CBF-Forum-Launch-websitebanner

To celebrate its 10th anniversary, Convergence will host the first ever Global Blended Finance Forum in Washington, DC at the Fairmont Georgetown Hotel from November 3-5, 2025.

This first of its kind gathering will bring together a wide spectrum of blended finance practitioners to share insights, discuss market trends, and break down silos, with an aim towards defining the next decade of blended finance.

The Forum will offer a variety of programming focused on the most urgent blended finance issues including private sector and local capital mobilization, data transparency, and standardization. Attendees will also have the opportunity to participate in multiple networking opportunities designed to foster collaboration and inspire and galvanize them to shape the future of blended finance.

Convergence members get access to preferred pricing. Early bird member tickets are $500 (compared to $750 for non-members). To get the discounted rate, reach out to your relationship manager.

*Early bird registration is currently open. Follow the [event LinkedIn page](https://www.linkedin.com/showcase/global-blended-finance-forum/) for up to date information, including newly announced speakers, agenda items, and themes.*

Global Blended Finance Forum

To celebrate its 10th anniversary, Convergence will host the first ever Global Blended Finance Forum in Washington, DC from November 3-5, 2025.

Convergence Global Blended Finance Forum

Blended Finance Training for Canadian Fund and Asset Managers (Toronto)

__Wednesday, October 15, 2025, 9:00AM - 12:00PM__

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(Le français suit/French follows) 
 

Convergence, with support from [Global Affairs Canada](https://www.international.gc.ca/global-affairs-affaires-mondiales/home-accueil.aspx?lang=eng), is proud to introduce a new skill-building initiative under its [Blended Finance Accelerator for Fund Managers (A4FM)](https://www.convergence.finance/accelerator/a4fm). Blended finance—using catalytic capital from public or philanthropic sources to attract private sector investment—is a key approach to mobilizing investment in emerging markets and developing economies (EMDEs). This initiative aims to enhance the skills of Canadian fund and asset managers in designing and structuring blended finance vehicles for EMDEs, enabling both diversification and market-adjusted risk-return, while meeting the growing demand for sustainable investments.

This session will bring together participants from the Canadian sustainable finance space, equipping them with practical, hands-on knowledge through Convergence’s proprietary training materials and real-world case study presentations from leading fund and asset managers. It will also offer insights from mainstream asset managers and impact fund managers on scoping, launching, and deploying blended finance vehicles to attract concessional and commercial investors, thereby unlocking new opportunities and expanding their reach in EMDEs.

We will additionally be hosting a second standalone training in Montreal in early 2026, for those who may find that location more convenient.

*Registration is subject to pre-approval. You will be notified of your approval status shortly after submission.*

(FRANÇAIS/FRENCH)

Convergence, avec le soutien [Affaires mondiales Canada](https://www.international.gc.ca/global-affairs-affaires-mondiales/home-accueil.aspx?lang=eng), est fière de présenter une nouvelle initiative de renforcement des compétences dans le cadre de son programme [Accélérateur de financement mixte pour les gestionnaires de fonds (A4FM)](https://www.convergence.finance/accelerator/a4fm). Le financement mixte, qui consiste à utiliser des capitaux catalytiques provenant de sources publiques ou philanthropiques pour attirer les investissements du secteur privé, est une approche clé pour mobiliser les investissements dans les marchés émergents et les économies en développement (EMDEs). Cette initiative vise à améliorer les compétences des gestionnaires de fonds et d'actifs canadiens dans la conception et la structuration de véhicules de financement mixte pour les EMDEs, permettant à la fois la diversification et un rapport risque-rendement ajusté au marché, tout en répondant à la demande croissante d'investissements durables.

Cette session réunira des participants issus du secteur canadien de la finance durable et leur permettra d'acquérir des connaissances pratiques grâce au matériel de formation exclusif de Convergence et à des présentations d'études de cas réels par des gestionnaires de fonds et d'actifs de premier plan. Elle offrira également des informations provenant de gestionnaires d'actifs traditionnels et de gestionnaires de fonds d'impact sur la définition, le lancement et le déploiement de véhicules de financement mixte afin d'attirer des investisseurs concessionnels et commerciaux, ouvrant ainsi de nouvelles opportunités et élargissant leur portée dans les EMDEs.

Nous organiserons également une deuxième formation indépendante à Montréal au début de l'année 2026, pour ceux qui trouveraient cet emplacement plus pratique.

*L'inscription est soumise à une pré-approbation. Vous serez informé de l'état de votre demande peu après l'avoir soumise.*

Join us for a training on blended finance for Canadian Fund and Asset Managers in Toronto.

Blended Finance Training for Canadian Fund & Asset Managers

Member Networking at the GIIN Investor Forum

__Tuesday, October 7, 2025, 6:30PM – 8:00PM CET, Berlin, Germany__

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Convergence invites you to our member networking reception on the sidelines of the GIIN Impact Forum in Berlin. Chat with other Convergence members, including impact investors, institutional investors, donors, development banks, and sponsors of blended finance deals. Join us to exchange ideas and discuss blended finance initiatives.

You do not need to be registered for the GIIN Impact Forum to attend our reception. Snacks and drinks will be served.

*Registration is on a first-come first-served basis, with a maximum of 2 people per organization.*

Convergence Member Networking in Berlin

Join us for a member networking event in Berlin.

Nordic Climate Dialogues 2025

__Wednesday, October 1, 2025 at 10:00–11:30 EEST__

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Join the discussion at Nordic Climate Dialogues 2025 on 1 October, the Nordic Development Fund (NDF)'s first-ever event for Nordic experts in the nexus of climate and development finance. The event will unpack bold climate solutions and explore how the Nordic region can come together and catalyse finance for real action.

The event brings together Nordic actors in the nexus of climate and development – high-level government representatives, financiers, strategic partners, think tanks, research institutions, and NGOs. Together with other Nordic actors, NDF will explore ways to mobilise financing at speed and scale, bring solutions to the table, and implement them.

Key topics include how Nordic countries and institutions can collaborate more effectively to mobilize climate finance, tangible ways to involve the private sector in adaptation in a meaningful way, and opportunities for collaboration in innovative finance, such as blended finance and concessional finance.

Join Convergence alongside the Nordic Development Fund (NDF) at the Nordic Climate Dialogues 2025 on 1 October, the NDF's first-ever event for Nordic experts in the nexus of climate and development finance.

Convergence's 2025 New York Climate Week Side Event

__Monday, September 22, 2025 at 8:30AM - 10:00AM ET__

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Join us for Convergence's Member Breakfast & Networking in New York on the sidelines of Climate Week New York, hosted in partnership with Citi. 

The Convergence Market Insights team will deliver the latest briefing on the climate blended finance market, featuring an exclusive preview of the upcoming State of Blended Finance – Climate report, along with highlights from other recent and forthcoming climate publications in Convergence’s knowledge suite. Following the briefing, enjoy a dedicated hour of networking with the Convergence team and a global community of practitioners in blended finance—leaders collectively working to mobilize billions toward sustainable investment in emerging markets.

*All participants will be subject to a security pre-screening, and a valid government-issued ID will be required for entry. Registration will close on September 15.*

Convergence Member Breakfast & Networking in New York

Join us for Convergence’s Member Breakfast & Networking in New York, hosted in partnership with Citi.

Role of Public Development Banks & Domestic Financial Institutions in Blended Finance PPPs

__Thursday, September 18, 2025 at 2:30PM CET__

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__Information__ 
Join Convergence alongside the World Association of PPP Units & Professionals (WAPPP) for their 'Role of Public Development Banks & Domestic Financial Institutions in Blended Finance PPPs' webinar on September 18.

National Development Banks (NDBs) are key players in long-term infrastructure financing, especially in sectors like energy, transport, agriculture, and MSMEs—areas critical to green transitions.

Owned and mandated by governments, NDBs use public funds and mobilize private and international capital to support national development goals. Unlike commercial banks, they are not solely profit-driven, allowing them to offer long-term, concessional financing for projects that may be too risky for private investors.

With public guarantees and local currency lending, NDBs help reduce project risk and improve bankability. Their strong local presence, policy alignment, and streamlined processes make them well-suited to support smaller, impactful projects and close financing gaps at the local level.

Webinar will explore the following:
1. Role of MDBs in supporting National Development Banks in mobilizing capital for infrastructure
2. Showcase example of blended finance structure with NDBs and MDBs
3. Case studies using commercial and capital markets financial solutions

Join WAPPP for this session that will explore the role of MDBs in supporting National Development Banks in mobilizing capital for infrastructure, and showcase example of blended finance structure with NDBs and MDBs.

Role of Public Development Banks & Domestic FI

Consultation for Convergence-UNDP Blended Finance Framework

__Thursday, September 18, 2025 at 9:30AM-10:45AM SGT__

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Convergence and Singapore Sustainable Finance Association (SSFA) jointly invite you to attend a virtual consultation on Convergence's upcoming report, funded by the United Nations Development Programme, entitled Strategic Framework for Blended Finance: A framework for country-level blended finance ecosystem development in South and Southeast Asia.

By breaking down the enabling environment into six interdependent pillars, the framework goes beyond principles into implementation, providing policymakers and regulators with practical tools, reform pathways, and guidance. It offers not only the “what” of blended finance, but the “how” that can empower emerging markets to advance their own sustainable development agendas, attract investment at scale, and ensure those flows are directed toward their highest national priorities.

Convergence is seeking input on the development of this framework and would be grateful for your participation.

__Session Agenda:__ 
- 09:30 – 09:35: Welcome by SSFA – by Kavitha Menon, Director, SSFA
- 09:35 – 09:40: Opening Remarks – by Ritesh Thakkar, Senior Advisor and Head of Asia Pacific, Convergence
- 09:40 – 10:00: Presentation: Overview of 6 Pillars of Blended Finance Framework– by Robin Ivory, Manager, Convergence and Tony Deary, Director, GBRW Consulting/ Learning
- 10:00 - 10:45: Open Discussion and Feedback

Convergence invites you to attend a virtual consultation on Thursday, September 18, 2025 at 9:30-10:45am SGT on its upcoming report entitled Strategic Framework for Blended Finance: A framework for country-level blended finance ecosystem development in South and Southeast Asia.

Member Training: Structuring Blended Finance Vehicles: Evergreen or Closed-End?

__Tuesday, September 9, 2025 at 9:00 AM - 10:00 AM ET__

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As blended finance continues to grow as a tool for mobilizing private capital toward the Sustainable Development Goals (SDGs), fund structuring decisions play a critical role in driving scale, flexibility, and impact.

In this 60-minute session, Convergence will explore one of the key design considerations: should a blended finance fund be evergreen or closed-ended? The session will begin with a 15-minute debate between two experienced structuring firms, each advocating for one structure. They will discuss how fund structure affects capital mobilization, risk appetite, and long-term impact.

This will be followed by two 15-minute case study presentations:
- __Evergreen Fund__: highlighting how a revolving structure can enable continuous investment and impact.
- __Closed-Ended Fund__: demonstrating how a fixed timeline and capital structure can drive time-bound results.
 

Participants will gain a clear understanding of the trade-offs between evergreen and closed-ended models, along with practical insights into when each approach is most effective in blended finance.

*The training is only open to Convergence members.*

Join us as we explore one of the key design consideration: should a blended finance fund be evergreen or close-ended?

Blended Finance Vehicles: Evergreen or Closed-End?

a4fm aug25 infosession web

__Thursday, September 4, 2025, 8:30AM - 9:30AM ET__

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(Le français suit/French follows)

We invite you to join us virtually for an information session on the [Blended Finance Accelerator for Fund Managers (A4FM)](https://www.convergence.finance/accelerator/a4fm). A4FM offers a comprehensive suite of support, including skill building, catalytic grant awards and ongoing acceleration support required to structure and launch blended finance solutions. This program is implemented by Convergence with the support of Global Affairs Canada.

Register for the webinar to:
- Learn about the application process for the A4FM and gain insight into how to apply, eligibility criteria, and evaluation criteria.
- Learn key tips for preparing a strong application and common pitfalls to avoid.
- Have the opportunity to ask the A4FM team questions directly! 

The A4FM is now accepting applications. The deadline to submit concept notes is __October 22, 2025__. Learn more and apply [here](https://www.convergence.finance/accelerator/a4fm).

__(FRANÇAIS/FRENCH)__

Nous vous invitons à vous joindre à nous virtuellement pour une séance d'information sur [l'Accélérateur de financement mixte pour les gestionnaires de fonds (A4FM)](https://www.convergence.finance/accelerator/a4fm). L'A4FM offre une gamme complète de services de soutien, notamment le renforcement des compétences, l'octroi de subventions catalytiques et un soutien continu à l'accélération nécessaire pour structurer et lancer des solutions de financement mixte. Ce programme est mis en œuvre par Convergence avec le soutien d'Affaires mondiales Canada.

Inscrivez-vous au webinaire pour:
- En savoir plus sur le processus de candidature à l'A4FM et obtenir des informations sur la manière de postuler, les critères d'éligibilité et les critères d'évaluation
- Obtenir des conseils clés pour préparer un dossier solide et éviter les pièges courants
- Poser vos questions directement à l'équipe A4FM! 

Le programme A4FM est désormais ouvert et la date limite pour soumettre les notes conceptuelles est fixée au __22 octobre 2025__. Pour en savoir plus et postuler, cliquez [ici](https://www.convergence.finance/accelerator/a4fm)!

Blended Finance Accelerator for Fund Managers (A4FM): Info Session

Join us for an info session on the Blended Finance Accelerator for Fund Managers (A4FM) to learn about the application process, gain insight into how to apply, eligibility criteria, and evaluation criteria, and more.

A4FM: Info Session

a4fm virtuallaunch web

__Tuesday, August 19, 2025, 8:30AM - 9:30AM ET__

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(Le français suit/French follows)

Join us for the virtual launch of the [Blended Finance Accelerator for Fund Managers (A4FM)](https://www.convergence.finance/accelerator/a4fm), a new initiative designed to strengthen global and Canadian fund/asset managers’ use of blended finance as a critical structuring tool for investing in emerging and developing markets (EMDEs). A4FM offers a comprehensive suite of support including skill building, catalytic grant awards, and ongoing acceleration support required to structure and launch blended finance solutions. This program is implemented by Convergence with the support of Global Affairs Canada.

What to expect at the launch:
- An overview of A4FM’s mission, strategic rationale, and its role in unlocking institutional capital for sustainable investments in EMDEs
- A breakdown of A4FM’s three core components
- Details about the application process for the A4FM and insight into how to apply, eligibility criteria, and evaluation criteria 

In addition to key insights, the virtual launch will feature a panel discussion on the role and value of blended finance for institutional fund and asset managers. The discussion will explore both the challenges and opportunities in this space, and how acceleration support can help unlock sustainable solutions in EMDEs.

Learn more about A4FM [here](https://www.convergence.finance/accelerator/a4fm).

