Convergence Eventbrite


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__Thursday April 16th at 9:00am – 12:00pm (SGT)__

__[REGISTER NOW](https://register.gotowebinar.com/register/4485768153571513613)__

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Demystifying Blended Finance is a 3-hour interactive workshop designed to offer members and partners a comprehensive understanding of how blended finance can mobilize higher levels of capital for projects in developing counties. The workshop will offer a brief overview of blended finance and trends across the ecosystem, along with a deeper understanding of the financial rationale for using blended finance; and reviewing practical applications of how blended finance structures have been used to capitalize projects in emerging and frontier markets.

The training has limited space to ensure a personal, intensive and practice-driven learning experience. __We recommend that no more than 1-2 representatives from each organization attend.__

Virtual Learning Seminars: Demystifying Blended Finance

Demystifying Blended Finance is a 3-hour interactive workshop designed to offer members and partners a comprehensive understanding of how blended finance can mobilize higher levels of capital for projects in developing counties.


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__Tuesday April 14th at 10:00am – 1:00pm (EDT)__

__[REGISTER NOW](https://register.gotowebinar.com/register/3878836635521367565)__

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Demystifying Blended Finance is a 3-hour interactive workshop designed to offer members and partners a comprehensive understanding of how blended finance can mobilize higher levels of capital for projects in developing counties. The workshop will offer a brief overview of blended finance and trends across the ecosystem, along with a deeper understanding of the financial rationale for using blended finance; and reviewing practical applications of how blended finance structures have been used to capitalize projects in emerging and frontier markets.

The training has limited space to ensure a personal, intensive and practice-driven learning experience. __We recommend that no more than 1-2 representatives from each organization attend.__

## Description
Sub-Saharan Africa is the region most frequently targeted by blended finance transactions, according to our data 35% of blended finance deals have historically targeted the region. For the impact of blended finance in the region to reach its full potential, there needs to be a robust ecosystem of sophisticated homegrown blended finance practitioners. To support this objective, Convergence is offering a blended finance training in Nairobi to help regional practitioners develop a strong understanding of both the theory and practice behind this collaborative approach.

As the global network for blended finance, Convergence has unique insights on public, private, and philanthropic players that participate in blended finance transactions and the various factors that unlock their participation. In designing this training program, we have leveraged our experience, data, and network to create a practical and actionable blended finance training curriculum.

## Program Structure

The one-day interactive training will include presentations, lectures, group exercises and case studies by Convergence and third-party facilitators. 
The curriculum will address questions like:

- What is blended finance and how can it be applied strategically?
- What does the blended finance ecosystem look like? Who are the players and how do they engage? 
- What are the key components of a blended finance transaction?
- What financial instruments are commonly observed in blended finance structures?
- How can development capital providers and private investors work together to create financial strucutures that reflect each other’s unique criteria and constraints?
- What are some of the blended finance innovations that have been designed to reduce currency risk for investors and borrowers?
- What needs to be done to mobilize local/domestic institutional capital and asset managers to participate in blended finance transactions?
- What are concrete examples of blended finance transactions that have successfully mobilized private capital that can achieve scale and contribute towards the SDGs? 



## Who should attend?
This training has been created for program and operational staff at commercial investment firms, development agencies, impact investing organizations, philanthropic foundations, and development finance institutions/multi-lateral development banks. Past participants have included individuals from organization such as Credit Suisse, the MacArthur Foundation, Global Affairs Canada, TDB Group, the Development Bank of Southern Africa, the African Development Bank, USAID, the World Wildlife Federation, the International Finance Corporation, the Australian Department of Foreign Affairs and Trade, the European Investment Bank amongst others.

The training will provide participants with an intermediate understanding of blended finance. It is recommended that participants already have a basic knowledge of the topic. Following the training, participants will be able to make sense of and implement blended finance transactions and frameworks within their respective organizations. 

## Information & Registration
Cost of attendance is $750 per person for members, and $1000 per person for non-members. Complimentary seat(s) are available for Convergence members who have registered for an annual membership. The training has limited space to ensure a personal, intensive and practice-driven learning experience. Please contact aakif.merchant@convergence.finance to register or if you require any additional information.

Can't make it to Nairobi? Stay tuned as we continue to add more trainings in other geographies throughout the year.

## Time & location

February 26, 2020 from 9:30AM - 6:00PM, at the Hotel Villa Rosa Kempinski, Chiromo Road, Nairobi, Kenya


Convergence Blended Finance Training - Nairobi, Kenya

NBO Member Training Agenda (1)

Convergence is pleased to invite you to a breakfast meeting in Nairobi, Kenya on Wednesday, February 26, 2020, on the sidelines of of the Sankalp Forum.

This is an opportunity to meet diverse private and public investors, as well as sponsors of projects and funds. We will also share the latest developments and trends in the field of blended finance from Convergence's database of historical deals, representing over $140 billion of financing. The program for the event is as follows:

- Registration and Breakfast
- Welcome and Introduction
- Trends and opportunities for Blended Finance in Africa (Lade Araba, Managing Director, Convergence)
- Icebreaker and networking

The breakfast will be followed by a [Blended Finance Training ](https://www.convergence.finance/news-and-events/events/26uihODPgqtG5zZ8v9gvol/view)for those who are duly registered.

## Time & Location:

Wednesday, February 26, 7:45 AM – 9:00 AM EAT

Hotel Villa Rosa Kempinski
Chiromo Road
Nairobi, Nairobi County 00800
Kenya

Convergence breakfast meeting in Nairobi

Convergence is pleased to invite you to a breakfast meeting in Nairobi, Kenya on Wednesday, February 26, 2020, on the sidelines of of the Sankalp Forum.

Convergence's [Design Funding](https://www.convergence.finance/design-funding) program supports the design and launch of new blended finance vehicles that aim to catalyze private investment in developing countries and towards the Sustainable Development Goals. 

In this information session, our Design Funding Manager Adhiti Gupta will provide a short presentation on the Design Funding program, with a focus on our two open windows: the Asia Natural Capital Window and the Indo-Pacific Window. This will be followed by a short interview on FAQs with our Head of Communications Sijia Yi and approximately 30 minutes for questions from participants. 

This session is targeted to anyone who is interested in applying for a grant from our Design Funding program.

The session will take place on __January 14th from 10:00-11:00 AM ET__

Convergence's Design Funding program: Everything you need to know to apply

Convergence Design Funding Webinar Jan 2020 v3

This session is targeted to anyone who is interested in applying for a grant from our Design Funding program.

Applying to Convergence's Design Funding program

Convergence's [Design Funding](https://www.convergence.finance/design-funding) program supports the design and launch of new blended finance vehicles that aim to catalyze private investment in developing countries and towards the Sustainable Development Goals. 

