexts.

Developing countries generally present weak financial systems and capital markets that hamper their ability to attract private investment at scale. Their markets often suffer from low liquidity and a heavy reliance on foreign currency financing, making them vulnerable to exchange rate fluctuations and external shocks. Strengthening domestic financial systems, including capital markets, is also crucial for managing debt sustainability by decreasing both dependence on foreign currency and exposure to currency risk (OECD, 2025[6]). However, these contexts often have a small institutional investor base, and their financial infrastructure, regulatory systems and corporate governance standards are also generally weak. This increases perceived risk and limits the ability to mobilise domestic savings. A comprehensive strategy is needed to reduce currency-related risks, including expanding local institutional investment and improving financial market infrastructure to attract more foreign investment in local currency-denominated securities (Horrocks et al., 2025[7]).

In addition to challenges within the domestic policy and regulatory environments, international financial regulations across advanced economies can also hinder investment in capital-intensive projects, particularly in developing countries. However, while these measures have made the financial system more resilient, some prudential regulations may inadvertently restrict the availability of long-term financing needed for infrastructure and other projects essential to achieving both local and global development goals in developing countries.

The lack of a sound enabling environment in developing countries contributes to fuelling risk perception and information asymmetries among private investors. These, in turn, generate a vicious cycle that hinder private sector participation in the sectors and regions with the greatest financing needs but also the lowest shares of mobilised private finance. Such bottlenecks are further exacerbated by the low expected level of returns on investment portfolios, the lack of project pipelines, foreign currency risk, and limited bankable or sizeable investment opportunities in high-impact projects in frontier markets.

The case of climate and nature-related sectors

Mobilising private finance in specific areas such as climate change adaptation and biodiversity remains particularly challenging. Adaptation and nature-related projects have traditionally been financed by the official sector as they generally do not offer sufficient financial returns to attract private investors. The main reason is the very small size of investment opportunities for adaptation, making it difficult to build a business case and achieve the required scale for private investors to come in (OECD, forthcoming[8]). But private investors generally also have less exposure to and knowledge about climate adaptation and biodiversity-related projects, which lessens their incentive to invest in this domain. Relatedly, adaptation and nature-specific projects and programmes should be structured and developed to involve banks, corporations and other private actors early on, including in design stage financing plans, and consider investors’ concerns in the project design phase (OECD, forthcoming[8]).

Effective investment in climate and biodiversity depends on a stable and enabling policy landscape. Yet, in many developing countries, this foundation is lacking, undermined by un-co-ordinated sector policies, inconsistent regulations and limited government funding for vital infrastructure. These shortcomings discourage sustained private sector involvement. Additionally, insufficient project preparation, ineffective procurement processes and limited capacity to structure public-private partnerships further reduce the availability of viable investment opportunities.

To encourage more private investment into climate and nature-related sectors, development finance providers should continue exploring innovative ways to overcome systemic bottlenecks. To enhance replicability and scalability, they should also reduce the complexity and transaction costs of blended finance approaches, including by clarifying their scope and shape for climate and nature-related projects and engaging with potential commercial private investors to eventually scale up blended finance approaches The way forward to enhance and scale up private finance mobilisation (OECD, forthcoming[8]).

Robust and enhanced evidence is critical to inform policymaking to scale up private finance mobilisation

Development providers should collectively commit to upholding the highest transparency standards and principles to improve data quality, accessibility and availability. Doing so would help reduce data-related barriers that hinder private investment flows to developing countries and social sectors and additionally meet private investors’ needs.

The OECD DAC statistics remain pivotal to providing the highest standards of data and evidence for policymakers and private sector players. Indeed, the enhanced availability, accessibility and quality of disaggregated data at the transaction level have the potential to foster evidence-based decision making, increase investors’ confidence and enable a proper analysis of investment opportunities in developing countries. As shown in the trend analysis in the preceding chapters, data play a key role by mapping and tracking the progress development co-operation providers are making in their private finance mobilisation efforts while also reassuring private investors and building trust in the markets (OECD, 2024[9]). To this end, these statistics are the underlying basis and key source for international discussions and initiatives around the mobilisation agenda, including major analyses such as the OECD book series on Climate Finance and the USD 100 Billion Goal, as well as processes such as Total Official Support for Sustainable Development (TOSSD).