__AGENDA__ 
8:30AM - Welcome Remarks 
8:35AM - Overview of the Accelerator for Fund Managers 
8:45AM - Deep Dive: Call for Proposals 
8:55AM - Panel Discussion featuring:
<ul>
<li>Chris Würdemann, Head of Emerging Markets Energy Transition, Mirova </li>
<li>Ellen Van, Investment Director, Mekong Capital</li>
<li>Faisal Khan, Managing Partner and Chief Investment Office, Acre Impact Capital</li>
</ul> 
9:20AM - Q&A and Closing Remarks
 

__(FRANÇAIS/FRENCH)__

Rejoignez-nous pour le lancement virtuel de [l'Accélérateur de financement mixte pour les gestionnaires de fonds (A4FM)](https://www.convergence.finance/accelerator/a4fm), une nouvelle initiative conçue pour renforcer l'utilisation par les gestionnaires de fonds/actifs canadiens et internationaux du financement mixte en tant qu'outil de structuration essentiel pour investir dans les marchés émergents et en développement (EMDE). A4FM offre un ensemble complet de soutien, y compris le développement des compétences, l'octroi de subventions catalytiques et le soutien continu à l'accélération nécessaire pour structurer et lancer des solutions de financement mixte. Ce programme est mis en œuvre par Convergence avec le soutien d'Affaires mondiales Canada.

À quoi s'attendre lors du lancement :
- Une vue d'ensemble de la mission de l'A4FM, de sa logique stratégique et de son rôle dans le déblocage de capitaux institutionnels pour des investissements durables dans les économies émergentes et en développement (EMDE).
- Une présentation détaillée des trois composantes essentielles de l'A4FM
- Plus d’informations sur le processus de candidature à l'A4FM et sur les modalités de candidature, l'éligibilité et les critères d'évaluation. 

En plus des informations clés, le lancement virtuel comprendra une table ronde sur le rôle et la valeur du financement mixte pour les fonds institutionnels et les gestionnaires d'actifs. La discussion portera à la fois sur les défis et les opportunités dans ce domaine, et sur la façon dont le soutien à l'accélération peut aider à débloquer des solutions durables dans les marchés émergents et les économies en développement (EMDE).

Pour en savoir plus, cliquez [ici](https://www.convergence.finance/accelerator/a4fm).

Blended Finance Accelerator for Fund Managers (A4FM) Virtual Launch

Join us for the virtual launch of the Blended Finance Accelerator for Fund Managers (A4FM), a new initiative designed to strengthen global and Canadian fund/asset managers’ use of blended finance as a critical structuring tool for investing in emerging and developing markets (EMDEs).

A4FM Virtual Launch

Deal Connect July 2025

Join us for an informative webinar that will connect you to relevant blended finance investment opportunities in emerging markets. During this interactive session, Convergence members will share details about their investment opportunities that are listed on our live deals database. This is a great opportunity to explore new and unique transactions and learn from developments in the broader blended finance ecosystem.

Save the date: __July 24, 2025, from 9:00 -9:45 AM ET__. During the session, we will present two deals from our live deals database:

__Acre Impact Capital - Export Finance Feeder Fund__ 
Acre Impact Capital (Acre) has launched a pioneering Export Finance Fund—the first of its kind—focused on investing in climate-aligned, essential infrastructure that serves underserved populations. Acre is implementing an insured Feeder Fund to allow risk-constrained investors looking for impact to invest in the Fund, while benefitting from additional credit risk protection.

__Setuka Partners– Global Innovation Fund Growth__ 
Global Innovation Fund Growth is a blended fund on a mission to de-risk high-impact companies and fill the financing gap for early-growth stage companies in emerging markets. The fund is targeting four key investment themes: Rural Resilience, Future of Work, Urban Resilience, and Water and Health. The fund will target key markets across Africa and Asia.

This webinar series is exclusive to investors registered on the Convergence platform.

Deal Connect: July 2025

Join us for an informative webinar that will connect you to relevant blended finance investment opportunities in emerging markets.

gacglobaltraining july25 web

__Tuesday, July 15, 2025, 8:30AM - 11:00AM ET__

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(Le français suit/French follows)

Convergence, in partnership with [Global Affairs Canada](https://www.international.gc.ca/global-affairs-affaires-mondiales/home-accueil.aspx?lang=eng), is launching a new training program as part of its upcoming [Blended Finance Accelerator for Fund Managers (A4FM)](https://www.convergence.finance/accelerator/a4fm). This program is designed to upskill global fund and asset managers in the structuring, designing, and fundraising of blended finance vehicles that advance sustainable investments in emerging markets and developing economies (EMDEs). The session will bring together participants from around the world, equipping them with practical knowledge and relevant examples through Convergence’s proprietary training materials and real-world case study presentations. It will also offer insights from mainstream asset managers and impact fund managers on scoping, launching, and deploying blended finance vehicles to attract concessional and commercial investors, thereby expanding their reach in EMDEs.

*Registration is subject to pre-approval.*

(FRANÇAIS/FRENCH)

Convergence, en partenariat avec [Affaires mondiales Canada](https://www.international.gc.ca/global-affairs-affaires-mondiales/home-accueil.aspx?lang=eng), lance un nouveau programme de formation dans le cadre de son prochain [Accélérateur de financement mixte pour les gestionnaires de fonds (A4FM)](https://www.convergence.finance/accelerator/a4fm). Ce programme est conçu pour améliorer les compétences des gestionnaires de fonds et d'actifs mondiaux en matière de structuration financière, de conception et levée de fonds pour des instruments financiers de financement mixte qui favorisent les investissements durables dans les marchés émergents et les économies en développement (EMEDs). La session réunira des participants du monde entier et leur permettra d'acquérir des connaissances pratiques et présentera des exemples pertinents. Elle offrira également des informations provenant de gestionnaires d'actifs traditionnels et de gestionnaires de fonds d'impact sur la définition, le lancement et le déploiement d'instruments de financement mixte afin d'attirer des investisseurs concessionnels et commerciaux, élargissant ainsi leur portée dans les EMDEs.

*L'inscription est soumise à une approbation préalable.*

Blended Finance Training for Global Fund and Asset Managers (Virtual)

Join us for a training session designed to upskill global fund and asset managers in the structuring, designing, and fundraising of blended finance vehicles that advance sustainable investments in Emerging Markets and Developing Economies (EMDEs).

Blended Finance Training for Global Fund and Asset Managers

Bolivian Investment Management Ltd (BIM) is an impact investments manager with over 25 years of experience creating and managing 14 investment companies and specialized funds seeking a positive impact beyond financial return.

We spoke to Daniel Maldonado, Investor Relations Officer at BIM about how they engage in blended finance, how they measure impact, their priority sectors, and more.

__Can you tell us about BIM and how you engage in blended finance?__

BIM, established in 1997, is one of six companies within the Panamerican Group, a financial group established in 1994 in Bolivia. BIM was founded as an asset manager with a focus on investments that create impact beyond financial returns. In its early years, BIM managed multi-sectoral funds. However, in 2007, with the launch of Locfund—a regional local currency microfinance investment vehicle focused on Latin America and the Caribbean—BIM shifted its focus exclusively to the microfinance sector.

Although the term blended finance was not widely used in 2007, when the first version of the vehicle—Locfund L.P.—was launched, the fund’s structure already reflected many of its core principles. It was able to attract two private investors, drawn by the potential impact outcomes of Locfund. However, this interest was made possible only because those investors had previously worked alongside public capital providers.

The track record built through this initial experience allowed the management team to maintain relationships with prior investors. Still, in the successor vehicle, the only private investor represented just 4.8% of the total capital raised. Despite the positive financial and impact results of Locfund I, raising additional private funding for Locfund II proved to be a challenge.

By 2020, with more than 12 years of successful operations, the new and current version—Locfund Next—was launched. This iteration managed to raise a larger pool of capital and succeeded in bringing in private foundations whose participation was both material and catalytic to the fund’s launch. However, these foundations had impact mandates embedded in their bylaws, and Locfund Next continued to face difficulties in attracting "pure" private investors—those motivated primarily by risk-adjusted financial returns—in the financial inclusion space in Latin America and the Caribbean (LAC).  

Today, the effort to attract private capital remains ongoing. Experience has shown that when targeting private investors willing to take development-related risks in less conventional markets, a strong track record and critical mass are essential. Only then can vehicles like Locfund Next align with the risk-return expectations of private capital.

__Can you tell us more about Locfund Next? What are some of the outcomes/expected outcomes?__

Although the fund is in its fifth year of operations, it is expected to deliver the projected financial returns by its 10th anniversary.

Locfund Next is structured as an evergreen-like fund, allowing shareholders to enter and exit at the end of defined equity stages. The initial equity stage spans 10 years, with each subsequent stage lasting five years.

Preliminary results from the first cohort of equity investors have been positive, sparking renewed interest from potential investors. As of June 2025, Locfund Next has built a robust capital structure with the participation of 16 investors, including six purely private investors. All 16 investors, though, have at the core of its mission, the requirement of development outcomes. 

During this period, the fund has disbursed over $380 million across 279 transactions, reaching a total of 61 microfinance institutions (MFIs) throughout the region. Locfund Next has consolidated its position as a regional leader, becoming the Microfinance Investment Vehicle (MIV) with the widest MFI outreach at the same time, operating concurrently in 15 countries.

Furthermore, in alignment with its core development and impact mandate, Locfund Next was able to raise technical assistance resources from the same investors, in order for this fund to be deployed to the microfinance institutions to strengthen areas such as gender equality, asset and liability management, and corporate governance, among others. To date, Locfund Next has completed 147 Technical Assistance initiatives across the region through its Technical Support Facility – TSF, reducing the risk of the underlying portfolio of the fund.

This momentum is expected to attract greater participation from private investors during the second equity stage, anticipated around 2029–2030. 

__Can you tell us more about the challenges you’ve faced with attracting institutional investors to Locfund Next?__

The first challenge relates to scale. Both the size of the fund and the individual investment tickets must align with the mandates of institutional investors. Since the launch of Locfund I in 2007, and through the consistent growth of Locfund II and now Locfund Next, this challenge has been progressively addressed, resulting in a vehicle with sufficient critical mass to appeal to institutional capital.

The second challenge lies in the limited familiarity most institutional investors have with the microfinance sector. This often necessitates the inclusion of additional risk mitigation mechanisms to make the investment case viable. To address this, BIM has explored several alternatives, including the use of partial guarantees from development finance institutions (DFIs). These guarantees could, in turn, be supported by technical assistance funding from other DFIs—effectively creating a dual-layered blended finance structure to enhance investor confidence and facilitate further growth of Locfund Next’s operations. 

__How do you measure the impact of your blended finance investments?__

Given the nature of microfinance, Locfund Next’s portfolio inherently generates impact across multiple indicators. The fund focuses on attending to underserved populations through the microfinance institutions it supports, reaching over 40% of end clients located in rural areas across the region and targeting more than 50% of women among its final beneficiaries.

Locfund Next also aims to support the most vulnerable segments of the population. One key indicator of this is the average loan size to end clients, which currently stands at $1,400, reflecting the fund’s reach to low-income borrowers.

__What role do you see blended finance playing in the microfinance industry in LAC?__

The microfinance industry in LAC remains a relatively small segment within the broader financial systems of each country. The total outstanding microfinance portfolio in the region is estimated at approximately $52 billion, but there are around 132 million people without access to formal financial services. The industry has maintained a steady annual growth rate of around 10%, driven primarily by unmet demand. To sustain this level of growth, the sector requires approximately $5 billion in fresh capital each year.

Unfortunately, public investors alone are not able to meet this financing need, underscoring the critical role of blended finance as a catalytic solution.

The encouraging news is that, where managed effectively and with a clear focus on financial inclusion, the microfinance sector has consistently delivered positive and stable performance. In many cases, financial indicators within the industry are not only healthy but also outperform those of the traditional financial system. These results provide a compelling case for further blended finance transactions, where private investors can engage under conditions that align with their risk-return expectations, while also contributing to inclusive development in the region. 

__Do you apply a gender lens in your blended finance activities?__

Yes. While microfinance is inherently aligned with gender lens investing, BIM has made a deliberate effort to further emphasize this focus. As a result, Locfund Next was granted the status of a 2X Challenge Flagship Fund, and BIM recently became a signatory of the UN Women’s Empowerment Principles.

In practice, all microfinance institutions (MFIs) that Locfund Next has worked with are able to identify the proportion of women among their end-clients and the composition of their portfolio by gender. This gender-disaggregated data is monitored by Locfund Next on a monthly basis to ensure a clear understanding of the fund’s outreach to this key segment. On average, more than 60% of the end-clients served through the portfolio are women.

__How do you see BIM’s blended finance activities evolving in the future?__

We believe that our strong 15+ year track record has helped build a compelling case for attracting greater private sector participation. This has been achieved not only through the positive financial and impact outcomes of Locfund, but also by demonstrating the resilience and long-term sustainability of the microfinance industry. Looking ahead, we are confident that within the next five years, we can significantly expand private investor involvement, targeting a share of at least 50% among Locfund Next’s key stakeholders.

__What are some opportunities you see for blended finance in Latin America? What are some challenges?__

Large players, including global investment banks, have begun exploring investment opportunities more actively in so-called “exotic” markets. Latin America, in particular, has demonstrated its ability to deliver attractive returns with balanced and manageable risk profiles. Public records indicate that blended finance structures in the region have averaged issuance sizes of approximately $150 million, underscoring the growing appetite and scalability of such instruments. 

Sectors such as financial inclusion, renewable energy, and circular economies stand out as key industries capable of absorbing substantial amounts of capital while offering compelling returns. The success of previous blended finance structures led by these institutions paves the way for future opportunities to mobilize private capital into the region.

However, Latin America is also characterized by a history of political volatility and recurring episodes of instability. These challenges can deter more conservative investors, especially when assessing opportunities that seek to combine financial returns with broader development outcomes.


Learn how BIM engages in blended finance, how they measure impact, their priority sectors, and more.

BIM Member Spotlight with Daniel Maldonado

The Blended Finance Company (TBFC) is a full-stack service provider for blended finance transactions enabling commercial investors to deploy significant capital while generating sustainable returns, and concessional funders to maximise their catalytic leverage.

We spoke to Nirav Khambhati, Partner at the Blended Finance Company about how they engage in blended finance, gaps and opportunities for blended finance in Asia, advice for those wanting to engage in blended finance, and more.

__1. Can you tell us about the TBFC’s mission and how it engages in blended finance?__ 
TBFC exists to reduce the Sustainable Development Goals (SDG) funding gap by changing how capital is mobilized and utilized in the development sector. Our mission rests on a two-fold approach.
First, we focus on increasing the volume of commercial capital flowing into development efforts. We do this by deploying government and philanthropic capital catalytically, creating structures that improve the risk-return profile for private investors in otherwise underserved sectors and markets.