In this information session, our Design Funding Manager Adhiti Gupta will provide a short presentation on the Design Funding program, with a focus on our two open windows: the Asia Natural Capital Window and the Indo-Pacific Window. This will be followed by a short interview on FAQs with our Head of Communications Sijia Yi and approximately 30 minutes for questions from participants. 

This session is targeted to anyone who is interested in applying for a grant from our Design Funding program.

The session will take place on __January 13th from 8:00-9:00 PM ET/ January 14th 9:00-10:00 AM SGT__ (for those in the Asia-Pacific).

Convergence's Design Funding program: Everything you need to know to apply 

impact investment summit

The Summit includes a community of 350 impact makers who come together to connect, catalyse and accelerate the ecosystem. Past speakers include Jed Emerson, BrianTrelstad, Wayne Silby, Megan Starr, Joy Anderson, Jyoti Aggarwala, Abigail Noble, Amit Bouri, Stephanie Cohn Rupp, David Batstone, Beau Seil, and tens of other international luminaries in the impact investing space.

Our CEO Joan Larrea and Design Funding Manager Adhiti Gupta will be at the summit. 

Joan will be speaking on Nov. 13 from 12:00 - 1:00PM, on the panel: __Outsized Impact: Boosting Catalytic Capital to Grow the Market__

Adhiti will be speaking on Nov. 14 from 2:15 - 4:15PM, on the panel: __DEEP DIVE - Investing at Scale in South East Asia: Women, Girls, Influence and Capital
__

See the full program [here](http://www.impactinvestmentsummit.com/program).

Impact Investment Summit 2019

Logo for newsletter

This fall on September 24th we are [launching](https://www.convergence.finance/news-and-events/events/5urXmjrQcNJUMM8NV3Kyjp/view) the 3rd edition of our keystone report: The State of Blended Finance 2019. The State of Blended Finance 2019 provides an updated analysis of the blended finance market based on Convergence’s continuous data and intelligence collection efforts as well as input from our partners and members.

This report builds on our previous reports from [2017](https://www.convergence.finance/resource/1qdtFkf5Fq86S4u8U4G8YU/view) and [2018](https://www.convergence.finance/resource/7LEqTu0YeceaQugSWaSKSk/view).

This webinar will review the report's findings, including impact, blending approaches, sectors, and regions. The webinar will also highlight emerging trends and themes as well as reflect on progress towards ‘better blending’.


Webinar: The State of Blended Finance 2019

Convergence - The State of Blended Finance 2019

This webinar will review findings from the State of Blended finance 2019, including impact, blending approaches, sectors, and regions. The webinar will also highlight emerging trends and themes as well as reflect on progress towards ‘better blending’.


The official Africa launch of our 2019 State of Blended Finance Report will be in Nairobi, Kenya on Thursday, October 3, 2019. 

The 2019 State of Blended Finance Report uses Convergence data to analyze the global blended finance market, including the most active funders and investors, sectors attracting the most financing, as well as the commonly utilized blending approaches.

__Agenda:__

9:00 a.m. Welcome and Opening Remarks

9:15 a.m. Keynote Address 

9:30 a.m. Report Highlights

9:45 a.m. Official Africa launch

10:00 a.m. Refreshments

10:30 a.m. Lecture on Blended Finance with Strathmore Business School

12:30 p.m. - 1:00 p.m. Light Lunch

*
Kindly RSVP no later than September 27, 2019 to reserve a place. Limited spaces available.*




State of Blended Finance 2019 Africa Launch

The official Africa launch of Convergence's annual keystone report, the State of Blended Finance 2019.

For blended finance to make a material difference towards the Sustainable Development Goals, diverse stakeholders such as commercial investors, development agencies, impact investors, philanthropic foundations, and development finance institutions, must develop a strong understanding of both the theory and practice behind this collaborative approach. 

As the global network for blended finance, Convergence has unique insights on each stakeholder and the various factors that unlock their participation. In designing this training program, we have leveraged our experience, data, and network to create a practical and actionable blended finance training curriculum.

## Program Structure

The one-day training will include presentations, lectures and case studies by Convergence and third-party facilitators. The training will be interactive and directly engage and involve participants in the learning process.

The modules and agenda are designed to enable participants to uncover answers to the following questions:

- What is blended finance and how can it be applied strategically?
- What does the blended finance ecosystem look like? Who are the various participants and what is their level of activity?
- What are the key components of a blended finance transaction?
- What are the various financial instruments that are commonly observed in blended finance structures?
- How can development capital providers and private investors work together in order to create financial transactions that reflect each other’s criteria?
- What are some instructive examples of transactions that have successfully adopted this approach to crowd-in private capital for development?

## Who should attend?

This training has been created for program and operational staff at commercial investment firms, development agencies, impact investing organizations, philanthropic foundations, and development finance institutions/multi-lateral development banks.

The training will provide participants with an intermediate understanding of blended finance. It is recommended that participants already have a basic knowledge of the topic. Following the training, participants will have a working knowledge of how to make sense of and implement blended finance transactions and frameworks within their respective organizations

## Information & Registration

Cost of attendance is __$2000__ per person. Complimentary ticket(s) are available for Convergence members who have registered for an annual membership. The training has limited space to ensure a personal, intensive and practice-driven learning experience. __Please contact aakif.merchant@convergence.finance to register or if you require any additional information.__


Convergence Blended Finance Training

Agenda

Join us in Amsterdam for a one-day training on blended finance that will include presentations, lectures and case studies by Convergence and third-party facilitators. The training will be interactive and directly engage and involve participants in the learning process.

Blended finance training in Washington, DC. 

This fall we're launching the 3rd edition of our keystone report: The State of Blended Finance 2019.

The State of Blended Finance 2019 provides an updated analysis of the blended finance market based on Convergence’s continuous data and intelligence collection efforts as well as input from our partners and members. The 2019 report will also outline key blended finance trends and developments in the past year.

This report builds on our previous reports from [2017](https://www.convergence.finance/resource/1qdtFkf5Fq86S4u8U4G8YU/view) and [2018](https://www.convergence.finance/resource/7LEqTu0YeceaQugSWaSKSk/view).

Please join us in Amsterdam on __Tuesday, October 1__ from __8:30-10:00am__. The morning will include a discussion of blended finance trends and activities, followed by a networking reception. Breakfast and refreshments will be served.

The State of Blended Finance 2019: Europe Launch

The official Europe launch of Convergence's annual keystone report, the State of Blended Finance 2019.

This fall we're launching the 3rd edition of our keystone report: The State of Blended Finance 2019.

The State of Blended Finance 2019 provides an updated analysis of the blended finance market based on Convergence’s continuous data and intelligence collection efforts as well as input from our partners and members. The 2019 report will also outline key blended finance trends and developments in the past year.

