Scaling blended finance to mobilize private SDG investments in LDCs and other vulnerable countries (UNDESA, UN-OHRLLS, UNCDF, Nepal, Global Investors for Sustainable Development Alliance, International Organization of Employers, Convergence)

17 September 2023 - 3:15pm to 4:45pm

Recording available on UN Webtv: Scaling blended finance to mobilize private SDG investments in LDCs and other vulnerable countries (SDG Action Weekend, Side Event) | UN Web TV

Information, concept note and agenda here.

Blended finance is the strategic use of development finance for the mobilization of commercial finance towards sustainable development in developing countries. It holds the potential to unlock significant private sector finance necessary to fill the SDG finance gap, especially if applied in coordination with technical assistance, policy reforms and market development initiatives. The Addis Ababa Action Agenda identifies the potential and challenges of blended finance and provides a set of principles to ensure that risk and rewards are shared fairly among all stakeholders.

However, the expansion of blended finance has slowed significantly following steady growth between 2012-2020. Furthermore, to date most blended finance transactions have occurred in middle-income countries and bypassed the least developed countries (LDCs) and other vulnerable countries. In general, there continues to be very low levels of private investment – both domestic and cross-border – with less than 5% of the estimated $480 trillion of global financial assets located in lower- and middle-income countries (ex-China).

The Doha Programme of Action for the LDCs therefore calls for significantly scaling up support in the form of concessional financing and blended finance to increase mobilization of private investment for the SDGs. Participants at the LDC5 Conference, including in the LDC5 Private Sector Forum, further stressed the importance of blended financing, gender neutral lending and numerous relevant initiatives in this regard were showcased.

The UN Secretary-General’s SDG Stimulus proposal also emphasizes that development institutions could work more closely with private partners to leverage resources, such as through guarantees and first-loss tranches. It calls for a new approach to blended finance, including with a stronger focus on development impact and better alignment with national development priorities.

The members of the Global Investors for Sustainable Development (GISD) Alliance agree that blended finance is an important instrument to mobilize private sector capital for SDG-aligned investment opportunities in emerging markets and developing economies. GISD Members have called to boost blended finance by designing and funding innovative structures at scale.

This side event will examine what it will take to scale up the use of blended finance for SDG investments in LDCs and vulnerable countries and will serve as a call to action for public and private actors to do more.

It will bring together senior representatives from governments, the UN system, employer federations and the private sector, including from the Global Investors for Sustainable Development Alliance, a group of prominent investors convened by the UN Secretary-General to mobilize and align finance for the SDGs.

The side event will relate directly to the High Impact Initiative on Finance and the SDG Stimulus, as well as several of the other High Impact Initiatives being discussed during the SDG Acceleration day.

Description of Event

The event, organized by UNCDF, UN-OHRLLS, UN-DESA, Nepal, Global Investors for Sustainable Development Alliance, International Organization of Employers, and Convergence, will spotlight the strategic role of selective and targeted blended finance in bolstering the number of viable projects, increasing overall investment, and boosting private sector involvement in SDG-focused initiatives, especially in least developed countries (LDCs). By identifying the most efficient blended finance solutions that deliver maximum value for donors and mobilize significant private investments, this event aims to reinvigorate public and private commitment to scaling up blended finance for SDGs.

Objectives

• Showcase how selective, targeted blended finance efforts can contribute to increase (i) the number of viable and investable SDG projects and (ii) total investment and private investment to finance those projects.
• Identify the most effective and efficient blended finance solutions of highest benefit for LDCs and maximum value-for-money for donors that can mobilize private investment at scale to high-priority SDG projects.
• Mobilize renewed public and private commitment and leadership to scale blended finance for the SDGs.
• Identify the top five actions that organizations need to take to increase the number of funded and implemented SDG projects through blended finance.