Second, we enhance the effectiveness of government and philanthropic capital by shifting the emphasis from inputs to outcomes. We help public and philanthropic funders design more strategic, results-focused interventions that drive systemic change.

Finally, TBFC serves as an end-to-end mobilizer—providing everything from transaction feasibility assessment and structuring to fundraising, execution, and lifecycle management. A critical part of our value lies in convening the right stakeholders, whose aligned participation is essential for blended finance transactions to materialize. We serve four core stakeholder groups, including governments, donors and philanthropic institutions, investors, and enterprises (for-profit and non-profit).

__2. What type of blended finance transactions or structures has your team been involved in recently? Any transactions you’re particularly proud of?__ 
In less than two years , our team has already enabled blended finance transactions across a wide range of sectors including livelihoods, climate, agriculture, health, and education. We’ve designed diverse instruments tailored to specific challenges, including guarantees, subordinated debt, technical assistance, impact-linked incentives, outcome-based funding, pooled philanthropic facilities, and investment platforms, among others.

Some of our most meaningful transactions have tackled long-standing financing barriers for underserved segments, such as unlocking credit for students from low-income families and supporting women entrepreneurs through de-risked lending models. In each case, we have used blended structures to shift incentives, reduce risk, and increase confidence in these segments as viable investment opportunities. 

One example is Aspirational Pathways for Youth Readiness and Employment (ASPYRE) a first-of-its-kind Skill Loan Facility that provides youth from low-income households with access to affordable credit to pursue market-relevant skill development programs. TBFC played an end-to-end role in designing and enabling this initiative. We began by deeply understanding the barriers to credit access for skilling, then structured a financial product that aligns the incentives of students, training providers, financial intermediaries, and philanthropic funders. We shortlisted mission-aligned partners, mobilized philanthropic capital for credit enhancement, and created a templatized approach that allows for efficient onboarding of new stakeholders. ASPYRE is now live and already benefitting underserved youth, with additional training providers, lenders, and philanthropic contributors continuously joining the platform.

We also find ourselves increasingly involved in outcome-focused initiatives such as those aimed at creating aspirational livelihoods for youth or scaling regenerative agriculture practices. These efforts often rely on instruments like outcome-based funding or impact-linked incentives that help improve accountability and align funding with results.

Another area of pride is expanding the blended finance ecosystem by bringing in new participants, especially local actors, such as a regional bank, a philanthropic trust, or a grassroots enterprise.

__3. Based on the Blended Finance Company’s involvement in blended finance, what gaps or opportunities do you see in the overall blended finance market in Asia?__ 
__First, there is limited understanding of blended finance among key local stakeholders, particularly subnational governments and local philanthropic actors.__ Wealthy individuals and family foundations in the region tend to operate at either end of the spectrum: they provide traditional grants or make impact investments expecting market-rate returns. The middle ground, where capital can be structured to optimize the trade-off between impact and financial returns, is often misunderstood or overlooked. There is a significant opportunity to engage this segment through targeted education, demonstration projects, and collaborative structuring that show how blended finance can amplify the effectiveness of their capital.

__Second, Asia needs more entities that can hold blended finance transactions end-to-end.__ Blended transactions involve diverse stakeholders, without a trusted intermediary who can align incentives, bridge communication gaps, and manage the transaction lifecycle, deals often stall or become too expensive and complex to execute. This is a role TBFC was purpose-built to play.

__Third, there is a shortage of clear, replicable, and efficient transaction models that donors and investors can easily plug into.__ Many transactions in Asia are still bespoke, overly complex, or tied to a single sector or geography. This raises costs and limits replicability. There is a significant opportunity to standardize structures, making them easier for capital providers to understand and engage with.

__Fourth, there is a need for a continuously curated pipeline of investible opportunities that are suitable for blended finance.__ A major bottleneck in sustaining stakeholder interest is the sporadic or opportunistic nature of deal flow. Governments, investors, and philanthropies are more likely to participate if they see a steady, credible pipeline of high-quality, impact-aligned, financially viable projects. Building this pipeline requires intentional effort, ecosystem engagement, and patient capital to support project preparation and design.

__4. What advice would you give to other organizations looking to enter or scale their efforts in blended finance?__ 
- __Always start with the problem__—not the capital. We often see organizations raise capital first, then search for problems to solve. The right starting point is a clearly defined problem that genuinely warrants the blending of different forms of capital—typically where risk-adjusted returns alone cannot attract sufficient private investment, but catalytic capital can make the economics work. 

- __Recognize that blended finance is still maturing as a market—it will become simpler and faster over time, but it’s not there yet.__ Blended finance transactions are complex, involving multiple stakeholders with different mandates, timelines, and constraints. Organizations that expect quick wins or look for silver bullets often end up disillusioned. 
- __Have a deep understanding of each partner’s motivations and constraints.__ One of the most overlooked aspects of blended finance is empathy—being able to see a transaction through each stakeholder’s lens, and structuring deals accordingly. The best blended finance practitioners are not just dealmakers—they are relationship stewards.
- __Commit to building the market—not just individual deals.__ There is a growing need for more actors who invest in knowledge sharing, ecosystem advocacy, and coalition building. Each transaction should not just solve a specific problem—it should also advance the field. 

__5. How do you incorporate gender considerations into your blended finance transactions?__ 
At TBFC, gender equality is deeply embedded in how we define problems, design solutions, and structure transactions. Over half of our transactions are explicitly targeted at advancing outcomes for women; in others, gender inclusion is a critical lens through which we assess broader development impact.

One initiative underway at TBFC brings affordable credit to women entrepreneurs, enabling them to build financial resilience in the face of increasing climate risks. The structure leverages catalytic capital to de-risk lending to women in sectors historically underserved by mainstream finance—combining access to capital with the capacity to withstand environmental shocks.

Even in transactions where gender is not the exclusive focus, it is a core design principle. For example, in an impact bond aimed at creating employment opportunities, we embedded specific targets and incentives to ensure high participation of women, especially in non-traditional sectors. 

Ultimately, we see gender inclusion not just as a moral imperative, but as smart development practice. When women are economically empowered, the benefits multiply across households, communities, and generations. Blended finance, with its ability to align capital with intentional design, offers a powerful mechanism to accelerate this transformation.

__6. Looking ahead, what’s next for the Blended Finance Company in 2025 and beyond?__ 
 Our foremost priority is ensuring the blended finance transactions we are currently stewarding deliver on their promise.

We believe that blended finance can unlock far greater capital flows. This fuels our ambition to take on larger and more complex transactions, including in outcome-based financing, where we believe there is significant room for scale and innovation.

Looking ahead, we intend to explore new frontiers where blended finance can be catalytic, such as __voluntary carbon markets__, __municipal finance__, and __social bonds__. 

This year we will also be expanding our work beyond India to other emerging markets. These regions face similar development challenges and share a need for localized, trusted intermediaries who can bridge the gap between capital and impact. 

Finally, we will continue to nurture the broader blended finance ecosystem. In 2024, we seeded the __Blended Finance Exchange (BFX)__ in India, a semi-formal gathering space for practitioners, funders, and policymakers to learn from one another and shape the field collectively.

__7. What emerging trends do you think we will see in blended finance in the future?__ 
One key trend we foresee is __the institutionalization of blended finance within public systems__. Governments, especially in the Global South, are starting to see blended finance not as a one-off innovation, but as a structural tool for financing development. As this mindset takes hold, we expect more formal policies, dedicated funding windows, and internal capabilities to emerge, enabling wider and more consistent adoption.

We also expect a __bifurcation in the market__, with transaction sizes increasing significantly at the upper end, while experimentation continues to grow at the frontier. Large-scale programs, particularly in areas like climate resilience, sustainable infrastructure, and health systems, will increasingly use blended structures to unlock private capital. Simultaneously, we will see newer, nimbler structures being tested to address complex and underexplored issues. Both trends are important: scale brings visibility and momentum, while experimentation fuels innovation and adaptability.

Another important shift we expect to see is __the evolution of grant-making institutions__. As the field matures, we believe more foundations, Corporate Social Responsibility arms, and development donors will embrace this middle path and use their capital catalytically.

Finally, as blended finance becomes more accessible and predictable, it will __catalyze a new generation of social enterprises and impact initiatives__. Entrepreneurs and organizations that may have previously struggled to find sustainable business models will have access to better-structured, more affordable capital. This will unlock innovation, scale, and long-term resilience, especially in areas where commercial capital has historically shied away.

We believe blended finance is foundational to solving the complex, large-scale challenges that define our time. We’re excited to contribute to this future by helping shape the market, build trust among stakeholders, and demonstrate what’s possible when capital is blended with care, creativity, and purpose.

Learn how the Blended Finance Company engages in blended finance, gaps and opportunities for blended finance in Asia, advice for those wanting to engage in blended finance, and more.

The Blended Finance Company Member Spotlight

The Blended Finance Company Member Spotlight with Nirav Khambhati

The Development Bank of Rwanda (BRD) provides long-term financial services to support Rwanda's development. Since 1967, BRD has driven sustainable economic transformation and prosperity in Rwanda. Its mission is to finance projects that align with Rwanda’s 2050 vision, socio-economic goals, and global Sustainable Development Goals by offering affordable, long-term, and customized development finance.

We spoke to Fernand Kamanzi, Head of Strategy, Research, M&E, and Resource Mobilization at BRD about their work to help achieve the Sustainable Development Goals (SDGs) in Rwanda, how they engage in blended finance, how they measure impact, their gender strategy, and much more.

__Tell us about BRD’s mandate and how your strategy encourages capital mobilization to the SDGs.__ 
BRD plays a crucial role in the economic development of Rwanda, with a mandate focused on financing projects that contribute to sustainable development.

The Bank focuses on sectors that are underfunded by traditional financial institutions, such as social infrastructure, agriculture, affordable housing, renewable energy, education, digital economy, green finance, and export. To effectively link its strategy with capital mobilization toward achieving the SDGs, BRD has adopted several innovative approaches:

- __Sustainability-Linked Bonds (SLBs)__: Unlike traditional bonds where proceeds are earmarked for specific projects, SLBs incentivize borrowers by linking interest rates to their performance against predefined sustainability targets. This mechanism encourages BRD to enhance its environmental, social, and governance (ESG) compliance while simultaneously attracting investors interested in sustainable finance.

- __Focus on Key Performance Indicators (KPIs)__: KPIs include, increasing the percentage of participating financial institutions (PFIs) demonstrating robust Environmental and Social Management System (ESMS) implementation to 75% in 2028 from 0% in July 2023, increasing the number of loans to women-led SMEs among total SME loans to 30% in 2028 from 15.4% in 2022, and increasing the cumulative number of affordable housing loans extended or refinanced by PFIs to 13,000 in 2028, from 544 in 2022. By setting measurable targets, BRD not only demonstrates its commitment to sustainable development but also provides transparency and accountability to investors.

- __Innovative Credit Enhancement Mechanism__: Collaboration with the World Bank through credit enhancement mechanisms allows BRD to reduce risks associated with bond issuance. By leveraging International Development Association (IDA) funds as collateral, BRD can lower borrowing costs and attract a broader range of investors. 

- __Contribution to Capital Market Development__: The successful issuance of SLBs not only benefits BRD but also contributes significantly to Rwanda's capital market development. We contributed towards deepening the capital markets by putting out a new asset class on the market and having a 100% retail allocation policy.

__BRD is among the innovative local development banks in Africa and over the past 12-18 months you’ve issued 2 sustainability-linked bonds (SLB) supported by the World Bank’s IDA private sector window. What was the motivation for structuring these issuances, and what gap were you aiming to fill in the market?__ 
One of the primary motivations for issuing SLBs is to align financial instruments with the SDGs. By structuring these bonds, BRD aims to attract investments that contribute directly to sustainable development in Rwanda, particularly in infrastructure and social projects.

The issuance of SLBs also provides BRD with an innovative financing mechanism that allows access to capital from investors who are increasingly prioritizing ESG criteria in their investment decisions. This trend reflects a broader shift in the global financial landscape where investors are looking for opportunities that not only yield financial returns but also generate positive social and environmental impacts.

The backing of the World Bank’s IDA private sector window adds credibility and reduces perceived risks associated with investing in emerging markets like Rwanda. This support enables BRD to offer more favorable terms on its bonds, making them attractive to a wider range of investors.

By issuing SLBs, BRD also aims to fill the gap between financing needed for sustainable projects and the available funding sources by mobilizing private sector investments into projects that may otherwise struggle to secure funding due to perceived risks or lack of investor interest.

__Tell us how the SLBs are blended and how this approach to risk mitigation translated into an increase in investor comfort and interest?__ 
The blending mechanism in these SLBs involves combining concessional finance from the IDA with market-based financing. This approach allows BRD to offer more favorable terms to investors, thereby enhancing the attractiveness of the bonds. The IDA provides guarantees/first-loss cover, which mitigates risks associated with lending to projects that may not have sufficient creditworthiness on their own. By reducing perceived risk, this mechanism encourages more investors to participate in financing sustainable projects.

__BRD has another ongoing SME-financing partnership with Rwanda Green Fund via Ireme Invest. What was the motivation for this partnership and what has been the outcome, so far?__ 
The partnership between BRD and the Rwanda Green Fund (RGF) through Ireme Invest is primarily motivated by the need to enhance access to finance for SMEs in Rwanda, particularly those engaged in environmentally sustainable practices. By collaborating with the RGF, which focuses on promoting green investments and sustainable development, we align financial support with environmentally sustainable goals. 

The Ireme Invest facility has two components: a __Credit Facility__ to provide financing for eligible projects, managed by BRD, and a __Project Preparation Facility (PPF)__ to support project preparation, managed by RGF. Furthermore, BRD provides subsidized loans from the credit facility and RGF provides grants and equity from the project preparation facility.

As of February 2025, several positive outcomes have emerged from this partnership. 

The funding provided through this partnership has enabled numerous SMEs to invest in projects that contribute positively to environmental sustainability including renewable energy projects, waste management solutions, and other initiatives aimed at reducing carbon footprints.

In addition to financial support, we have emphasized capacity building among SMEs. Training programs and workshops have been organized to educate business owners about sustainable practices, financial management, and how to effectively utilize funding for maximum impact.

The partnership has also contributed to overall economic growth in Rwanda by fostering innovation within the SME sector. As these businesses grow and thrive, they create jobs and stimulate local economies.

__How does BRD measure the impact of its blended finance investments?__ 
__Alignment with Strategic Objectives__ 
__KPIs__ 
To quantify the impact of its investments, BRD establishes specific KPIs that reflect both financial performance and social outcomes. These KPIs may include metrics related to job creation, access to finance for underserved populations (such as women-led businesses), and improvements in housing affordability. By tracking these indicators over time, BRD can assess the effectiveness of its blended finance initiatives.