This report builds on our previous reports from [2017](https://www.convergence.finance/resource/1qdtFkf5Fq86S4u8U4G8YU/view) and [2018](https://www.convergence.finance/resource/7LEqTu0YeceaQugSWaSKSk/view).

Please join us in New York on Tuesday, September 24 from 8:00-10:30am. The morning will include a discussion of blended finance trends and activities, followed by a networking reception. Breakfast and refreshments will be served.

The State of Blended Finance 2019: New York Launch

The rapid spread of COVID-19 presents an unprecedented challenge in an ever more connected world, requiring health organizations, governments, and the private sector to work together in the face of human tragedy. Given the crucial need for multi-stakeholder collaboration and additional resources (financial and otherwise), we explore how blended finance can help respond to epidemics. Unquestionably, emergency relief funding like government spending and unblended global aid will be crucial to minimizing the impact of COVID-19 in the immediate term. However, blended finance can play an important assisting role in the medium-to-long-term recovery of health systems and economies, especially in the developing world. 


## Financing for vaccines: a difficult landscape 

Developing a vaccine will be crucial to tackling the COVID-19 pandemic and limiting loss of life. Globally, scientists are working around the clock to better understand the virus, requiring [billions of dollars](http://theconversation.com/coronavirus-vaccine-must-be-affordable-and-accessible-134282) in research and development (R&D). Up till now, a major problem in vaccine development has been the insufficient levels of investment in R&D in innovative health technologies, relative to emergent health needs. Rapidly changing health threats (including noncommunicable diseases, new infectious diseases, and antimicrobial resistance) have produced new R&D demands. And, with the high costs and failure rates of drug and vaccine development, with their low margins and uncertain markets, urgent health needs remain [inadequately addressed](https://www.bsr.org/reports/BSR_Healthcare_Innovative_Finance_Final_September_2017.pdf).

Blended finance has been touted as one way to help mobilize additional financing toward vaccine development, by allocating the risks and returns among public, philanthropic, and private investors. For example, advance market commitments (AMCs) are contracts in which concessional funders guarantee the future purchase of a service/product not yet available, or not available in a particular market at a specific price. They can therefore accelerate the development of products like vaccines at affordable prices and enable manufacturers to leverage economies of scale and reduce costs by contracting large volumes over longer-term periods. [The Global Alliance for Vaccines and Immunization’s (GAVI) AMC](https://www.gavi.org/) is a prime example. GAVI incentivizes vaccine makers to produce affordable vaccines against pneumococcal diseases in the world’s poorest countries. It is ‘blended’ in two ways: (i) through its AMCs, which incentivize private investment in vaccine development, and (ii) through the International Finance Facility for Immunization (IFFIm), which accelerates vaccine delivery by using long-term pledges from donor governments to sell ‘vaccine bonds’ in the international capital markets, making large amounts of capital immediately available for GAVI projects. Indeed, the [prospect has been raised](https://www.gavi.org/vaccineswork/when-covid-19-vaccine-available-how-will-we-pay-it) of the IFFIm mechanism being used to ensure enough near-term funding exists to mass produce and quickly deploy any eventual COVID-19 vaccine. 

Addressing COVID-19 will also require additional funding for innovative health technologies beyond vaccines. [The Global Health Investment Fund](https://www.dcvmn.org/IMG/pdf/egertonwarburton_dcvmn_28_oct14.pdf), which provides financing to accelerate the development of drugs, vaccines and diagnostics for diseases disproportionately affecting developing countries, is another example of a blended structure being used to tackle the shortfall in financing for innovative health technologies, mobilizing private investors through a partial guarantee provided by the Gates Foundation and SIDA. Atomo Diagnostics, an Australian rapid blood test maker backed by the Fund, is preparing to raise [AU$30 million ($11.7 million) ](https://www.bioworld.com/articles/433862-atomo-diagnostics-readies-au30m-ipo-to-ramp-up-manufacturing-of-covid-19-rapid-self-test)in an IPO on the Australian Securities Exchange, and looks to develop simple-to-use rapid self-tests for COVID-19. These self-tests could potentially alleviate pressures on health systems around the world by reducing the need for people to visit clinics. If successful, they would look to integrate these COVID-19 blood tests with their existing rapid test platform for HIV. Their HIV self-tests can deliver results in as little as fifteen minutes and can be used [without](https://www.bioworld.com/articles/433862-atomo-diagnostics-readies-au30m-ipo-to-ramp-up-manufacturing-of-covid-19-rapid-self-test) clinical expertise or laboratory equipment. 

Other mechanisms, while not strictly blended, can also help instigate private sector investment in epidemic virus R&D. For example, the [COVID-19 Therapeutics Accelerator](https://www.gatesfoundation.org/Media-Center/Press-Releases/2020/03/COVID-19-Therapeutics-Accelerator), launched by the Gates Foundation, Wellcome, and Mastercard, with up to $125 million in grant funding, looks to accelerate R&D into COVID-19, identifying, developing, and scaling-up affordable treatments. Learning lessons from the 2014 Ebola outbreak, the [Accelerator](https://www.gatesfoundation.org/Media-Center/Press-Releases/2020/03/COVID-19-Therapeutics-Accelerator) will share research, pool resources, and coordinate investments with a variety of public and private sector partners around the world, including the World Health Organization (WHO), with the intention of lowering the financial and technical risk of treatment development for COVID-19 and future threats, and ensuring that new drugs are accessible in lower-income countries. Of course, looking beyond potential private sector innovation, standard grants that target the medical sector and shore up health systems, amongst other areas, will also be needed to help minimize the impact of COVID-19 in the immediate-term.


## Looking forward 

Managing the COVID-19 pandemic threatens to be a critical challenge for developing economies. The COVID-19 [supply shock](https://www.project-syndicate.org/commentary/flattening-covid19-curve-in-developing-countries-by-ricardo-hausmann-2020-03) has seen developed economies plan large fiscal stimuluses to help households and businesses avert bankruptcy. However, developing economies’ access to finance is more precarious. They must address a range of challenges, including higher borrowing threatening inflationary spikes; international investors fleeing to the safety of developed government assets; and their traditional sources of foreign income (such as commodity exports, remittances, and tourism) likely declining, limiting their access to hard currency while the dollar appreciates, which makes debt servicing more challenging. Overall, these obstacles [constrain](https://www.project-syndicate.org/commentary/flattening-covid19-curve-in-developing-countries-by-ricardo-hausmann-2020-03) the fiscal space developing economies need to manage the pandemic. Despite commitments from the developed world, in the aftermath of the Ebola outbreak, to help developing economies in preparing for epidemics, most developing economies remained [unprepared](https://thehill.com/opinion/healthcare/482049-stop-coronavirus-and-the-next-epidemic-by-establishing-a-healthy-security) for COVID-19, with persisting challenges such as relatively weak health systems, vulnerable supply chains, and difficulties with proper infection prevention and control.  

