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.
In this report we analyse the available data on blended finance, beginning to build the evidence base that is needed to inform decisions on its future use. We look at what the data can tell us about the potential of blended finance for financing the SDGs and the associated risks, opportunities and possible benefits for developing countries.