__Third-Party Evaluations__ 
BRD often collaborates with independent evaluators to conduct assessments of its projects. These evaluations provide an objective analysis of project outcomes against predefined benchmarks. This process helps ensure transparency and accountability in measuring impact while also providing insights for future investment strategies.

__Reporting Frameworks__ 
The Bank adheres to established reporting frameworks such as those set by the International Capital Market Association (ICMA) for SLBs. This involves regular disclosures on how funds are utilized and the resulting impacts on targeted sectors. Such reporting not only enhances credibility but also allows stakeholders to understand the tangible benefits derived from BRD’s investments.

__Stakeholder Engagement__ 
Engaging with stakeholders—including beneficiaries, local communities, and investors—is crucial for understanding the broader impact of BRD’s investments. Feedback from these groups helps refine measurement approaches and ensures that projects remain responsive to community needs.

__Monitoring and Evaluation__ 
BRD has a department responsible for monitoring and evaluation (M&E) as well as dedicated M&E officers. The Bank also has an institutional balanced scorecard that measures its impact at an institutional level. Additionally, this year BRD has implemented an impact scoring model to accurately predict the impact of the Bank’s investments. 

__How does BRD apply a gender lens to its blended finance initiatives?__ 
The Bank collaborates with the European Investment Bank (EIB) to define strategic objectives and key performance indicators that mainstream gender equality considerations in its lending and advisory activities. This collaboration aims to enhance women’s economic empowerment in Rwanda by ensuring that financial products and services are designed with a gender-sensitive approach.

Through its partnership with EIB, BRD develops targeted advisory services specifically designed for women entrepreneurs in micro, small, and medium-sized enterprises (MSMEs). These services aim to provide guidance on accessing finance as well as business development strategies that consider the unique challenges faced by women in the entrepreneurial landscape.

Next, the Bank works with local banks and microfinance institutions to design, establish, and promote gender-intelligent financial products and services through African Women Rising Initiative (AWRI). These products are tailored specifically to meet the needs of women entrepreneurs, thereby increasing their access to finance. The initiative focuses on creating an environment where women-led enterprises can thrive through better financial solutions.

BRD also implements capacity-building programs aimed at empowering women entrepreneurs. This includes providing mentoring services that help women navigate the challenges of starting and running businesses. By equipping women with the necessary skills and knowledge, BRD ensures that they can effectively utilize financial resources available to them.

BRD is committed to championing gender equality within its operational framework. The Bank actively implements policies that support women’s access to finance, ensuring that gender equity is a core component of its blended finance initiatives. BRD’s new strategy (2024-2028) aims to increase financed Women-led SMEs by 30% share of the Bank’s portfolio by the end of 2028.

__Based on your experience in blended finance to date, what gaps do you see in the market that need to be filled?__ 
One of the primary gaps in the blended finance market in Rwanda is the limited access to capital for SMEs. Despite their critical role in economic development and job creation, SMEs often struggle to secure financing due to perceived risks by traditional financial institutions. Blended finance can play a pivotal role here by combining concessional funding with commercial investments, thereby reducing risk and attracting more private sector investment into this segment.

There is also a lack of diverse financial instruments that are specifically designed to meet the unique needs of development projects in Rwanda. Current offerings may not adequately address the requirements of sectors such as agriculture, renewable energy, and infrastructure. Developing innovative blended finance products that align with local priorities could help bridge this gap, enabling more effective mobilization of resources towards the SDGs.

Another significant gap is the need for capacity building and technical assistance for both investors and project developers. Many potential beneficiaries of blended finance lack the necessary skills or knowledge to effectively design, implement, and manage projects that attract blended finance solutions. Providing training and support can enhance project viability and improve outcomes, making it easier for investors to engage with local initiatives.

The regulatory environment in Rwanda is supportive when it comes to blended finance, however, it can be improved. There is a need for clearer policies that support blended finance mechanisms, including tax incentives or guarantees that encourage private sector participation. Strengthening these frameworks would facilitate greater investment flows into priority sectors while ensuring alignment with national development strategies.

Lastly, there is a significant gap in data availability regarding the impact of blended finance investments. Investors require robust data to assess risks and returns accurately; however, many projects lack comprehensive monitoring and evaluation frameworks. Improving data collection methods will enhance transparency, allowing stakeholders to make informed decisions based on evidence of impact.

__How do you see BRD’s blended finance activities evolving in the future?__ 
As global awareness around ESG issues continues to rise, BRD is expected to deepen its commitment to sustainability. The Bank’s current strategy emphasizes mainstreaming ESG practices within financial institutions and increasing financing for women-led businesses and affordable housing. This focus will likely lead to more SLB issuances and other financial instruments that prioritize sustainability metrics. By aligning its financing activities with international standards such as those set by the CMA, BRD can enhance its credibility and attract more investors interested in sustainable finance.

BRD’s successful inaugural SLB issuance demonstrates the potential for domestic capital markets in Rwanda. The Bank is likely to continue leveraging these markets to raise funds while reducing reliance on international credit lines. As local investor interest grows, evidenced by the oversubscription of both SLBs, BRD may implement targeted campaigns to engage retail investors further. This could include educational initiatives about blended finance products, thereby fostering a more robust investment culture within Rwanda.

The partnership between BRD and the World Bank has been instrumental in enhancing the former’s capacity for blended finance initiatives. Future collaborations with international financial institutions will be crucial for accessing additional resources and expertise. Such partnerships can facilitate knowledge transfer regarding best practices in blended finance, enabling BRD to innovate further in structuring financial products that meet both local needs and global standards.

Given the evolving landscape of sustainable finance, BRD is likely to explore new financial instruments beyond SLBs that can attract diverse investor bases. These could include green bonds or social impact bonds tailored specifically for Rwandan priorities such as climate resilience or social equity projects. By diversifying its product offerings, BRD can appeal to a broader range of investors who are increasingly looking for impactful investment opportunities.

To effectively implement blended finance strategies, BRD must invest in capacity building within its team and among partner financial institutions. This includes training on structuring complex financial products, understanding risk management in blended finance contexts, and measuring impact against sustainability goals. Additionally, sharing knowledge with other regional development banks could foster collaboration and innovation across East Africa.

Learn about how BRD engages in blended finance,  how they measure impact, their gender strategy, and much more.

BRD member spotlight

Development Bank of Rwanda (BRD) Member Spotlight with Fernand Kamanzi 

Tri-Sector Associates (TSA) is an end-to-end impact firm that partners with government, private sector, and civil society organizations in Singapore and across Asia to tackle emerging societal challenges, with a focus on education/skill building, health, and climate. They do this by bringing these different sectors together through new collaboration models, including blended finance, and variations of pay for success (as a subset of blended finance), such as social impact bonds, social impact guarantees, and outcomes amplifiers. TSA utilizes a ‘for Asia, by Asia’ model to address the local nuances inherent in their work.

We spoke with Chris Glotfelter, Senior Project Leader at TSA about how they engage in blended finance, their priority sectors, challenges they have faced in the blended finance space, and more.

__How do you engage in blended finance? How has your approach evolved?__

TSA is committed to supporting the evolution of funding systems through cross-sector collaboration to ensure more (and more impactful) funding is allocated to projects that progress the Sustainable Development Goals across Asia. This requires innovative financing approaches and mechanisms, which is where blended finance comes into play. Our work focuses on three thematic areas: education/skill building, health, and climate/environment. 

As concessional capital is typically the more difficult part of the blended finance equation, especially as donor funding is being cut back, we come at it from this angle: working with foundations, family offices, and government to seed blended finance projects. This is typically the first time these organizations have waded into blended finance, so we allow them to dip a toe in by undertaking what we call a ‘sequential blended finance approach.’ Essentially, philanthropic capital goes in first to seed an opportunity and mature it to the point that it is commercial capital ready, often while structuring a mechanism to recycle the philanthropic capital into a later stage of growth or into a separate opportunity. This increases the leverage of each concessional dollar committed. Engaging with organizations in this way allows for a smoother transition into blended finance compared with the blended fund approach.

__Can you tell us about any specific blended finance projects/programs you’ve worked on?__

As a firm that began with a core focus on pay-for-success projects, later branching out to innovative and blended finance, we have quite a few examples. Two are outlined below, demonstrating how the funding models unlocked new benefits:

__A. Conservation International Recyclable Technical Assistance Facility (TAF)__ 
There is a significant pipeline of nature-based solutions (NbS) projects in the Asia Pacific region. However, many of these projects are not yet investment-ready because of knowledge gaps in the financial, operational, and technical aspects of these projects. This increases their perceived risk-level and does not fit the current preferences of NbS investors. Conservation International sought to accelerate the investment readiness of these projects and commissioned Tri-Sector to assess the landscape of potential blended finance options, taking into consideration the specific geography and nature of the issue. A technical assistance facility (TAF) was developed where capital allocated to projects would be recycled back into the TAF upon investment into the project. Through this structure, $12 million in philanthropic commitments were made, which sought to catalyze over $100 million in commercial capital for NbS projects. Due to the recyclable nature of the TAF, donors saw that their capital was highly catalytic, paying repeat dividends. Since then, 14 projects in seven countries across the region have received support from the TAF, with some being able to provide repayments back to the TAF.

__B. [Skills for Success](https://www.linkedin.com/feed/update/urn:li:activity:7247123147248816128/) Outcomes Amplifier Model__ 
Skills for Success is a pay-for-success project tackling the problem of Singaporean youth not in employment, education, or training (NEETs), by providing free-of-charge access to a skill building program with a monthly stipend to offset living cost considerations. Based on the [Outcomes Amplifier model](https://ssir.org/articles/entry/keeping_the_social_impact_going_when_a_pilot_project_ends), which was pioneered by Tri-Sector, additional funding is allocated to the program based on verified outcomes, which is then used as a pay-it-forward model to fund the next round of learners. 

In this model, Temasek Holdings (TH) and UBS Optimus Foundation (UBS-OF) provide the upfront funding to kick off the program and cover the monthly stipends. Generation Singapore, as the service provider, oversees the training program and provides soft skills training, along with placement services. Upon achieving verified outcomes, the Institute of Policy Studies (part of the Lee Kuan Yew School of Public Policy at the National University of Singapore) provides the outcomes funding to fund the next round. Capital is blended in the early stage of the program, with up to 30% of the funding coming from TH and UBS-OF, while at least 70% of the remainder of the funding comes from the government in the form of SkillsFuture funds. This cross-sector collaboration model is a key reason all the partners have bought into this project, with the view that this pilot can become replicable and scalable elsewhere in Southeast Asia.

__What innovative blended finance solutions have you recently implemented or are you currently exploring?__

Currently, we are working on a number of solutions. One of the most interesting, in relation to a key environmental challenge at present, is the use of philanthropic capital to support just transitions related to the early retirement of coal-fired power plants in Southeast Asia. The blending required here, and the additionality sought by philanthropic capital, is not straightforward and requires thinking outside the box to create a win-win-win situation for private, public, and philanthropic organizations.

__What sectors and focus areas are your priorities? Where do you see maximum potential to scale blended finance in the region?__

Recently we have seen a lot of interest in two areas: i) skill building; and ii) the intersection of climate and health. With regard to skill building, we have seen great interest in ethical income share agreements – those which do not make learners worse off than if they were able to access student loans or other educational financing – which typically requires some concessionality, rather than a pure commercial mindset. However, the area with greater potential is at the intersection of health and climate, where we are seeing an emergence of sub-themes including heat-related illnesses, water and food security, mental health impacts, and ocean-linked economic livelihoods. Although both health and climate are relatively well understood on their own, the themes at their intersection are just now coming into focus and being better understood, with new interventions being developed. Blended finance opportunities in this space will need to address how impact-first businesses can scale and become sustainable while being at the leading edge of adaptation solutions that are seen as less interesting (and commercially viable) than mitigation solutions. As a region that will be highly impacted by climate change, Southeast Asia is a strong focus in this space.

__How do you measure impact and evaluate success for your blended finance activities?__

We focus on both traditional and emerging impact indicators. On the traditional side, we track the leverage multiplier created using concessional capital to attract commercial capital. On the emerging side, we focus on the wider ecosystem impacts of blended finance, such as the new entrants to blended finance transactions and whether blended finance projects unlock wider incentives (e.g., the Monetary Authority of Singapore’s tax incentives for family offices1).

__Do you apply a gender lens in your work?__

Though we do not apply a blanket gender lens across all our work, we certainly have seen opportunities to make gender a meaningful part of the conversation. One recent example is the [Skills for Success program](https://www.linkedin.com/feed/update/urn:li:activity:7247123147248816128/) which was launched based on the Outcomes Amplifier Pay-for-Success model using funding from TH, UBS-OF, and the Institute of Policy Studies. Given females are highly underrepresented in technology-related roles in Singapore, one of the program targets was to have female participants reach parity with males over the course of the program. This has the added benefit of creating impact beyond the target beneficiaries (at-need youth), drilling down to who would benefit most from the program’s interventions.

__What are some interesting or unexpected challenges Tri-Sector Associates has faced while navigating the blended finance space?__

One of the unexpected elements that we have encountered has been large banks coming to us and wanting to do more in the blended finance space, but being faced with challenges in two areas: i) a lack of a voluminous pipeline of projects; and ii) not enough access to philanthropic capital to meaningfully support projects that are of a sufficient size to make sense for their clients. This shows us that more must be done in the ecosystem to build the components of blended finance before it can truly proliferate in the global market.

__What advice do you have for other non-profit and social enterprises interested in participating in blended finance?__

Being able to ‘speak the language’ of both commercial and concessional capital providers is critical to participating in blended finance. We find that when organizations cannot communicate efficiently, nothing gets done. If you are finding that this is the case, consider hiring an intermediary who can ‘translate’ between all the parties and create cross-sector alignment. This will naturally be an added cost, but will save time and money throughout the process, and many times is the critical factor in whether the project launches.

__Given TSA is a part of the larger Temasek Trust family, how do you collaborate with other entities internally to bring the collective experience of the Temasek group to clients and stakeholders and advance the ecosystem in Asia?__

We are so thankful to be a part of Temasek Trust’s ecosystem, which enables us to support meaningful causes across its network – both in Singapore and the wider region. Our collaborations take various forms: we introduce new ideas, they bring potential projects to us, or we co-create new initiatives. This versatile approach has been key to fostering strong partnerships, as engagement is shaped by the unique needs and opportunities of each collaboration. Likewise, our collective support for the broader ecosystem is not one-size-fits-all, as everyone requires a tailored approach to deliver meaningful impact.

The diversity of the Temasek Trust ecosystem allows us to shape projects that span commercial, concessional, and purely philanthropic capital, while drawing on deep thematic expertise. This convening capability, combined with the ability to bridge perspectives across different sectors, is one of TSA’s value-adds for our partners both within the Temasek Trust ecosystem and beyond. When like-minded partners come together with a shared purpose, the results can be truly transformative.