In this context, blended finance may have a key role to play in leading efforts to scale-up health security measures in developing countries. Experimentations with innovative finance mechanisms designed to boost preparedness for pandemic scenarios across developing economies, however, have had mixed success. For example, the World Bank’s pandemic bond, which pays investors interest and returns their principal during normal times but gives that principal to developing economies in the event of a pandemic, has not yet paid out, with any future payments to affected countries potentially coming [too late](https://www.ft.com/content/70dd05ac-54d8-11ea-8841-482eed0038b1). Further thinking on how to crowd-in private sector capital to aid pandemic preparedness is needed. For example, there have been [calls](https://thehill.com/opinion/healthcare/482049-stop-coronavirus-and-the-next-epidemic-by-establishing-a-healthy-security) for the creation of a Global Health Security Challenge Fund, which would blend resources from national governments, global financial institutions like the World Bank, bilateral development agencies, international philanthropies and the private sector, to help at-risk economies improve their preparedness for epidemic scenarios. 

We also anticipate that blended finance will be able to show one of its core strengths in the difficult passage ahead, which is its ability to draw out the best of both donors pushing for impact and investors moving at the speed of crisis. During the Ebola crisis, [Flash Vehicle Rentals](https://www.youtube.com/watch?v=6sLj43AQfjo#action=share), a portfolio company of [Solon Capital Partners](https://www.soloncapitalpartners.com/), a blended investment holding company, transported WHO doctors and nurses around hard-hit areas of Liberia when other firms had departed. Their actions delivered a critically needed public good, arguably moving faster and more cost efficiently than the dwindling alternatives available, and the company is still in business today, contributing to the local economy.

Overall, the response to COVID-19 and our preparation for future epidemic scenarios will require increased collaboration between the public and the private sector, with blended finance solutions potentially becoming less tied to specific geographical borders, and more cross-country or cross-continental collaborations arising to tackle emergent health threats that know no borders. 


Convergence explores how blended finance can help respond to epidemics in the medium-to-long-term recovery of health systems and economies, especially in the developing world. 

Convergence on Blended Finance & COVID-19 Recovery

What role can Blended Finance play in the response to COVID-19?

*Image © Water Supply and Sanitation Collaborative Council*

This week, water and sanitation professionals were planning to meet in Kenya for the [conference](https://www.innovate4water.net/nakuru-2020) “Innovate 4 Water: Accelerating Financing of Climate SMART water and sanitation solutions”. With the increasing spread of COVID-19, the event has been postponed. What shouldn’t shift, especially in light of recent events, is our focus on improving sanitation services worldwide. We take this opportunity to reflect on the role blended finance can play in advancing access to adequate sanitation for all. 

Water and sanitation pose a significant development challenge, and access to adequate financing is a critical barrier to improving access to water and sanitation. According to [WHO and UNICEF](https://washdata.org/), 4.2 billion people still lack access to safely managed sanitation. The capital costs of achieving basic sanitation for all by 2030 are [estimated](https://www.wsp.org/sites/wsp/files/publications/K8543.pdf) at around $19.5 billion annually, while safely managed sanitation for all (the ultimate goal) will cost $49 billion annually. These staggering figures exclude operation and maintenance costs of existing infrastructure, such as wastewater treatment facilities and latrines. Closing the financing gap for sanitation will require tackling foundational issues, increasing the creditworthiness of sanitation service providers, and pooling investment opportunities to reach scale. 

## Tackle the stumbling blocks to unlock urgently needed resources 


Water and sanitation receive much less blended finance than other sectors such as energy, financial inclusion, and agriculture. And, relative to water, sanitation projects are even less likely to mobilize blended finance. Looking across Convergence’s database, 70% of blended finance transactions in the sector have targeted water supply services, while only 11% have aimed at sanitation and wastewater. Several barriers need to be addressed to make way for the use of diverse financial instruments for sanitation: 


__1. At the enterprise level, seek transformation of small and informal businesses into financeable distributed sanitation service providers.__ Power companies and cell phone service providers often have a national mandate. By contrast, most sanitation services are provided locally by small, informal businesses that engage in emptying latrine pits and similar work. These companies cannot provide the required financial track record and scalability investors and funders are seeking. However, decentralized solutions are clearly needed, because universal access to sanitation for all will not be achieved with large, centralized sewerage systems only. There are ways to improve the financial and operational performance of off-grid service providers. For example, the local government of Wai, India, introduced a performance-linked annuity model for [scheduled desludging](https://www.frontiersin.org/articles/10.3389/fenvs.2019.00188/full). By switching from on-demand pick up of fecal sludge to scheduled desludging, this model brought down costs of fecal sludge management and introduced regular, steady payments from customers. At a policy level, improving the regulatory environment for sanitation is important because business models depend on secure mandates. 

__2. Build awareness and step up advocacy around sanitation.__ People too often regard sanitation as a taboo topic, locking important discussions about health, toilets, and human waste behind closed doors, away from public engagement. By contrast, safe water and clean energy are topics politicians and civil society groups often discuss publicly. Overcoming this taboo requires awareness campaigns, social marketing, and leadership among civil society and government alike. Placing sanitation higher on the agenda and openly discussing the sector’s challenges will generate interest from funders and investors.


## Attract new actors and impact investors to the sanitation sector 


We have seen successful blended finance transactions in sanitation. One example is __Sanergy__, a social enterprise in Nairobi, Kenya, that designs, manufactures, and then leases low-cost, high-quality “Fresh Life Toilets” that collect human waste in containers. Sanergy’s employees then collect and deliver that waste to a central processing facility for conversion into various products. [The company](http://www.sanergy.com/) initially received design-stage funding from Massachusetts Institute for Technology (MIT) and USAID, and later went on to catalyze growth-stage investments from Acumen, Grand Challenges Canada, SpringHill Equity Partners, and Eleos. More recently in 2019, __Cambodia Rural Sanitation Development Impact Bond (DIB)__ [launched](https://medium.com/social-finance-uk/who-gives-a-sludge-about-toilets-building-markets-for-safe-and-sustainable-sanitation-b2a7736a009b), representing the world’s first Development Impact Bond for sanitation. The DIB targets the development of rural sanitation markets in six provinces in Cambodia through the NGO iDE’s Sanitation Marketing Scale Up program. It received upfront funding from The Stone Family Foundation. USAID will pay up to $9.99 million in outcome funding based on the achievement of pre-determined results by iDE. 

