This is the 5th edition of Convergence’s flagship report. In some respects, we’ve come a long way since we started reporting on the state of blended finance in 2017. In the last few years, blended finance has grown from a niche field to a central topic at major conferences and boardrooms around the world. As it becomes more mainstream, we also hear more voices talking about blended finance at ever higher levels of sophistication.
What we are not seeing is the requisite leap into action. Over the past five years, blended finance flows have averaged around $9 billion per year – steady growth, but not close to the exponential growth needed. Then in this year’s report, we saw a significant decrease in flows (~$4.5 billion in 2020, 50% less than in 2019). This decrease, at a moment where blended finance is on everyone’s lips and when it is needed more than ever, is alarming.
As we wrote this report, the effects of climate change raged unabated as floods ravaged Western Europe, catastrophic tropical cyclones and extreme heat appeared across Africa, and Turkey experienced its worst-ever wildfire season, all while the ongoing pandemic exposed our world’s vast inequalities, with developing countries bearing the economic brunt of the disease and finding themselves last in line for vaccines.
That’s why this year’s report is focused on scale. It’s time for blended finance to reach its full potential and meet its promise of attracting private capital into emerging markets at volumes never seen before.
There are of course some points of light. A few actors stimulated the field in the last year, and we’ve given some of them a voice in this report. However, what we need are a thousand sparks. It will take many more of us to go out and be bold for radical change to happen and to overcome the sense that it can’t be done.
The time to scale is now. We’re into the last decade of the 2030 agenda and we are nowhere near the trillions we will need to achieve it. Blended finance isn’t a silver bullet, it’s a tool, and it’s time we started using it.
JOAN M. LARREA CHIEF EXECUTIVE OFFICER, CONVERGENCE