__How do you see TSA’s blended finance activities evolving in the future?__

As our deal sizes increase over time, we envision more engagement with multilateral development banks and development finance institutions to support the quantum of funding required to finance these projects. Naturally, this could come in the form of a fund. We are especially seeing interest from organizations regarding the management of purely philanthropic funds (e.g., technical assistance facilities), these sit outside of the typical remit of fund managers on the commercial side who are also willing to blend some concessional capital into these funds. Given our strong relationships with philanthropists, this would be a natural next step for TSA.

1. Source: [MAS](https://www.mas.gov.sg/schemes-and-initiatives/fund-tax-incentive-scheme-for-family-offices)

Learn about how Tri-Sector Associates engages in blended finance, their priority sectors, challenges they have faced in the blended finance space, and more.

Tri-Sector Associates Member Spotlight

Tri-Sector Associates Member Spotlight with Chris Glotfelter

Learn how blended finance fits into AECF's approach, how they measure and track impact, the evolution of their business model, and more.

AECF Member Spotlight

Africa Enterprise Challenge Fund Member Spotlight with Victoria Sabula

BPL is a broker specializing exclusively in credit and political risk insurance (CPRI) for financial institutions, development finance agencies, multinational corporations, and investors around the world. They work closely with their clients to structure insurance programs for those engaged in international trade, investment, and lending, primarily to protect against the risk of non-payment by borrowers but also in-country political risks. Since their founding in 1983, they have settled over 600 CPRI claims, collecting over $4 billion on behalf of their clients. 

Investing in emerging markets often comes with high real or perceived risks. In development finance, risk-mitigating instruments such as non-payment insurance and political risk insurance are crucial to help increase origination capacity and adjust the risk-return profile of transactions so that private investors can enter developing countries. In addition to private investors, more development finance institutions (DFIs) and multilateral development banks (MDBs) are benefiting from these insurance products, bolstering their balance sheets and increasing their lending appetite. 

We spoke with Harry McIndoe, Director at BPL, about how insurance is used in the development finance market, BPL’s experience in the blended finance space, advice for those interested in partnering with insurers, and more.

__Can you tell us what products you focus on and the scope of the CPRI market?__

Our core focus is Comprehensive Non-Payment Insurance. This product is similar to a silent risk participation from an A-rated or double A-rated insurer that sits behind the policyholder, thus protecting them from losses on their funded or unfunded exposures. It covers non-payment for any reason so has a very simple trigger. There are roughly 60 active insurers in this space, all of whom are rated S&P A- or higher, with a large proportion now rated AA-. By swapping the counterparty rating with that of the insurer, institutions can recognise huge benefits in terms of balance sheet management and increasing their syndication capacity. 

BPL has been at the forefront of developing the market’s capabilities in recent years, and appetite has expanded to include a wide range of underlying debt instruments and structures. Another focus area is Political Risk Insurance, whereby our clients seek to cover certain specified cross-border country risks, such as expropriation, currency inconvertibility/non-transfer, and war.

__Why did BPL decide to become involved in development finance?__

Helping mobilize finance to where it is needed most has always been a cornerstone of our work. We have been active in development finance since our inception, helping both commercial and non-commercial institutions mitigate credit and country risk exposures, enable larger ticket sizes, and manage capital/balance sheets. Increasingly, we are seeing the power of insurance in derisking development finance. It has been applied across a wide spectrum of underlying exposures and stretched tenors, in the midst of long-term and disruptive trends.

We are keenly aware that CPRI has an important, and sometimes underestimated, role to play in enabling and accelerating the flow of funds to support sustainable objectives – including the transition to a low carbon economy and the mobilization of sustainable finance to developing markets. As an insurance broker we recognize that our ability to directly influence client investments and lending decisions is limited, nevertheless our clients value our support in helping them accelerate towards sustainable objectives. Additionally, our leading market position enables us to offer incisive market intelligence and drive product innovations that support the proliferation of sustainable finance, infrastructure, investments, and ambitions.

__The use of non-payment insurance in blended finance is still niche and often provided by DFIs/MDBs themselves. How has BPL participated in the blended finance space?__

Our work with DFIs/MDBs has primarily been on projects supporting the United Nations Sustainable Development Goals (SDGs), such as financial inclusion, infrastructure, healthcare, sanitation, and utilities. While some of these institutions do issue guarantees/risk covers themselves, many work with the private insurance market to increase origination capacity and syndicate a portion of their own balance sheet exposures.

When it comes to MDBs, non-payment insurance is increasingly relevant in helping to action the recent G20 Capital Adequacy Framework recommendations, which underscores the importance of insurance for enhancing lending capacity and enabling MDBs to leverage their balance sheets. 

In addition, we are often asked to secure non-payment insurance on projects for commercial lenders where there is DFI/MDB involvement, such as project finance transactions where a DFI might be a co-insurer or lender, A/B loans, and more recently, on “repack” transactions whereby private institutional capital can be crowded in with the benefit of A/AA rated insurance coverage. 

Another area where we see engagement is on portfolio and securitization solutions, where the insurance market has considerable appetite to support DFIs/MDBs through a more programmatic approach to risk-sharing and capital management, providing significant benefits at scale.

Our insured portfolio currently stands at approximately $87 billion, with nearly 60% in developing countries. This scale gives us an accurate finger on the pulse of the market and equips us with a real-time view of market appetite across global markets and underlying project types.

__What have you learned about the role of the insurance brokers in blended finance transactions?__

MDBs/DFIs are not too different from commercial financial institution clients in terms of gleaning the best results out of the CPRI market. 

One of the challenges facing insurers in the development finance space is the risk profile of their transactions. DFIs/MDBs have a development mandate, while CPRI insurers active in the market must answer to commercial capital providers. The role of a broker is to navigate this occasional disconnect, underlining the MDB’s preferred creditor status and securing the optimal coverage at the right price, all while keeping in mind that there is a finite amount of credit risk that insurers are willing to take in certain countries.

__What advice would you give to participants in the blended finance market interested in partnering with the insurance industry?__

A potential risk factor for less experienced DFIs/MDBs when it comes to using CPRI can be a lack of understanding of the product or the insurance market. This emphasizes the importance of using a broker who understands the market and can guide them through the process – ideally one with extensive emerging market experience and a good claims track record. These factors help indicate the strength of the broker in building goodwill and relationships with the insurance market on behalf of its client. 

Another critical element when engaging with the insurance market is partnership. If participants embrace that partnership approach and transparency with the market, they can count on a long and fruitful collaboration. Indeed, we find insurers see a lot of value in projects and expertise from DFIs/MDBs and in their origination strategy. Further, insurers tend to appreciate the portfolio and market diversification that such partnerships offer them.

__How do you see BPL’s blended finance activities evolving in the future?__

The SDG funding gap is a huge area of concern that CPRI can play a vital role in bridging. According to the 2024 Financing for Sustainable Development Report, SDG financing and investment gaps are estimated at between $2.5 trillion and $4 trillion annually. At BPL, we are keen to continue building on our 40-year commitment to the development finance space and advocating for the huge value for development financiers that comes from working with the CPRI market. We expect to see much more involvement for BPL as the role of insurance in helping DFIs/MDBs meet their objectives becomes more visible and as insurer appetite becomes increasingly supportive.

Learn how insurance is used in the development finance market, BPL’s experience in the blended finance space, advice for those interested in partnering with insurers, and more.

BPL Member Spotlight

BPL Member Spotlight with Harry McIndoe

UBS Optimus Foundation (UBS OF) is an independent philanthropic foundation associated with UBS, the world’s largest wealth manager. UBS OF uses a range of grant making and investment tools, and approaches such as blended finance and outcomes-based finance, to fund scalable, evidence-based approaches.

UBS OF’s approach is based on a recognition that in order to achieve the Sustainable Development Goals (SDGs) we need a combination of more financing and better results. To raise more financing, UBS OF follows a dual approach of engaging more UBS clients to donate philanthropically, while at the same time making use of investments, through blended finance structures, to engage more commercial capital into social and environmental development. To achieve better results, UBS OF has strongly engaged in promoting outcomes-based finance, which at its core is simply a shift to paying for results, rather than paying for action. This approach puts the emphasis and ownership on the partners implementing programs, giving them flexibility to innovate, change, and focus on continuous improvement.

We spoke to Dhun Davar, Global Head of Social Finance at UBS OF about how they engage in blended finance as a foundation, how they measure impact, their focus on outcomes-based finance, and much more.

__In your own words, can you tell me about UBS OF and how it engages in blended finance?__

By being closely associated with UBS AG, a major wealth and asset manager managing over USD 5 trillion in assets, UBS Optimus Foundation is in a unique position to draw commercial capital into social and environmental programs that otherwise would not receive funding. This is made possible by approaches such as blended finance and the unique collaboration opportunities with various parts of UBS. Why is that? Because many UBS clients are seeking exposure to impact, and while UBS already has a significant offering, UBS OF engagement expands this offering to further opportunities that would have previously been impossible. These opportunities are of interest to philanthropists that are supporting UBS Optimus Foundation and keen to leverage their impact -  while also offering UBS clients - investment opportunities that did not exist previously or that they would not have had access to.

__Can you describe one or two blended finance transactions that UBS OF has been involved in? In what capacity did the foundation participate?__

UBS OF started making impact investments in 2015 and we launched the first blended finance fund in 2022. Two examples are:

The SDG Outcomes Fund, which is a Luxembourg domiciled fund that invests in outcomes contracts (outcomes-based funding program). UBS OF provides 20% first-loss capital to unlock additional capital from investors in the fund, the UBS OF investment is in turn supported by donations from over 30 UBS clients.

Investors will receive returns linked directly to verified social and environmental outcomes. As the junior/philanthropic share class investor, the Foundation takes the highest risk and lowest return, but if the fund overperforms the foundation can even catch-up to the highest return share class. This is attractive for UBS OF as a fund like this builds on our successful track record in outcomes-based financing, but at the same time raises five times more capital than would have been possible if the Foundation had done it alone.

Other investors include the United States International Development Finance Corporation, British International Investment, as well as four family offices that are leading the private investment component. The fund is being managed by Bridges Outcomes Partnerships, who have a strong track record in outcomes-based finance in the UK, and who have partnered with UBS OF to apply this experience globally in lower and middle income countries. The fund focuses on education, employment, health and the environment.

Another example is the Future of Work fund (FWF), run by Chancen International, a fund that provides financing for students in the form of income share agreements. Given the early nature of this initiative, to date we’ve supported the FWF fund with a grant and with an investment. Student financing is an area we are doubling down on. With global demographic changes currently underway, a large part of the future youth and working age population will live in Africa, the Middle East, South Asia, and Southeast Asia. Ensuring people in these regions are well educated and productive will be key for their personal growth and outcomes, the health of the communities they live in, as well as global prosperity.

__How do you measure the impact of your blended finance activities? What does that impact look like?__

We measure impact in blended finance transactions the same way we measure impact in any of the foundation’s other grants and investments. In 2023, we developed and rolled out our own industry-aligned impact rating tool that aims to assess programs against three impact categories: intentionality, additionality, and measurability. What we add or emphasize in blended transactions is the financial leverage and scale that the transaction can achieve. It is important to achieve scale, but also to leverage commercial capital, which is the main point for considering a blended finance transaction.

__What advice do you have for foundations who may be interested in entering the blended finance space?__

We see opportunities for corporate and philanthropic foundations to play a bigger role in de-risking blended finance transactions, catalyzing innovation and enterprise and achieving a much greater multiple in terms of scale than they would otherwise be able to do. Our advice would be to get experience and develop your team and knowledge on approaches, actors, and get access to opportunities. A great way to get started is partnering on a deal or transaction. Perhaps consider partnering with other experienced foundations as a route for engagement and building your capabilities. In short, get engaged!

__UBS OF has been a big supporter of outcomes-based finance transactions, especially in the education and health sectors. What have been some key learnings for supporting these transactions? What are you doing in order to scale up this approach and ensure that such transactions are more efficient/have larger deal sizes.__

The SDG Outcomes Fund is our answer to scale. It is the biggest investment fund in this space so far. In order to develop the market, we are working closely with stakeholders to continue shifting the social development and environmental space to focus on results.

The SDG Outcomes fund is also a way in which we are seeking to transition from investments with concessional capital to pure commercial investments. In early programs, UBS OF acted as the sole investor, however with the SDG Outcomes Fund, we’ve reduced this exposure to 20%, with an aim of such structures being fully funded by commercial investors in the long run.

At the same time, we are working with like-minded partners to build the market for outcomes-based finance by getting more programs into the design and scale stage. One of our key initiatives in this area is the Outcomes Accelerator, which we have launched together with the UK Foreign, Commonwealth and Development Office (FCDO) and the Swiss State Secretariat for Economic Affairs (SECO). The objective of the Outcomes Accelerator is to fund promising outcomes based programs to launch and scale. As part of this work, we support an annual conference of practitioners, the [Outcomes Finance Alliance](https://outcomesaccelerator.org/outcomes-finance-alliance/).

Finally, we work with partners such as FCDO, SECO, the Organisation for Economic Co-operation and Development, the World Economic Forum, and others to advocate for better effectiveness in development funding, with outcomes-based financing being a key lever for this. Next year’s [4th International Finance for Development conference](https://financing.desa.un.org/ffd4), in Seville, Spain, is an opportunity for the global development community to consider how the use of outcomes-based financing, with its focus on better results can help unlock better outcomes in our mission to achieve the SDGs.

__UBS OF has recently become more active in the climate finance space, especially in sectors like nature-based solutions. What has been the motivation for this and what role do you expect to play in this space?__

UBS OF has traditionally been focused on children and young peope, and as it is universally recognized that climate and climate change have a disproportionate effect on children, this is an area that is naturally of interest and importance to us. At the same time, we see significant interest from philanthropists to focus on climate and environments issues and would like to play a role in connecting the dots between well meaning funders and strong project opportunities on the ground. We have decided to focus on nature-based solutions (NbS) in particular as we see these as more sustainable in the long run with emphasis beyond carbon on biodiversity and communities.

In our first work in this space we have partnered with Mana Impact to study best practices in Monitoring, reporting and verification (MRV) in NbS and are now engaging with Terratai a “nature venture builder” that builds businesses to protect and restore some of Asia’s most at-risk land and seascapes.

As we engage more deeply we are now working on the design of a blended finance fund focused on carbon using NBS. We are developing this fund in collaboration with UBS Asset Management, with an aim of offering this to UBS clients globally.

__How do you see UBS OF’s blended finance activities evolving in the future?__

We're aiming to grow and scale the number of blended finance transactions in collaboration with UBS. Themes we are particularly interested in are employment and climate though we continue to build on healthcare and education as well. Drawing on our experience and track record we would also like to continue to innovate on the role of concessional funding and see if we can reduce the level needed in each transaction, because rather than volume it is the strategic use of this capital that is important.