Both the DIB and Sanergy demonstrate how blended finance can be used to bring new funders into the sanitation sector. However, these transactions remain small; each of these deals is under $10 million in size. Our 2019 [data brief](https://www.convergence.finance/news-and-events/news/2HfdSUcp3XPdsUeV4s9t0v/view) on water and sanitation reported that the average transaction size of blended finance deals in the water and sanitation sector was $76 million. Unsurprisingly, the vast majority of these transactions were water infrastructure deals. As discussed in an earlier [blog post](https://www.convergence.finance/news-and-events/news/4l2G2RAIuknXQ2PFIh0cTb/view), pooling is one way to get around the ticket-size constraint, and diversify risks for investors. For example, the __Karnataka Water and Sanitation Pooled Fund__ in India raised USD 22.7 million for water supply and sewerage infrastructure development in eight localities within the Bangalore Metropolitan area in Karnataka, India. It benefitted from a partial guarantee from USAID. Moreover, our case study on the [WaterCredit Investment Fund 3](https://www.convergence.finance/resource/4VLkTKyP0lzPzDhp6IoqF0/view) demonstrated how WaterEquity scaled affordable loans for safe water and for toilet construction in India, Indonesia, Cambodia, and the Philippines.

## Mix traditional and innovative approaches to close the sanitation financing gap


Blended finance cannot be the primary answer to the sanitation challenge. ODA and philanthropic funding will remain crucial sources of financing for achieving SDG 6. However, private finance, bolstered by [well-targeted subsidies](https://www.worldbank.org/en/topic/water/publication/smarter-subsidies-for-water-supply-and-sanitation) from local governments and grant funding from donors and philanthropic actors, can offer an additional form of much needed financing to help achieve SDG 6. As sanitation practitioners increasingly get interested in blended finance, they should bear in mind this thought from Louis Boorstin of the Osprey Foundation: “Even the most creative of blended financing won’t go far without improving the sanitation sector’s fundamentals through stronger enterprises, clearer regulations, and innovative approaches.”

Are you working on a blended finance transaction in sanitation? Contact us to learn more about listing your transaction on our matchmaking platform. This can help you gain additional visibility with potential funders and investors to secure additional capital.

In light of World Water Day (Mar 23), Convergence reflects on the role blended finance can play in advancing access to adequate sanitation for all.

Fixing the plumbing to increase investments in sanitation

Fixing the financial plumbing to increase investments in sanitation

This year, the theme for International Women’s Day (March 8) is #EachforEqual. It will kick off a year-long campaign to raise awareness on how each individual can mobilize collective action to advance gender equality. Ten years away from our goal to realize the UN’s Sustainable Development Goals (SDGs), 2020 symbolizes a seminal time in human history as we take stock of women’s rights since the adoption of the Beijing Platform for Action 25 years ago and build urgency for innovative policies and practices to bridge the gender divide. This year, the team at Convergence took time to reflect on the state of gender-lens investing in blended finance, identifying recent initiatives in the field, and areas for further action. What steps has blended finance taken to ensure gender equality goes mainstream in this defining decade of impact?

## Blended Finance and Gender Equality to date 

This year at Davos, a coalition of public and private sector partners launched SDG500, a first-of- its-kind $500 million investment platform to promote the SDGs, offering investors access to six different funds, each managed by Bamboo Capital Partners (BCP). Each fund follows a blended finance approach in partnership with a specific UN agency, development finance institution or international NGO. Capitalised by catalytic layers of first-loss capital, these funds will use debt and equity to back businesses at the seed, series A, and series B stages, focusing on companies operating within agriculture, energy, finance, and healthcare across developing markets. While the platform has a general gender-lens focus, some of its funds will prioritise enterprises empowering women.

For example, BCP will partner with CARE Enterprises (CEI), a for-profit subsidiary of CARE USA, and the International Trade Centre to launch CARE SheTrades, a gender-lens fund that will invest debt and equity into businesses in Asia that promote women’s entrepreneurship, gender- responsive products, and gender equality in the workplace and in supply chains. This follows a strategic partnership announced in 2018 between CEI and BCP, in which they committed to invest in early-stage companies in South and Southeast Asia that advance workplace equality practices, promote women’s access to finance, and expand access to goods and services that help incorporate women within the formal economy.

Next, the Government of Canada launched a ground-breaking endeavour in 2018, inviting investors and members of the development community to create a partnership that would provide flexible funding and technical assistance to women’s organizations and initiatives that promote gender equality in developing countries, committing up to C$300 million to this initiative. Dubbed the Equality Fund, this initiative has secured an additional $100 million in commitments from outside funders, and now looks to secure and deploy $1 billion over the next 15 years. Calvert Impact Capital is leading the private debt strategy for the Equality Fund, helping to develop a pipeline of deals across different geographies and sectors by applying a gender lens to C$75 million of private loans, deployed mainly through funds and intermediaries, with the goal of mainstreaming gender-lens investing.

Investors have also begun to develop toolkits for the assessment of gender-related factors on investment. For example, Pacific RISE and the Criterion Institute have developed the world’s first investment due-diligence tool for gender-based violence. Focusing on the Pacific region, the tool assesses how gender-based violence impacts four due-diligence categories: political, regulatory, operational, and reputational risk. Similarly, in 2020, the Sasakawa Peace Foundation and Frontier Incubators Program launched the Gender Lens Incubation and Acceleration (GLIA) Toolkit, which looks to help incubators and accelerators in Southeast Asia to create their own unique gender strategies, providing guidelines, case studies, and strategic frameworks with the aim of building a gender-smart entrepreneurial regional ecosystem.

There is more progress to note. The Ilu Women’s Empowerment Fund, for example, backs businesses in Latin America and the Caribbean that promote women in leadership and governance, products and services that meet the needs of women and girls, gender-sensitive value chains, and workplace equity. Having closed its first round of fundraising from catalytic investors, it is currently planning a second round to raise another $10 million, targeting a fund size of $35 million overall. Elsewhere, Athena Global Alliance launched BIDUK in 2019, a lending platform that seeks to show the suitability of flexible, commercially priced debt products for underserved, women-led SMEs in Indonesia. Finally, Affirmative Finance Action for Women in Africa (AFAWA), a joint initiative launched by the African Development Bank and the African Guarantee Fund in 2019, looks to encourage lending to women in Africa by providing partial guarantees to financial institutions, thereby helping to tackle the $42 billion financing gap between male and female entrepreneurs on the continent.