Policymakers should seize the opportunity to engage and take part in existing and high-level initiatives aimed at fostering data granularity and transparency, including through sharing data on mobilisation to the OECD DAC statistics and participation in the Hamburg Data Alliance. It is important to also support and participate in ongoing efforts by the OECD and MDBs to align approaches for measuring mobilisation – including broader baskets such as generation and catalysation – through a more coherent and whole-of-government approach, particularly for those that are council and/or board members of both types of institutions.

In addition, when refining existing metrics on mobilisation and working on approaches for capturing broader baskets of mobilisation, policymakers and stakeholders should remain mindful of the risk of inflating figures, which could lead to undermining the credibility of the statistics on mobilisation and sharpening the focus on quantity of finance rather than on quality.

Effective allocation and use of development finance remain a key determinant for scaling up private finance mobilisation

Enhancing the use and effectiveness of blended finance and other risk mitigation tools is vital for making projects bankable and unlocking private capital for development, climate action and biodiversity goals. These instruments can help attract a diverse range of investors by facilitating risk sharing, mitigating financial exposure and improving creditworthiness. Tailored instruments can also address specific risks at various stages of a project’s lifecycle. However, scaling their impact requires stronger evidence to better understand what drives success, which enabling conditions matter most and what obstacles continue to hinder their adoption.

Ensuring that blended finance lives up to its mobilisation potential requires a stronger focus on the need expressed by private investors for standardised products that emphasise simplicity, efficiency, speed, cost and volume. It also requires more collaboration among donors, DFIs, MDBs and other stakeholders to pool resources, portfolios and ideas on new and more effective approaches and requires the implementation of higher standards on transparency in blended finance, particularly around financial performance, additionality and impact (OECD, 2025[5]). The OECD updated the Blended Finance Guidance in 2025 to ensure that donors, policy makers, commercial actors and other stakeholders in blended finance can respond to the international call for mobilising private finance at scale.

In addition, the long-term success of blended finance to mobilise more investment in EMDEs also hinges on an integrated approach in which technical assistance and other support help build and strengthen enabling environments. This includes interventions that address sustainable regulations and the investment climate in recipient countries as blended finance at the transaction level cannot sustainably compensate for the absence of structural and regulatory reforms. The five OECD DAC Blended Finance Principles continue to provide a strong foundation for upholding high standards in blended finance, with the goal to provide tools and showcase good practices that can help scale up blended finance interventions in the coming years, ultimately making blended finance a routine component of both public and private sector financial operations.

While increasing the volume of finance remains an important objective, the quality of financing flows is equally critical. As such, development finance deployed to mobilise private capital should ensure strong financial and development additionality – meaning that it should ensure that public resources are used only where they unlock investments that would not otherwise occur and where they deliver measurable development outcomes (OECD, 2025[5]). At the same time, the terms, cost of capital and debt implications of financing structures must be carefully considered to avoid exacerbating fiscal vulnerabilities in developing countries, particularly where borrowing already places pressure on public debt sustainability. Recent analysis shows that many developing countries face higher borrowing costs and rising debt servicing burdens, both of which limit fiscal space and can undermine the effectiveness of development finance if financing is not structured carefully (OECD, 2025[10]; OECD, 2026[11]). These concerns have increasingly featured in global policy debates – including discussions at the Finance in Common Summit, the Bridgetown Initiative, the Paris Summit for a New Global Financing Pact and the World Bank and International Monetary Fund Spring Meetings – that emphasised lowering the cost of capital for EMDEs while ensuring that development finance supports sustainable debt trajectories and delivers genuine additionality.

It is essential that policymakers establish sustainable finance regulations, guidance and instruments to help EMDEs overcome gaps in climate and development financing. This includes promoting credible climate transition plans, improving sustainability-related disclosures, and assessing climate- and nature-related financial risks through, for instance, climate scenario analysis and stress testing. The NCQG also recognises the need to strengthen the domestic enabling environment to enable countries to fully realise the potential of climate finance and more broadly make finance consistent with climate mitigation and resilience goals (Falduto, Noels and Jachnik, 2024[12]). Market authorities also play a critical role in identifying and addressing biodiversity and broader nature-related financial risks by evaluating dependencies, impacts, economic implications and transmission channels to the financial system. The OECD’s Supervisory Framework for Nature-related Financial Risks offers valuable support to EMDEs in advancing this agenda (OECD, 2023[13]).