Learn how UBS Optimus Foundation engages in blended finance, how they measure impact, their focus on outcomes-based finance, and more.

UBS Optimus Foundation Member Spotlight

UBS Optimus Foundation Member Spotlight with Dhun Davar

Rand Merchant Bank (RMB) is a leading African corporate and investment bank and part of FirstRand Limited, one of the largest financial services groups in Africa. RMB offers their clients innovative, value-added advisory, funding, trading, corporate banking, and principal investing solutions. RMB has a deal footprint in over 35 countries in Africa, as well as a presence in the UK, USA, India, and China. 

We spoke with Alessandro Scalco, Blended Finance Lead, at RMB about their blended finance strategies, how they measure impact, their future in the blended finance space, and more.

__What can you tell us about your approach to using blended finance?__

Although blended finance is an evolving concept in Africa, RMB is very familiar with its features, for example the blending of different risk types in a capital stack. We have identified blended finance as an important capability in delivering on our ambitions for shared prosperity in Africa. We believe that an African corporate and investment bank should be driving blended finance in the region to help find solutions and close developmental funding gaps in Africa.

RMB is currently working on several blended finance deals in South Africa. We are sector agnostic working across a variety of sectors, including healthcare, affordable housing, financial inclusion, and women-led businesses.

__Can you tell us about the partners you work with and any commonalities and differences between them?__

We work with a variety of partners, including local development finance institutions (DFIs), international DFIs, institutional investors, corporates, foundations, and other investor types. One of our focus areas is fostering relationships with local DFIs to work towards closing development financing gaps in Africa. Many of the foundations we’ve engaged with are reassessing their grant programs and are interested in using innovative finance structures to create more impact with their grants.

What is clear from our blended finance engagements is that across the spectrum of stakeholders both impact and financial return is critical. However, different stakeholders have different priorities. Grant and concessional funders prioritize impact, aiming to catalyze investors into transactions to make them bankable. While commercial investors are more focused on financial returns. However, regardless of the type of stakeholder, impact is an essential component of blended finance transactions. For us striking the right balance between both sides, impact and financial return, is critical. 

__Can you share an example of a successful transaction that has benefited from your blended finance approach?__

Blended finance is quite new to RMB in the sense that we haven't structured for the market, but I’ll tell you about a transaction where we were the social investor. 

In March 2023, RMB provided upfront funding as a social investor for the Imagine Social Impact Bond, an outcomes-based funding model aimed at improving the health outcomes of adolescent girls and young women in South Africa. The South African Medical Research Council (SAMRC), in its role as outcomes funder, made payments based on the achievement of pre-agreed impact outputs and proxy-outcomes. As the social investor, RMB only received a return on the upfront funding provided. The outcomes funder is only required to make a payment to the extent that the impact outputs and proxy-outcomes are achieved by the programme implementer, Networking AIDS Community of South Africa (NACOSA). NACOSA delivers a package of interventions targeting the prevention and management of HIV/AIDS and pregnancy within the target population. Outcomes achieved each quarter are verified by an Independent Verification Agent (IVA).

The implementation risk of the program is transferred to RMB and the efficiency of public health service funding is increased. In addition to defining a package of health services that improves health outcomes for adolescent girls and young women in 14 schools based in Moretele and Newcastle, the program seeks to test the funding model for scale to enable greater investment from the private sector and achieve both financial and social returns.

Our goal with this transaction was to deepen our understanding of blended finance. It was a key step in our journey towards establishing our blended finance capabilities and getting buy-in from relevant stakeholders, as well as a proof-of-concept that these transactions can work. After seeing the impact that the transaction had and is currently having, we decided that we are quite well suited to structure blended finance transactions and take them to market.

We're already talking to SAMRC, NACOSA, and other organizations about how we can support future funding in the space and structure for that market. 

__What are some ways that RMB measures and evaluates the success and impact of blended finance transactions?__

We currently have a pipeline of about five transactions across healthcare, student accommodation, affordable housing, financial inclusion, and conservation. Measurement and evaluation of success is different for each transaction. The critical first hurdle for us in any transaction is what is the impact? That's always the first question we ask. Then, what is the commercial investor trying to get out of this? What is the return or the impact that they're trying to get and how can we get that right for them? The second aspect is looking at the implementer or the beneficiary of the transaction. What's critical is that there is a measurable outcome, a tangible impact resulting from the measures implemented. Another important element of measuring success for us is ensuring that there's a stretch element to the impact. We want to push the institution or the beneficiary to drive impact and go above and beyond what they might normally do, while still being sustainable and achievable.

In a market like Africa and South Africa you also need to be careful in striking that balance, because if you go too far many projects will fail from an impact perspective, which could lead to the perception that blended finance is ineffective. However, on the other hand if you choose easy targets, you could get criticism that transactions are not impactful enough.

We measure our success and impact by looking at the replicability, scalability, and additionality of each transaction. For example, if we are looking at an outcomes-based funding structure in the conservation space, success for us would be: 
i. creating a transaction that results in the conservation project securing the required funding to achieve scientifically tested and agreed upon success metrics 
ii. crowding in commercial investors to take on the implementation risk (but with the potential to outperform if successful) 
iii. developing the market for these types of instruments, thereby crowding new capital into conservation and shifting the way traditional grant/donation funding is channeled into these projects.

__As a corporate and investment bank, what are some unexpected challenges or opportunities you’ve experienced navigating blended finance transactions?__

Blended finance is still new to the market and a lot of energy is expended on explaining what it is. There is also the risk that some of the deals are too highly structured or complicated and will not be replicated or taken up by traditional investors (i.e. investors other than DFIs or impact focused investors). Access to deals seems to be a common theme in this space right now. This doesn’t mean there aren’t companies who need the capital, we just haven't bridged the gaps to provide funding to those businesses yet. 

The opportunity for us as a bank is to explore how we can close those gaps and create more bankable deals. We are in a good position as RMB to close this gap in that we have a variety of capabilities and skills at our disposal. Additionally, the brand backing goes a long way in legitimizing the importance of blended finance in Africa. 

The struggle we have as a bank is getting the deal size right. We acknowledge that we'll need to look at deals that are not our usual deal size, so we can build our blended finance capabilities. Too often the knee jerk reaction in Africa is to use a debt structure because it's more palatable to investors, but there is a need to use more patient capital. That's something we need to navigate.

__How does RMB apply a gender lens?__

We haven’t reached the maturity yet where we can say we specifically apply a gender lens on investments, but we look at it on a deal-by-deal basis.

The issue facing the South African market now is that there is a lack of investable deals, this is not to say there is a lack of businesses looking to be funded, but rather the traditional sources of funding (i.e. banks) won’t fund early-stage businesses, and if those businesses do find alternative funding, it will often be at a rate that will likely cripple them. It is important that we use blended finance to bridge this gap and create an enabling environment that will result in businesses, particularly those led by women and youth, being able to access patient and enabling capital to support them so they can grow and prosper. 

That’s the key here, by creating a universe in which you can do that you will then be able to apply a gender lens and a youth lens and fund the space more actively because people will feel confident that there is access to finance.

__How do you see RMB’s blended finance activities evolving in the future?__

At RMB we like to stay one step ahead of the market, but also one step abreast with the market. Evolution will be led by the demand in the developmental space. Climate and just transition are the focus right now, but that space is starting to get crowded. We need to identify the next developmental focus area and determine the funding nuances in that space. Healthcare, affordable housing, and water in particular, are becoming very topical on the African continent. It is going to be an evolving space and each of these sectors will have different funding needs. 

More patient capital will be required going forward, so I suspect we will see more “equity like” capital instruments (i.e. convertibles being introduced to bridge the gap between the needs of the market and the developmental funding need). I also believe the use of guarantees will become more prominent as a tool in blended finance, especially to catalyze investments into early-stage projects where the risks are higher or perceived to be higher. Blended finance is going to become more mainstream in Africa, however I would caution that we often overcomplicate blended finance, we structure the structure too much and that crowds out the market. We need to create structures that are replicable, scalable, and simple enough that investors can be comfortable and allocate capital to them.

Learn about Rand Merchant Bank's blended finance strategies, how they measure impact, their future in the blended finance space, and more.

Rand Merchant Bank Member Spotlight

Rand Merchant Bank Member Spotlight with Alessandro Scalco

ResponsAbility is an impact asset manager. Since 2003, they have invested over $15 billion in impactful projects and currently manage $5 billion in assets divided into three investment themes: climate finance, financial inclusion, and sustainable food. Beyond these three core themes they also offer tailor-made and Fund of Funds investment solutions, totaling at $1 billion. 

Blended finance makes up a significant portion of their portfolio. Structured blended finance debt strategies account for over $1.3 billion of responsAbility's assets under management, a figure that’s expected to grow rapidly, especially in climate finance. Two new structured blended finance debt strategies have been launched recently: the Climate Smart Agriculture and Food Systems strategy in March 2023 and the Asia Climate Strategy in November 2023.

We spoke with Henk Nijland, Head Business Development, DFIs & Public Investors, at responsAbility, about their blended finance strategies, how they measure impact, their acquisition by M&G plc., and more.

__Can you tell me about your background and experience in blended finance?__

Blended finance has been a central theme throughout my career. I began my professional journey at the Dutch Ministry of Economic Affairs, where I worked on promoting investments from Dutch companies in Eastern Europe. These investments often required de-risking through subsidies and political risk insurance – what we now recognize as blended finance, even though the term wasn’t in use at the time. 

I later spent 20 years at FMO, the Dutch Development Bank, where I held roles as a banker and head of investment teams focused on financial inclusion, infrastructure, and renewable energy. FMO is well-known in the blended finance arena. I was involved in 2014 with a Climate strategy, which provides green lines to financial institutions and direct lending for smaller project finance transactions. This strategy is managed by responsAbility. FMO’s $20 million investment in the strategy, alongside other notable investors like KfW and IFC1, was a key milestone. Today, the strategy has grown to around $613 million, demonstrating the long-term impact and scalability of blended finance.

1. [Project detail - GLOBAL CLIMATE PARTNERSHIP](https://www.fmo.nl/project-detail/33148)

__Can you tell me more about the Asia Climate Strategy and responsAbility’s role?__

In November 2023, we launched the Asia Climate Strategy, which targets corporates in Asia that operate in sectors with high CO2 reduction potential, including renewable energy, energy efficiency, e-mobility, and circular economy. A cornerstone of this strategy is our innovative "Climate Impact Assessment and Monitoring Framework", which ensures transparency and aims to achieve direct CO2 savings of an estimated 16 million tons2 over the lifetime of the investments. 

KfW, the anchor investor in the junior tranche3, and FMO, in the senior tranche4, play critical roles in this strategy. Additionally, a German family office invested in the senior tranche. In the strategy’s second closing in August 2024, M&G plc’s Life business invested $100 million5, bringing the strategy’s size to over $200 million. This example highlights how blended finance can effectively mobilize private sector capital at scale.

2. Calculations based on USD 500 million strategy
3. [Boost for the transformation in Asia: KfW supports mobilisation of private capital with the responsAbility Asia Climate](https://www.kfw.de/About-KfW/Newsroom/Latest-News/Pressemitteilungen-Details_788544.html)
4. [Project detail - ResponsAbility Asia Climate](https://www.fmo.nl/project-detail/63058)
5. [responsAbility Asia Climate strategy surpassed USD 200 million at second closing](https://www.responsability.com/en/press-releases/responsability-asia-climate-strategy-surpassed-usd-200-million-at-second-closing/)

__How do you measure the impact of responsAbility's blended finance deals?__

We take a rigorous approach to impact measurement, which we call the “4 eyes” principle. It involves two key teams: our in-house impact team and our Climate Advisory Specialist team. The latter comprises local technical experts who work hand in hand with an Investment Officer to estimate the impact of portfolio companies’ projects before and after investment. These specialists gather and analyze climate impact data, which is then validated and reported by our impact team - the two pairs of eyes. 

We’ve also developed a carbon measurement tool that tracks and reports climate impact, ensuring our data is accurate and transparent. Typically, we engage reputable external partners to review the fund’s portfolio carbon impact at the end of its life, further ensuring the veracity of our impact reporting. 

__Last year responsAbility was acquired by M&G plc, can you talk a bit about this and what the acquisition might signal for the impact investing and blended finance space?__

In May 2022, M&G plc., a leading international savings and investment company, acquired responsAbility. This acquisition underscores the growing interest among mainstream investors in impact investing and blended finance, as well as the increasing importance of sustainability in investment decision-making. What makes this acquisition particularly noteworthy is M&G’s active involvement in our recent initiatives. For example, in January 2023, M&G committed $274 million to two sustainable food strategies6 in Latin America and Asia, and in August, M&G’s Life business invested $100 million in the Asia Climate Strategy7. 

These large private investments highlight M&G’s strong commitment to impact investing and serve as a positive signal to other large institutional investors to engage more actively in this space, particularly in our pioneering structured blended finance strategies. 

6. [responsAbility announces first closings of two Sustainable Food strategies totaling USD 274 million](https://www.responsability.com/en/press-releases/responsability-announces-first-closings-of-two-sustainable-food-strategies-totaling-usd-274-million/)
7. [responsAbility Asia Climate strategy surpassed USD 200 million at second closing](https://www.responsability.com/en/press-releases/responsability-asia-climate-strategy-surpassed-usd-200-million-at-second-closing/)

__How do you see responsAbility's blended finance activities evolving in the future?__

Since our inception in 2023, we’ve raised over $2 billion in blended finance across various strategies, including the Global Climate Partnership strategy, the Access to Clean Power strategy, and the Social Bond focussed on financial inclusion, health, water, and sanitation. The Asia Climate Strategy, our newest flagship blended finance strategy, has a target size of $500 million and has already raised over $200 million, we expect to secure the remaining $300 million within the next year. 

Looking ahead, we’re committed to developing more high impact blended finance strategies, particularly in financial inclusion and climate finance, covering both mitigation and adaptation. We’re excited about the future and look forward to collaborating with Convergence and its members to further promote blended finance as a tool to mobilize private investments at scale to reach the SDGs.

Learn about responsAbility's blended finance strategies, how they measure impact, their acquisition by M&G plc., and more.

ResponsAbility Member Spotlight

responsAbility Member Spotlight with Henk Nijland

African Guarantee Fund (AGF) is a specialized guarantee provider whose mission is to facilitate economic development and poverty reduction in Africa. To achieve this, AGF increases access to finance for small- and medium-sized enterprises (SMEs) across key economic sectors through an array of guarantee products and capacity development assistance. Since inception, AGF has unlocked $4.3 billion in SME financing, through partnerships with 250 partner financial institutions across 43 African countries.   