## Moving forward: Blended Finance and Gender Equality 

Blended finance has demonstrated the ability to mobilize additional financing for gender-focused projects and companies that advantage women and narrow the gender gap, with a quarter of all blended transactions demonstrating alignment with SDG 5 (Gender Equality) to date.
However, there is room for considerably more deliberate action to mainstream gender in blended finance going forward. We have [previously](https://www.convergence.finance/news-and-events/news/5lqarXZRuQEMKeyeI9cI8e/view) identified several ways in which gender can be mainstreamed to achieve Blended Finance 2.0, including:

  • Focusing on the legal, political and societal barriers that women face
  
  • Mandating gender-disaggregated reporting to monitor whether women are benefitting,and;
  
  • Instituting comprehensive feedback systems within projects and programs


[Design funding](https://www.convergence.finance/news-and-events/news/3YuY8OvK96dFomtV29sBTn/view) can also play an important role in achieving gender equality, by:

1. Integrating gender throughout the process of transaction design, and properly aligning incentives
2. Sourcing better investment opportunities through building out more inclusive deal pipelines and assessing gender-related risks in prospective investments, and;
3. Developing meaningful evaluation methodologies
  
There is positive momentum for achieving gender equality in the decade ahead. The year 2020 represents an unmissable opportunity to mobilize global action for gender equality and the human rights of all women and girls. Mainstreaming gender in blended finance offers an important avenue to realizing SDG 5 – achieving gender equality and empowering all women and girls.

For International Women's Day, we take stock of the state of gender-lens investing in blended finance, and areas for further action. 

Convergence on Blended Finance for Gender Equality

Blended Finance and Gender-Lens Investing

[IDB Invest](https://idbinvest.org/en) is the private sector arm of the IDB group. Their mandate is to support private sector companies in Latin America and the Caribbean. 

An early player in blended finance, IDB Invest has been active in the space since 2009. Since then, they’ve closed 50 investments with total concessional resources of $375 million, which has leveraged $950 million of their own capital and $2.2 billion from traditional investors. As of February 2020, the blended finance team within IDB Invest is managing $820 million of concessional capital, which is divided across 17 different funds or programs. Unsurprisingly, they’re the largest purveyor of concessional capital in the region.

Convergence spoke to Gema Sacristan, Chief Investment Officer of IDB Invest and Matthieu Pegon, Head of Blended Finance, on the unique challenges and opportunities for blended finance in Latin America and the Caribbean, how IDB Invest measures impact, and how they expect IDB Invest to evolve its blended finance activities in the future. 
 

## As the largest provider of blended finance in the region, what are some unique challenges and opportunities in Latin America and the Caribbean? 

__Gema Sacristan (GS):__ IDB Invest’s mission is to drive investments that advance sustainable development in Latin America and the Caribbean, not only to economies at or above investment grade, but also to those below that range. To achieve this, we need to mobilize significant resources, for which blended finance has proven to be a powerful tool. We use it to pilot, replicate, and scale innovative business models and new technologies to bridge the financing gap for the Sustainable Development Goals (SDGs).

From a blended finance perspective, we analyze opportunities where our concessional resources can yield a higher risk appetite from investors and explore new frontiers, for example, on projects that may not be readily bankable but that could prove to be the new normal in the future (e.g. climate-change related, focused on gender equality, financing to small and medium-size companies). We’re also committed to not crowding-out available sources of funding for commercially viable projects, so we feel very proud to continue accompanying these markets in their transition to a cleaner energy matrix. For example, we’re seeing an opportunity for the manufacturing and agribusiness sectors to incorporate cleaner technologies, while they invest in improving their productivity and efficiency. 

Finally, the private sector in the region is increasingly aware of their role in contributing to achieve the SDGs and the Paris Agreement—priority agendas for the IDB Group—and we’re pleased to be their partner of choice in this transition. 


## As the private sector arm of the IDB Group, what are some unexpected challenges you’ve had to navigate in blended finance?

__Matthieu Pegon (MP):__ One of the inherent challenges is operating in the short-term subsidy space. We are constantly balancing between supporting nearly commercially viable business models, taking risks, and avoiding market distortions. And we are going the extra mile in terms of [development impact](https://www.idbinvest.org/en/how-we-work/development-effectiveness) and mobilization. We do all this in a market continuum that is neither static nor linear.  

In fact, I would say one of the biggest challenges is knowing when to start and when to stop. In other words, when to realize your capital is additional and when it is no longer needed. Take renewable energy for example. In some markets, such as Chile, blended finance was instrumental to support the development of small scale and utility scale renewable generation. Now we are looking for the next areas where blended finance can add value, whether that is energy storage, grid optimization, or decarbonization. For instance, we recently partnered with Engie Energía Chile and the Clean Technology Fund to support the phasing out of existing coal-based plants, which could be used as template for other countries in the region. In that sense, it’s quite exciting when a sector, a technology, or a financing structure becomes commercial, as it generally leads to new challenges. We’re constantly pushing boundaries.


## Can you give me an example of a specific blended finance deal that IDB Invest has been involved in? And in what capacity?

__MP:__ I’ll tell you about the [Ejido Verde project](https://idbinvest.org/en/news-media/idb-invest-and-ejido-verde-promote-reforestation-degraded-lands-and-development-ejidal), which closed in 2019. It’s a reforestation project in the state of Michoacán, Mexico, with total financing of $2 million that includes a $1.5 million blended finance tranche from the Global Environment Facility. What’s interesting about this transaction is that it constructs a viable business model that combines sustainable land use and reforestation with supporting indigenous populations.

For this transaction we’re working with one of the leading companies in the pine resin industry in Mexico. The pine resin is obtained from pine trees that grow on indigenous land. This project addresses an often overlooked challenge faced by indigenous communities in the region: access to long-term financing. It takes eight years for a pine tree to mature and produce pine resin. Thus, if the indigenous communities cannot secure long-term funding, they turn to using those lands for grazing as a source of income, which leads to land degradation, reduces their income, and affects the supply for the company. 

As a solution, Ejido was structured to match the growth cycle of the pine tree. This allows for new tree plantations and a revenue stream for the indigenous populations that take care of them in their growing stage. The lenders get repaid once the trees start yielding a return. The market failures we’re trying to address here are market inertia and information failure by proof-testing a new financing template through blended finance. The expectation is that similar investments can be gradually financed on a commercial basis.


## How do you see IDB Invest evolving in the future? 

__GS:__ Since 2016, when IDB Invest consolidated all private sector and non-sovereign guaranteed transactions of the IDB Group, we have been working to become the partner of choice for investing with impact in Latin America and the Caribbean. To achieve this we have diversified sectors, for example, strengthening our involvement in technology, media, and telecom, as well as our funding – we can now provide financial products in several local currencies. We are also closer to our clients, with 42% of our field personnel based in 25 countries across the region. 

But we’re not stopping there. Our new business plan for 2020-2022 reflects a renewed recognition of our role as a driver for impact far beyond financing. For example, we have signed up to support the [Task Force on Climate-related Financial Disclosure (TCFD)](https://www.fsb-tcfd.org/) and have placed the SDGs at the center of our actions. Personally, I see no other way to continue making investments in the future, not only in the region but anywhere in the world, without considering climate action and an inclusive sustainable development approach. 


