by Rob Tew, Cordelia Lonsdale, Duncan Knox et al.
Development Initiatives, November 2016
Blended finance, or the use of public funds to de-risk or ‘leverage’ private investments in development, has been presented by donors and development finance institutions as having the potential to provide at least part of the solution to the gap in funding for the Sustainable Development Goals (SDGs). However, the discussion about blending has been based on very little evidence to date. Before scaling up investments in this area we need a much better understanding of the current role and the future potential of blended finance and the comparative advantages for ending poverty in relation to other possible uses of official development assistance (ODA), such as traditional grants and loans.