AGF is backed by the following shareholders and sponsors: The Government of Spain through the Spanish Agency for International Cooperation (AECID), the African Development Bank (AfDB), French Development Agency (AFD), Nordic Development Fund (NDF), Investment Fund for Developing Countries (IFU), German Development Bank (KfW), French Agency for Private Sector (PROPARCO), West African Development Bank (BOAD), Global Affairs Canada (GAC), USAID's West Africa Trade & Investment Hub (WATIH), The Norwegian Agency for Development Cooperation (Norad) and TechnoServe.  

We spoke with AGF’s Group Chief Executive Officer, Jules Ngankam, about how AGF works to achieve their mandate of facilitating access to finance for SMEs, enabling them to drive the growth of African economies.

__The total financing gap for Africa's 50 million SMEs, which form the backbone of Africa's economies, is [estimated](https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=17513) to be $330 billion. Tell us about the gaps AGF aims to bridge when it comes to SME financing in the context of Africa.__

AGF is committed to bridging the $330 billion SME financing gap by addressing several critical gaps in Africa’s budding business landscape. These gaps are related to: information, collateral, tenor, skills, product, and perception gaps. 

Below is an analysis of the gaps AGF aims to bridge.

![AGF Table Draft 1](//images.ctfassets.net/4cgqlwde6qy0/Yw9gKjCPqZX9Yha4MrvMD/34482d89f8e1511c4a0b60119cc1e20a/AGF_Table_Draft_1.png)
*Source: African Guarantee Fund*

__AGF offers intentionally designed products to bridge these gaps and address the needs of African SMEs, as well as to support financial institutions in serving these businesses. How do your products enable you to do this?__

By renewing and enhancing existing guarantee lines and targeting new prospects, AGF alleviates the challenges SMEs encounter in accessing finance.

We offer tailored guarantees that reduce the risk for financial institutions, making it easier for them to extend credit to SMEs without stringent collateral requirements.

Our products support all the funding needs of the SMEs, from debt to equity; working capital to capital expenditure; short term to longer-term financing solutions, as well as addressing the tenor gaps that hinder the growth of SMEs. We provide capacity development for financial institutions, ensuring they have the tools and knowledge to assess and manage their SME portfolio effectively. Additionally, we encourage the creation of innovative financial products that align with the unique business cycles and needs of SMEs, ensuring they receive adequate and appropriate financing.

By showcasing the success and potential of SMEs through our guarantee products, we help shift the perception of these businesses as viable and attractive financing prospects.

__Tell us about your suite of guarantee products and how you determine when to deploy them.__

AGF offers a suite of guarantee products designed to address specific financing challenges faced by SMEs, while also empowering financial institutions to extend their lending capabilities. Our Loan Portfolio Guarantees (LPGs) provide a 50-75% risk cover for on-lending to increase lending to SMEs with higher risk cover for Green SMEs and Women SMEs (WSMEs). This gives significant comfort to partner financial institutions (PFIs), encouraging them to increase their exposure to SMEs and WSMEs and take on risks they are not typically comfortable with. Below is a breakdown of our key products and how we determine their deployment:

1. __Loan Portfolio Guarantee:__ Covers multiple loans within a specified portfolio, helping PFIs scale up SME lending where collateral requirements are unmet. We use this when targeting a broader segment of SMEs, enabling PFIs to support more businesses simultaneously.

2. __Loan Individual Guarantee:__ Covers a single loan made by a PFI to a specific borrower. It is applied when a particular SME needs support, allowing PFIs to provide targeted assistance.

3. __Equity Guarantee:__ Covers the risk associated with equity investments by private equity or venture capital funds in SMEs, and it strengthens SMEs’ capital base by mitigating investment risks.

4. __Bank Fundraising Guarantees:__ Enables financial institutions to raise funds for scaling up credit facilities to eligible SMEs. This assists PFIs in securing long-term resources and facilitating the funding of long-term SME needs.

5. __Capacity Development:__ Here we provide PFIs with training sessions on financial product development, diversity, equity, and inclusion, market research, and customer service. This enhances PFIs’ understanding and willingness to revamp their processes and product offerings to cater to a broader spectrum of SMEs. 

Each product deployment begins with a thorough assessment of the specific needs and challenges faced by the SME or financial institution. Products are customized to address identified gaps, ensuring they provide maximum support and impact. There are also continuous monitoring and feedback loops to ensure the effectiveness of the deployed products and allow for adjustments as needed.

We also have structured guarantee products for specific sectors or unprecedented occurrences:

__Green Guarantee Facility__

With support from the Nordic Development Fund (NDF) and the Danish Investment Fund for Developing Countries (IFU), AGF has designed an innovative pan-African financing program, the Green Guarantee Facility (GGF) to support sustainable private-sector led economic growth in Africa. The GGF is a platform which combines a guarantee facility with a capacity development program to unlock greater financing for SMEs advancing climate change mitigation and adaptation efforts, as well as those working in climate-smart industries. The GGF is a market leader in green financing that crowds-in other financial institutions (FIs) to provide greater financial and/or capacity development supports.

__AFAWA Guarantee for Growth__

With support from the Group of Seven (G7) countries, the Netherlands and Sweden, and the African Development Bank (AfDB), AGF has created an innovative pan-African financing program, Affirmative Finance Action for Women in Africa (AFAWA) Guarantee for Growth (G4G), to encourage financial institutions to bridge the continent’s $49 billion gendered financing gap. AFAWA G4G is a gender-lens investing platform which combines a risk sharing mechanism with a capacity development program to unlock up to $2 billion in financing for African WSMEs and develop specialized WSME products. 

__You have a blended capital structure with a tranche for concessional capital providers such as donor agencies as well as private commercial capital. Why was this structure necessary and how does it enable AGF to achieve its mandate of scaling SME financing?__

AGF’s blended capital structure is essential for scaling SME financing effectively. It features a waterfall structure with tranches for concessional and private capital providers. This accommodates the diverse risk and impact profiles of various investors, offering flexibility to meet their unique needs and requirements. In terms of why this structure is necessary, summarily, it allows for diverse investor needs and risk mitigation. The waterfall structure allows us to tailor investment options, making it attractive to a wide range of investors, based on their varying risk tolerance and impact goals. By structuring investments in tranches, AGF also offers preferred positions to meet investor needs and address their constraints. 

This layered approach distributes risk appropriately, making it feasible to secure significant capital from diverse sources. This is how AGF attracts investments to achieve its mandate of scaling SME financing across Africa, driving inclusive economic growth and sustainable development.

__What about your work with donor agencies outside of your capital structure? You have partnered with Global Affairs Canada (GAC) on the Affirmative Finance Action for Women in Africa (AFAWA) program and with the Nordic Development Fund (NDF) on the Green Guarantee Facility. Tell us more about these programs and how these donor agencies are supporting in order to reduce the effective cost of the guarantees issued.__

Partnerships with organizations such as GAC and NDF enhance AGF’s ability to provide cost-effective guarantees and drive sustainable development across Africa.

Under the Green Guarantee Facility, for example, our partnership with NDF launched in 2016. This climate-focused initiative supports SMEs engaged in sustainable energy, cleaner production, climate-smart agriculture, natural resource management, and green services. By aligning with the Paris Agreement’s Nationally Determined Contributions (NDCs), AGF and NDF work together to enhance sustainability, stimulate green job growth, increase income, and improve the quality of life for low-income communities across Africa. Since then, other partners, such as IFU have joined AGF to contribute to the program.

With the AFAWA program, originally supported by the G7 nations and the African Development Bank, our aim is to improve women’s access to financing through innovative financial instruments and risk-sharing mechanisms. GAC contributed capital to support AFAWA, which aims to unlock up to $3 billion in financing for women-owned SMEs. The program also includes a risk-sharing instrument and a capacity development grant. AFAWA focuses on gender equality and financial inclusion, helping women entrepreneurs access the funding they need to grow their businesses and contribute to economic development.

Through strategic partnerships and collaboration like these, AGF’s capacity to issue guarantees increases, making financing more accessible and affordable for SMEs.

__An important feature of a guarantee is to reduce the difference between the perception and reality of risk. Can you give us a success story of an institution that you worked with that increased provision of credit to an asset class/segment?__

One of our success stories is our collaboration with a financial institution in East Africa that has been able to increase its women customer base from 28% to 40% through a tailormade product that addressed the specific needs of women entrepreneurs. 

The bank utilized AGF's guarantees and capacity development to mitigate risk concerns and confidently offer loans to this underserved segment. Over time, as the institution witnessed the robust performance and repayment rates of these loans, it gained a deeper understanding and appreciation of the true risk profile of women-owned SMEs. The success and positive impact of the program transformed the bank's perception as women accessing loans from this lender increased from 10% to 38%.

Our partnership has so far enabled the bank to:
- Grow its loan portfolio by supporting financing of businesses that lack required collateral who are mostly women SMEs.
- Improve the quality of the business portfolio for both the bank and customer through capacity development support especially for women entrepreneurs resulting in improved business operations.
- Grow its customer base as customer financing needs are adequately addressed through structured financing based on the facilities under the partnership.
 
Through the AGF guarantee and capacity development program the institution has developed enough confidence and expertise to sustainably provide credit to women entrepreneurs. Today, it has expanded its lending portfolio to include a significant share of women-owned SMEs, driving growth and empowerment in its community. This success story exemplifies how AGF's guarantees not only bridge financing gaps but also create lasting change in the financial landscape. 

__AGF applies a stringent Monitoring and Evaluation (M&E) framework to measure impact across strategic, beneficiary, and operational levels. Tell us about this framework and what are some key indicators to this end? Has your M&E approach evolved since inception?__

Our comprehensive approach to measuring impact allows us to gauge the effectiveness of our interventions in enhancing SME financing in Africa.

The purpose of our macro-level impact indicators is to assess long-term effects on financial markets and SME-targeted products. Some key metrics include: loan tenor, cost of loans, collateral requirements, and the share of loan portfolios favoring SMEs in countries of exposure. We take this measure every 3-5 years through surveys. Our goal is to demonstrate how sustained support triggers broader adoption of similar initiatives, contributing to economic growth and poverty reduction, aligning with the SDGs.

We also have outcome indicators at the beneficiary/SME Level. The purpose is to track direct effects on PFIs’ behavior and socioeconomic impacts on SMEs benefiting from guaranteed loans. This is measured by the number of SMEs accessing financing, effects of capacity development support, the share of PFIs’ loan portfolios to SMEs, non-performing loans among trained PFIs, SME revenue growth, job creation, gender distribution in SME ownership, and other socioeconomic changes. We do this using annual surveys and case studies focusing on primary data collection at the SME level, supplemented by data from AGF systems and field visits.

To monitor the direct activities and inputs from PFIs and AGFs output and input indicators, data on PFIs’ activities is reported monthly and quarterly to AGF, and the input data is retrievable from AGF’s database. 

Since its inception, AGF’s M&E approach has evolved to become more comprehensive and data-driven. Initially focused on basic output tracking, we now include sophisticated impact assessments and outcome measurements, ensuring a holistic view of our interventions' effectiveness. This evolution has enabled us to fine-tune our strategies and better support the SMEs we serve, ultimately driving more meaningful and sustainable economic development. By continuously refining our M&E framework, AGF ensures that our initiatives not only provide immediate financial support but also contribute to long-lasting positive changes in the African SME landscape.

__AGF now has a presence across 43 countries in Africa and has cumulatively unlocked $4.3 billion in SME financing since inception. Where does the organization go from here in terms of achieving scale and how can blended finance help you get there?__

AGF's journey to scale is ambitious and inspiring. We aim to grow our capital to $500 million by 2028, unlocking an additional $5 billion financing for SMEs across Africa. In achieving scale, we’ve sought to expand our reach with plans to deepen our presence in existing markets while exploring new ones, ensuring that more SMEs across Africa have access to financing. We are also developing and introducing new financial products tailored to the unique needs of African SMEs, so we can continue to address critical financing gaps. 

On the role of blended finance in catalyzing investments, blended finance combines concessional capital from donors with private capital to mitigate risks and attract more investors. We leverage resources to maximize the impact of each dollar invested, enabling AGF to significantly unlock more funding for SMEs. Ultimately, blended finance encourages collaboration between the public and private sectors, fostering partnerships, and aligning interests and resources to achieve optimal impact and support sustainable economic growth.

*By Karolyn Xie, Interim Head of Communications*

Learn how the African Guarantee Fund works to achieve their mandate of facilitating access to finance for SMEs, enabling them to drive the growth of African economies.

African Guarantee Fund Member Spotlight

African Guarantee Fund Member Spotlight with Jules Ngankam

Established in 1898, Bechtel is a global engineering, procurement, construction, and project management company. Bechtel has helped customers complete more than 25,000 projects in 160 countries on all seven continents.

Housed within Bechtel Infrastructure, bechtel.org is the corporation’s social enterprise. Structured as a breakeven business, their mission is to help build resilient and sustainable communities in frontier and emerging markets through technical advisory and project management. bechtel.org originates its own projects, partnerships, and financing and measures impact. Their focus is execution and delivery; however, they have also been involved in project development.

__Tell us about the interaction between Bechtel and bechtel.org?__

bechtel.org was formed as a part of Bechtel’s sustainability journey. While exploring ways to leverage Bechtel’s core capabilities to support underserved communities in developing countries, we tested the concept with various friends in the non-profit sector and launched the Building Resilient Communities corporate initiative. We deployed technical experts into projects in Kenya, Nigeria, Philippines, and Peru and found our expertise in helping local teams manage and deliver projects was a demand driver. We also sought feedback from other corporate social enterprises and found Bechtel’s global reach and depth of experience was a key value proposition. Hence, we kept the Bechtel name and simply added .org instead of creating a separate organization with a new name. This early work informed our executive leadership and shaped bechtel.org’s business model and impact framework, which is distinct from Bechtel Foundation, Bechtel’s CSR initiatives, and Bechtel’s Sustainability and ESG. 

Our integration and interaction with Bechtel Corporation is intentional and synergistic. We’re governed by a Board of Advisors, an Impact Committee that assesses and evaluates our projects, and an executive sponsor that keeps us connected to the broader enterprise. We are challenged by our Board to demonstrate *why this project* and *what impact we leave behind*. We apply Bechtel’s business process and procedures to develop and deliver projects. And while we leverage Bechtel’s global resources, we do not use bechtel.org to bring commercial advantage to Bechtel. Once there’s a project scope and financing, we recruit and onboard talent from Bechtel’s global projects into bechtel.org (we do not outsource) and then integrate them into local implementing organizations. We benefit from accessing a global pool of Bechtel colleagues with a diverse set of experiences, competencies, and skills. This means we can form integrated teams that can transfer Bechtel’s knowledge and technical know-how to local organizations so they can build their own capacities to deliver projects. 

We’re also sector agnostic. For example, if logistics or infrastructure (e.g., storage and process facilities) is part of a solution to boost food security in the agriculture sector, we’ll get involved. We’ll collaborate with any organization – non-profit, for-profit, government – that share our values and interests and complement our capabilities. 