## How do you measure impact in your deals?  How important is impact to your investment decisions?

__MP:__ All our transactions, whether they are blended or not, have a development impact rating on a scale from 1-10. The scale involves an extensive assessment that takes into account multiple dimensions, such as climate mitigation and adaptation, supporting SMEs/vulnerable populations, ability to crowd-in private capital, etc. If that score is not satisfactory, we do not do the transaction. Impact is, therefore, at the core of our investment decisions. For all transactions, we also measure the SDGs that the transaction is expected to contribute to. 

In the case of blended finance, we have an additional layer, which is driven by the [DFI Principles for Blended Finance](https://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/solutions/products+and+services/blended-finance/blended-finance-principles). We ask ourselves what are the market failures preventing the transaction from being financed on a commercial basis and to what extent are blended finance interventions contributing to solving those market failures? Is this a commercially viable business model in the long run? What is the minimum concessionality required to close the deal? In this context, relying on a strong governance for the use of concessional finance is paramount. With more players entering the space of blended finance, I encourage them to subscribe to the principles.  

__GS:__ Just as Matthieu expressed, generating impact is the very purpose that drives our everyday work. Since we go hand in hand with the private sector, when we talk about impact, we mean achieving this through our clients and partners. Here is where blended finance has a key role. Since we started our blended finance activities in 2009, they have generated 50 investments for a total of US$375 million in concessional resources, which has leveraged US$950 million of our resources and US$2.2 billion from external investors. Looking at climate only, we have channeled a quarter of all climate-related international resources in the region.


## Based on our data, most blended finance transactions target middle-income countries. At IDB Invest, is there any effort being made to target LDCs in your transactions? 

__MP:__ You need to look at the idiosyncrasies of the region we’re serving. For instance, Latin America and the Caribbean is the most unequal region in the world. If you look at CEPAL figures, 20% of the wealthiest people make up 45% of total household income, while the lowest quintile only accounts for 6%. That’s what drives our work. It’s not only income and wealth inequality, it’s ethnic, gender, or spatial inequality, including climate vulnerability. We are looking to address the developmental priorities of our region, whether it’s financing rural SMEs in Brazil through our Canadian Climate Fund, building access to energy in Haiti, or supporting climate resiliency in all our Caribbean countries. 


## Can you tell us about your professional background and what attracted you to the blended finance space?

__MP:__ I’ve been leading the IDB Invest’s blended finance team for the last three years. I’m an investment banker by trade and I was first introduced to blended finance through climate finance.

Three things attracted me to the blended finance space: 1) The mission – doing something for a purpose; 2) How concrete it is – at the end of the day you’re financing projects in the real economy that are affecting real people; 3) It’s creative – You really can be creative in the ways you structure a transaction. That in and of itself is very rewarding.  

We spoke to Gema Sacristan & Matthieu Pegon on the unique challenges and opportunities for blended finance in Latin America and the Caribbean.

Gema Sacristan & Matthieu Pegon on Blended Finance

Member spotlight with Gema Sacristan & Matthieu Pegon of IDB Invest

*Toronto, February 26, 2020* – Four years since Convergence launched its [Design Funding](https://www.convergence.finance/design-funding) program, it has awarded $6 million in funding to 18 blended finance solutions, which have gone on to mobilize over $550 million from public, philanthropic, and private investors towards the Sustainable Development Goals (SDGs).

The Design Funding program awards grants to design blended finance solutions that attract private capital to global development at scale. 

“The half billion dollars mobilized by Convergence grantees is a feat on its own, but this money will go on to generate real development impact over many years, whether it’s supporting conservation in island nations or improving access to finance for low-income women,” says Joan Larrea, CEO of Convergence. “That’s what’s so compelling about Design Funding. It shows us how early-stage funding injected at just the right time to support a blended deal can lead to a cascade of impacts, including building the blended finance market, catalyzing additional investment, and improving the lives of people.”

Grants have been awarded to vehicles in a diverse range of sectors and regions, from an impact bond for maternal and newborn health in India to a financing structure for electric transit in Latin America.

Convergence [supported](https://www.convergence.finance/news-and-events/news/F7wKMfkm3yrtOshsAxUcU/view) Aligned Climate Capital to coordinate and design the Climate Finance Partnership (CFP), an unprecedented blended finance partnership between the world’s largest asset manager - BlackRock - and leading philanthropies and governments. At Davos this year, the CFP [announced](https://www.businesswire.com/news/home/20200121006178/en/Davos-2020-Climate-Finance-Partnership-Press-Release) that it has raised over $75 million in concessional capital that will mobilize climate-related investments in emerging markets.

“The CFP is a new model of philanthropies and governments working together to mobilize institutional capital at scale. Tackling climate change demands creative partnerships like the CFP that aim to significantly expedite the flows of private capital into climate opportunities. And Convergence support was critical to CFP’s design phase,” says John Morton, Managing Coordinator of the CFP and Senior Advisor to Aligned Climate Capital.

Convergence also [supported](https://www.convergence.finance/news-and-events/news/64ZjxX5As00OgOwomQks88/view) the design of Clarmondial’s Food Securities Fund, an open-ended investment fund for private credit in agriculture, which recently secured a [$15 million package](https://www.clarmondial.com/gef_fsf_approval/) from the Global Environment Facility.

“The funding from Convergence was a significant milestone in the development of the Food Securities Fund. It helped us secure commitments from public and private investors for this new investment vehicle to support climate-smart agriculture in emerging markets,” says Tanja Havemann, Co-Founder & Director of Clarmondial. 

The type of early-stage funding offered by Convergence’s Design Funding program is instrumental for developing the blended finance market, especially in frontier markets and nascent sectors. Blended finance transactions can be complex, time intensive, and costly to structure and launch. Design funding operates as a market acceleration tool. It provides critical support early on to teams with viable investment products who otherwise lack the resources to get to market. The resulting transactions, and the lessons propagated, contribute to building the market and ultimately catalyzing additional investment towards the SDGs.

The Design Funding program offers two types of grants, feasibility study funding (up to $200,000) or proof of concept funding (up to $500,000 in repayable grants).

Two new partners have stepped forward to support the program, initially funded by the Government of Canada. Convergence’s two windows currently accepting applications are: i) the [Indo-Pacific Design Funding Window](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window), initially focused on sustainable and resilient infrastructure and funded by the Australian Government, and ii) the [Asia Natural Capital Design Funding Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window "Website with more information on the Asia Natural Capital Design Funding Window") funded by [RS Group](http://www.rsgroup.asia/ "RS Group's website."). 

