8 July 2025 - For years, blended finance —utilizing public development funds to attract private investment in developing countries —has been touted as a powerful means to bridge the financing gap for achieving the Sustainable Development Goals (SDGs). However, with this gap currently standing at US$4 trillion, according to data from the United Nations Department of Economic and Social Affairs (UN DESA), blended finance is not living up to its potential.

“Blended finance can unlock private capital for sustainable development,” said UN Under-Secretary-General Li Junhua in opening remarks on Wednesday at a standing-room-only UN DESA Global Policy Dialogue on “Reimagining Blended Finance: Aligning Capital with the SDGs,” held at the fourth International Conference on Financing for Development (FFD4) in Sevilla, Spain.  

However, he noted that “current models fall short of the scale, speed, and impact required. Too often, investments are concentrated in a few markets and sectors, leaving behind the countries and communities most in need.”

He called upon members of the UN High-level Advisory Board on Economic and Social Affairs (HLAB) present in Sevilla to offer ways to correct this.

In the first of two panels, Mariana Mazzucato, a professor at University College London, offered her views.

“We need concessional resources to steer private capital towards defined public missions and long-term structural transformation objectives rather than narrowly targeting individual project bankability,” she said.

Jose Antonio Ocampo, a former finance minister of Colombia and current professor at Columbia University, said that one of the strengths of the outcome document of FFD4 – the Compromiso de Sevilla  – is that it provides more funding for multinational development banks (MDBs) and a path for them to better support national development banks to (NDBs). This type of improved financial system design could “make viable some kind of investment that is long-term or risky or totally new,” he said.

The second discussion focused on highlighting specific examples of ways in which blended finance can work.

Stephany Griffith-Jones, Vice-Governor of the Central Bank of Chile, pointed to the development of one of the COVID-19 vaccines as a positive example of blended finance, as it involved investment from the European Investment Bank, European Union and the private sector, where the “risks and the profits were shared for the common good.”

More examples of this are needed, particularly in the developing world, panelists said. For instance, better technology transfer must be improved to help people in the Global South reach their full potential, said Fadhel Kaboub, associate professor at Denison University.

Pointing to Africa, which has a growing renewable energy industry, he said that it should have “access to the manufacturing technology to use its own critical minerals, to actually have green industrialization to manufacture and deploy the building blocks of this massive potential.”

More than 50 people attended the event in person, while over 250 participants joined live on Zoom. More than 500 people have watched all or some part of the event on Facebook.

Want to learn more? Watch the full UN DESA Global Policy Dialogue here.