Developing fit-for-purpose sustainable financial instruments is key to driving investment in climate, development and biodiversity that is tailored to specific sectors, technologies and national or regional contexts. This includes both market-based financial products and services as well as blended finance and other risk mitigation tools. Financial authorities in EMDEs can also take clear actions to integrate development, climate and biodiversity considerations into capital market activity, doing so in close co-operation with MDBs, donors and international organisations and in co-ordination with other financial authorities in OECD countries pursuing similar efforts. In the clean energy sector, for example, innovative instruments like energy savings insurance and energy efficiency insurance can help unlock investment in energy efficiency across EMDEs. Effective co-ordination among market authorities and stakeholders, alongside capacity building across the ecosystem, remains critical to advancing the development and uptake of these instruments (OECD, 2025[6]).

Addressing the challenges faced by investors in developing countries and scaling up the volumes of mobilised private finance to close the SDG and climate finance gaps will therefore require a more profound and radical shift in providers’ portfolios and approach in the coming years. Experience sharing between providers (e.g. to develop green bond ecosystems to attract private investors) could help drive behavioural change and contribute to strengthening institutions’ financial capacities and expertise. More comprehensive reporting and full disclosure on co-financing schemes involving private finance would support peer learning in this area and contribute to building trust in the markets and reducing the risk perception. These structural challenges require effective deployment of blended finance approaches including technical assistance programmes, local currency financing and sustainable outcome bonds (e.g. GSSS bonds) (Dembele, Schwarz and Horrocks, 2021[14]; OECD, 2025[15]).

References

[14] Dembele, F., R. Schwarz and P. Horrocks (2021), “Scaling up Green, Social, Sustainability and Sustainability-linked Bond Issuances in Developing Countries”, OECD Development Perspectives, No. 11, OECD Publishing, Paris, https://doi.org/10.1787/8a5c3156-en.

[12] Falduto, C., J. Noels and R. Jachnik (2024), The New Collective Quantified Goal on climate finance: Options for reflecting the role of different sources, actors, and qualitative considerations, OECD Publishing, Paris, https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/05/the-new-collective-quantified-goal-on-climate-finance_b2ac72e8/7b28309b-en.pdf.

[7] Horrocks, P. et al. (2025), “Unlocking local currency financing in emerging markets and developing economies: What role can donors, development finance institutions and multilateral development banks play?”, OECD Development Co-operation Working Papers, No. 117, OECD Publishing, Paris, https://doi.org/10.1787/bc84fde7-en.

[11] OECD (2026), Global Debt Report 2026: Sustaining Debt Market Resilience Under Growing Pressure, OECD Publishing, Paris, https://doi.org/10.1787/e9d80efd-en.

[15] OECD (2025), “FDI in Figures”, OECD Publishing, Paris, https://www.oecd.org/en/publications/fdi-in-figures-april-2025_d5a76fd0-en.html.

[10] OECD (2025), Global Outlook on Financing for Sustainable Development 2025: Towards a More Resilient and Inclusive Architecture, OECD Publishing, Paris, https://doi.org/10.1787/753d5368-en.

[4] OECD (2025), Increasing development finance efforts to scale private finance mobilised and its impact, OECD Publishing, Paris, https://doi.org/10.1787/345b768b-en.

[1] OECD (2025), “Mobilising private finance for development, climate and biodiversity in emerging markets and developing economies: Financing our futures”, OECD Business and Finance Policy Papers, No. 91, OECD Publishing, Paris, https://doi.org/10.1787/ada2dfcd-en.

[5] OECD (2025), OECD DAC Blended Finance Guidance 2025, Best Practices in Development Co-operation, OECD Publishing, Paris, https://doi.org/10.1787/e4a13d2c-en.

[6] OECD (2025), Supporting emerging markets and developing economies in developing their local capital markets, OECD Publishing, Paris, https://doi.org/10.1787/4456de62-en.

[9] OECD (2024), Multilateral Development Finance 2024, OECD Publishing, Paris, https://doi.org/10.1787/8f1e2b9b-en.

[13] OECD (2023), “A supervisory framework for assessing nature-related financial risks: Identifying and navigating biodiversity risks”, OECD Business and Finance Policy Papers, No. 33, OECD Publishing, Paris, https://doi.org/10.1787/a8e4991f-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.

[8] OECD (forthcoming), Blended Finance Guidance for Climate Change Adaptation, OECD Publishing, Paris.

[2] World Bank (2024), “Scaling Up Co-Financing for Greater Development Impact”, https://www.worldbank.org/en/news/feature/2024/04/23/scaling-up-co-financing-for-greater-development-impact.