Increasingly, we see this synergistic integration with Bechtel Corporation as a value proposition for blended finance and impact investors as we can help de-risk investments to local firms, improve their project’s certainty of outcome, and help ensure the additionality of social impact is delivered.

__What is your approach to impact infrastructure? How does blended finance support this?__

For bechtel.org, the infrastructure’s value to the community is not the asset itself but the services it provides and the additionality it creates – that’s impact infrastructure. We focus on the overlooked elements like operations and maintenance (O&M), which, if neglected or addressed downstream in the project, put the intended impact at risk. For example, if the aim is to expand access to healthcare for women by solarizing health facilities in rural communities, and then a technical component of the solar energy system fails in a year because there is no O&M or sustainable financing, there’s no impact.    

Issues arising from O&M or the lack of an enabling environment to sustain a project mean we spend a lot of time on engaging and supporting the ecosystem of local actors who have a stake in the durability of the project. This is very time-consuming and often requires bechtel.org becoming political athletes, but it’s important and necessary if we are focusing on the long-term. 

We also measure. We want to demonstrate the correlation between infrastructure and social impact. Because we could not find an external framework that was fit for purpose, we developed our own and are road-testing it on our projects. Our intent is to build a body of knowledge and share how we’re measuring infrastructure with a community of interest. We have a full-time impact analyst devoted to this. 

These experiences have been part of an ongoing rethinking and reorientation of bechtel.org and blended finance is a key part of this evolution. Catalytic capital and long-term investment from a mix of partners (e.g., foundations, banks, DFIs, aid agencies, communities, corporates) is critical to covering the costs associated with project development, capital expenditures, operating expenses, and ensuring impact. Blended finance structures discipline partners to focus on the durability of the project to achieve the intended impact.

__What are the advantages of leveraging a blended finance approach? Can you give us some examples of specific transactions that illustrate this?__

Blended finance helps bechtel.org in two ways:

One of the strategic pivots we’re taking is to become technical assistance facilities or accelerators to blended finance or impact funds that want to de-risk their investments, build local capacity, and deliver impact. In addition to our technical expertise in project delivery, we bring a ready-made facility with a structure, governance, and transaction model that can bolt onto these funds. This blended approach offers several advantages: risk mitigation, access to capital, mobilizing private investment, and additionality. We’re currently working with a financial intermediary to develop a climate adaptation fund and accelerator targeting Southeast Asia. We hope to replicate this for Africa and Latin America. Blended finance allows us to align stakeholder interests to deliver a project that meets the unique needs and priorities of communities. We can solve complex problems from a position of strength and often that strength is the partnership. 

Second, a few of our current projects use a pilot-test-scale approach. Blended finance plays an important role particularly in seed funding, de-risking, capacity building, and demonstration effect. In Peru, seed capital from mining companies enabled us to pilot an innovative thermal harvesting system that can futureproof thousands of indigenous homes in the remote Peruvian Andes from extreme frost. In India, seed capital from an insurance company facilitated an early assessment of a nature-based solution that regenerates polluted canals for productive use and flood mitigation. In Zambia, catalytic capital from a public aid agency enabled us to pilot a project to increase transactions between smallholder farmers and commodity buyers to reduce post-harvest loss and bolster food security. Blended finance allows us to align incentives and explore innovative financing structures to scale these projects. 

__How does bechtel.org apply a gender lens to its blended finance transactions?__

In all our projects, we measure specific metrics around access to services (e.g., health, education, jobs) that contribute to impact on women and other marginalized demographics (e.g., migrants, youths). For example, we are developing an accelerator targeting Ukraine migrant-owned/operated SMEs and developed a vulnerability lens to identify and assess women-led SMEs that can be suppliers or service providers for energy transition projects in Europe and/or Ukraine’s future reconstruction. 

Women are also part of the design thinking process for our current projects. In Peru, the thermal harvesting system mentioned earlier was based on the input of women as to what is a living temperature inside the home when temperatures drop below -10 degrees Celsius at night. Similarly in India, women were among the 350 consultations to help us identify the appropriate technology for a nature-based infrastructure solution. Our approach is to be intentional and upstream on the inclusion of women as part of the solution.

__Have you faced any interesting or unexpected challenges in your blended finance journey?__

Blended finance has many positives for bechtel.org. With multiple partners the amount of time to align interests and the due diligence required on each of the investors was somewhat unexpected. Despite these time challenges it's the right thing to do. I also did not expect to spend a year studying blended finance models. We knew the market was moving in this direction and it was critical to learn how it works and more importantly how we fit. It was one of the reasons we became a member of Convergence.

__What are some lessons you have learned so far about measuring the impact and evaluating the success of blended finance transactions?__

We’ve learned that because of our business model and the nature of our projects, bechtel.org may never participate on a project long enough to contribute to its full impact, but we can be there long enough to position the project to achieve it. We also learned that we need to measure attribution and contribution separately. Our measurement framework is implemented in two parts: attribution to bechtel.org and the project’s overall contribution to impact. By separating the two we can distinguish between the level of control we have on the project and, alongside with our partners, capture the project’s overall contribution to impact. 

__What have the different types of stakeholders that you’ve worked with looked for in blended finance deals?__

Our stakeholders have diverse objectives, preferences, and expectations. In our projects, public sector investors are focused on policy alignment and impact measurement while private investors prioritize financial returns and risk mitigation. Philanthropic organizations tend to emphasize innovation, scalability, and partnerships while DFIs are interested in alignment with their development mandate and crowding-in private capital. I would say all of them support blended finance deals that increase local capacity building and technical assistance.

__How do you see bechtel.org’s blended finance activities evolving in the future? What is next for the organization?__

As I highlighted earlier, we’re positioning bechtel.org to be a technical assistance facility or accelerator to blended finance or impact investment funds. For us these financing models generate the kind of scale, durability, and impact that Bechtel is known for.

*By Karolyn Xie, Interim Head of Communications*

Hear from Tam Nguyen of bechtel.org on their approach to impact infrastructure, blended finance, gender, and more.

bechtel.org Member Spotlight

bechtel.org Member Spotlight with Tam Nguyen

FOUNT is a leading impact investment firm, providing strategic advisory and investment management services focused on driving social and environmental impact alongside financial returns in emerging markets. 

Building upon earlier experiences in their previous roles, Bernadette Blom and Bob Assenberg established FOUNT in 2013 as a strategic advisory firm, specializing in impact investing within emerging markets. As FOUNT advised and supported its numerous clients to achieve substantial impact, the firm expanded their involvement to encompass fund and investment management activities, leveraging their existing networks and expertise in setting up and managing impact investment funds. This evolution started with the management, restructuring, and eventual divestment of an affordable housing portfolio in emerging markets.

We spoke with co-founder Bernadette Blom about FOUNT’s portfolio, blended finance insights and learnings, integrating a gender lens, and more.

__Can you tell us about FOUNT’s portfolio of impact funds?__

FOUNT currently oversees a diversified portfolio of four impact funds that span various sectors, geographies, and instruments, all characterized by innovative and sustainable business models.

Since 2017, we manage __BIX Capital__, focusing on pre-financing impact receivables (mainly carbon credits) in Sub-Saharan Africa. Additionally, since 2019 we are Fund Manager for the __Good Fashion Fund__, contributing to systemic change within the textile and apparel industry and as of 2020, we serve as the Investment Advisor for the __AGRI3 Fund__, collaborating with Cardano Development, to provide guarantees for sustainable agriculture, forest protection, and improved rural livelihoods.  FOUNT recently added the __Organic Development Finance__ to its portfolio, dedicated to providing affordable finance for organic agricultural producers in developing countries.

Our commitment revolves around innovative, unique, and impact-focused initiatives, with blended finance constituting a central role in all our endeavours.

__What is FOUNT’s approach to blended finance? What have you observed in your practice of blended finance?__

The impact funds under our current management exhibit a blended capital structure comprising distinct risk/return tranches. This structural composition is imperative for innovative impact funds without a proven investment thesis. In instances where risks are indeterminate, investors frequently perceive them as high, underscoring the indispensability of a blended capital structure to stimulate private investor participation. The strategic allocation of varying risk/return profiles across diverse investors within a unified capital structure facilitates the attainment of substantial impact.

As a prudent practice, ascertained from experience, we observe that upon establishing a robust track record, the concessional tranche can be strategically diminished. Simultaneously, leverage can be augmented for subsequent funds, capitalizing on the diminished risk perception among investors. This nuanced approach aligns with industry best practices and enhances the overall viability and attractiveness of subsequent investment vehicles.

__FOUNT has an array of blended transactions, ranging from fashion, to clean cooking to agriculture. What lessons have you learned working with different instruments and across sectors?__

When establishing an innovative fund, particularly one entering a new sector or featuring a novel investment instrument, as exemplified by our experience with all our mandates being first-of-its kind impact funds, the primary objective is to showcase the financial, environmental, and social viability of the investments. In the context of such a ‘demonstration fund’, the inclusion of junior equity/first-loss is imperative to attract private investors. 

The distinctive innovation introduced by BIX Capital (investors include Shell foundation, International Finance Corporation (IFC), FMO: Dutch Entrepreneurial Development Bank (FMO), and U.S. International Development Finance Corporation (DFC)) lies in its unique investment instrument, impact receivable finance. Under this mechanism, carbon credits generated through the utilization of cookstoves or other impact products are pre-sold to reputable offtakers, based on a pre-agreed volume and price . The underlying agreement serves as collateral, mitigating the need for recourse to the balance sheet of the financed SME. Since its inception BIX Capital has successfully demonstrated the efficacy and scalability of this business model, and is now fully invested prompting the initiation of a follow-on fund, BIX2, characterized by increased leverage, a larger fund size, and a broader investment mandate.

AGRI3 (investors include the Dutch Government, Rabobank, and Global Environment Facility (GEF)) , on the other hand, specializes in providing risk mitigation, employing various types of guarantees to empower financial partners in developing countries to collaborate with their clients towards greater sustainability, encompassing areas such as sustainable agriculture, deforestation avoidance, and support for rural livelihoods. AGRI3 facilitates transactions that might be beyond the capacity of individual partners, ensuring scalability through collaborative efforts. 

__Tell us about a past transaction that benefitted from using a blended finance approach.__

The strategic utilization of blended finance empowers FOUNT to foster innovation and engender positive environmental and social impact, aligning seamlessly with our commitment to maintaining an impact-focused and innovative approach in managing our funds.

A notable illustration of the successful implementation of blended finance is the establishment of the Good Fashion Fund in 2019.The fund strategically targets apparel manufacturers. Investments are directed towards impactful equipment that results in a substantial (>50%) reduction in the utilization of energy, water, or chemicals in the production process, concurrently improving workers' conditions and rights.

The textile sector is known for its environmental impact, challenging labor conditions, and reputational challenges. Laudes Foundation initiated the fund, acknowledging the pressing need for investments and the considerable potential for positive impact within the sector. The junior equity investments from Laudes Foundation and the Mills Fabrica catalyzed senior debt funding from Rabobank. This collaborative approach not only validated the viability of the business model but also exemplified the indispensability of the blended finance strategy in overcoming inherent challenges and propelling the success of such initiatives.

__How does FOUNT integrate a gender lens into its investment decisions?__

Gender inequality remains a formidable global challenge, and FOUNT is unwaveringly committed to the rights of women and contributing significantly to the realization of gender equality. Within our funds, women, whether as customers, company proprietors or employees, play pivotal roles. A comprehensive gender lens is meticulously integrated into the investment decisions of AGRI3, Good Fashion Fund, and BIX. Each fund adheres to an individualized gender policy, incorporates leading industry standards and best practices, and tailors to address specific gender challenges within the targeted sectors.

In the case of BIX2, the fund has undertaken multifaceted adaptations to the 2X Challenge criteria, aiming to yield tangible gender outcomes from its investments. The primary focus is on the percentage of investments targeting products specifically designed to enhance the livelihoods of underserved female populations. Our steadfast commitment involves dedicating 80% of investment capital, via SME finance, to such products and services. We are committed to quantifying the number of women reached and calculating time saved by women, utilizing a proprietary model. Where feasible, we intend to pre-finance companies based on monetized time savings, denoted as "Gender Credits." 

Beyond our core focus, we actively engage with portfolio companies to promote gender-positive workforce and supply chain policies and. Additionally, we consciously exhibit a positive bias towards investing in female-led or owned businesses.

__What are some key challenges FOUNT has faced in your blended finance journey?__

Securing risk capital, particularly for the first-loss/concessional tranche, poses a considerable challenge, yet is pivotal for mobilizing private funding, especially for innovative impact funds. 

Our track record has become instrumental in facilitating the expansion of our funds. Given our focus on establishing high-impact, pioneering funds with innovative approaches, operational in developing countries, the associated perceived risks are often elevated. Over the years, we have systematically instituted standards and policies that can be applied across various initiatives, encompassing investment, environmental, and social impact considerations.

__We are seeing lots of interest in the potential for blended finance to enable scaled opportunities and impact. Could you share some insights and advice based on your experience managing funds of a significant size?__

We see many opportunities for blended finance and foresee substantial prospects in its future application. It is often imperative to initiate a first fund to establish the proof of concept. Drawing from the insights gained in this initial endeavor, a considerably larger second fund can be formulated. The second fund typically necessitates a reduced reliance on junior or concessional capital, given that the viability of the business case has been substantiated, resulting in a commensurate reduction in perceived risk.

__How do you see FOUNT’s blended finance activities evolving in the future?__

As we focus on the continued management and investment of existing funds in our portfolio, a logical progression for FOUNT is to leverage the insights garnered, sector networks, knowledge, methodologies, and processes from our current funds. These valuable assets will be strategically channeled into the creation of larger follow-up funds, including a first close of BIX2 in 2024 and our imminent plans for GFF 2.0.

Moreover, we are dedicated to exploring new, innovative initiatives capable of generating substantial impact and that have not yet achieved widespread implementation.

__Thinking about your time at FOUNT to date, what has stood out to you?__

FOUNT was founded in 2013 by two visionary entrepreneurs committed to enhancing livelihoods and ecosystems in emerging markets. Presently, FOUNT is strengthened by a dedicated team of international professionals. Over the years, FOUNT has successfully established multiple impact investment funds, disseminated knowledge, and facilitated financial flows to impact investment initiatives. Through the creation of innovative and scalable projects in emerging markets, FOUNT actively contributes to advancing the Sustainable Development Goals.

Our commitment is to persist in this journey alongside our stakeholders, with a focus on expanding FOUNT's influence as an innovator in the sector. Simultaneously, we aspire to maintain our status as an inspiring workplace dedicated to making a meaningful impact.

*By Karolyn Xie, Interim Head of Communications*

Hear from Bernadette Blom of FOUNT on their portfolio of impact funds, their approach to blended finance, how they are integrating a gender lens in their work and more.