The Design Funding program is open to additional funding partners. Organizations interested in launching their own window or co-funding an existing window, to catalyze private sector investment towards the SDGs, are encouraged to contact Convergence at: design.funding@convergence.finance.

__About Convergence__

Convergence is the global network for blended finance. On top of its Design Funding program, Convergence generates blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. Convergence’s global membership includes over 200 public, private, and philanthropic investors as well as sponsors of transactions and funds. To learn more, visit [www.convergence.finance](http://www.convergence.finance/ "Convergence's website").

__Media Contact__

Sijia Yi

Communications Lead

Tel.: +1 647-573-5993

sijia.yi@convergence.finance



Four years since Convergence launched its Design Funding program, it has awarded $6 million in funding to 18 blended finance solutions, which have gone on to mobilize over $550 million from public, philanthropic, and private investors towards the SDGs.

Convergence grantees mobilize $550M towards blended finance

Convergence grantees mobilize $550 million towards blended finance for global development

![Blended finance transactions targeting SSA by sector](//images.ctfassets.net/4cgqlwde6qy0/7EoLca2MZxadhEox8MzVtW/6a6caa420de76e7d6fb9663a50e0d5c4/blended-finance-transactions-targeting-ssa-by-sector.png)

*Figure 1: Blended finance transactions targeting SSA by sector*

Convergence's latest [Data Brief](https://www.convergence.finance/resource/7owlGBuisRe89fCvqjlouG/view "Link to the Blended Finance in Sub-Saharan Africa data brief") explores how blended finance approaches have been deployed in Sub-Saharan Africa (SSA) to date. According to the Convergence database, there have been 216 blended finance transactions targeting one or more countries in SSA, representing an aggregate volume of up to $45 billion invested in full or in part in the region. Energy is the most commonly targeted sector in SSA, accounting for 30% of all transactions. Overall, the Brief finds that 41% of blended finance transactions targeting SSA have been in energy or in (non-energy) infrastructure. Since energy infrastructure accounts for 72% of blended finance transactions focused on infrastructure globally, Convergence captures energy as a separate sector.

## Infrastructure financing is a priority

SSA’s development challenges are well known and are especially acute when considering the region’s infrastructure needs. Up to [600 million](https://www.iea.org/reports/sdg7-data-and-projections/access-to-electricity "Link to SDG7: Data and Projections from IEA.org") people in SSA still lack access to electricity, with the continent facing an annual infrastructure financing gap of [$68-108 billion](https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/2019AEO/AEO_2019-EN.pdf "Link to the African Economic Outlook 2019"), and an urban population of [472 million people](https://www.worldbank.org/en/news/press-release/2017/02/09/world-bank-report-improving-conditions-for-people-and-businesses-in-africas-cities-is-key-to-growth "Link to the World Bank's press release on Improving Conditions for People and Businesses in Africa’s Cities Is Key to Growth") set to double over the next 25 years. At the same time, SSA is among the regions that are most vulnerable to climate change-induced poverty, with annual adaptation costs across the continent potentially reaching [$100 billion](https://www.worldbank.org/en/region/afr/publication/africa-climate-business-plan-key-messages "Link to the world bank's publication on The Africa Climate Business Plan: Key Messages") in a worst-case mid-century scenario of a 4 °C global warming.

However, the region’s ability to attract global commercial financing to tackle these challenges is hampered by the high perceived risks of investing and a shortage of investable opportunities of scale. The region’s infrastructure gap is largely greenfield, and thus suffers from higher perceived risk, being relatively unattractive to institutional investors who prefer the stable yield and inflation-hedge of brownfield infrastructure assets.

## Bridging the infrastructure gap with blended finance

MDBs and DFIs should lead the way in financing and de-risking the earlier stages of large infrastructure projects in SSA and, where needed, using blended finance instruments (such as concessional capital, guarantees and risk insurance, technical assistance funds, and design-stage grants) to make infrastructure assets’ risk-return ratios more attractive to private investors. 

In other words, blended finance can make unattractive greenfield projects investable and guide commercial capital towards sectors like transport, water and sanitation, information and communication technology, and clean energy. 

There is increasing awareness of blended finance’s potential to address the region’s infrastructure gap.  For example, the UK recently [partnered](https://www.gov.uk/government/news/international-development-secretary-launches-new-venture-to-create-rich-pipeline-of-infrastructure-projects-across-africa "Link to the press release International Development Secretary launches new venture to create rich pipeline of infrastructure projects across Africa") with five African countries to design a new project development facility focused on developing sustainable infrastructure projects across Africa that will ultimately be commercially investable. 

However, blended finance is not a panacea. As with the [case](https://www.convergence.finance/resource/6BYvXp0lws20g6yI6U8oEc/view "Link to Convergence's Emerging Africa Infrastructure Fund Case Study") of the Emerging Africa Infrastructure Fund, a blended multi-donor fund with an 18-year history of providing financing to private infrastructure projects across Africa, mobilizing institutional investors can take time and largely hinges upon the patient establishment of a track record. Indeed, blended finance should be complemented by reforms that strengthen the investment climate, while deepening local capital markets. 

## A need for local investors

To date, International Finance Corporation (IFC), the Netherlands Development Finance Company (FMO), and the African Development Bank (AfDB) have been the most frequent investors in blended finance transactions targeting SSA. Local investors have not been as active as their foreign counterparts in SSA.

![Investors in blended finance transactions targeting SSA by number of investments](//images.ctfassets.net/4cgqlwde6qy0/7JDcIRjgSXOZzwpHivBIGZ/8f901e85d51d8084ebfefc07110ba506/Investors_in_blended_finance_transactions_targeting_SSA_by_number_of_investments.png)
*Figure 2: Investors in blended finance transactions targeting SSA by number of investments*

Increased activity from local DFIs could mobilize more local investors in SSA. These local investors could then play an important role in catalyzing further investment in the region by providing not just the financing to bridge SSA’s infrastructure gap, but also a reassuring presence to foreign investors. 

![SSA-domiciled investors in blended finance transactions targeting SSA by number of investments](//images.ctfassets.net/4cgqlwde6qy0/3EzRj8iwdbmmm6iuzF9vdq/670ea791ab482a153fa7ff92176f0000/SSA-domiciled_investors_in_blended_finance_transactions_targeting_SSA_by_number_of_investments.png)
*Figure 3: SSA-domiciled investors in blended finance transactions targeting SSA by number of investments*

As blended finance continues to build its track record in the region, strategically developing scalable, de-risked opportunities for both local and international investors, it has great potential to play a critical role in boosting financing for infrastructure in SSA. 

*Become a [member](https://www.convergence.finance/membership "Link to Convergence's Membership page") and read the [full brief](https://www.convergence.finance/resource/7owlGBuisRe89fCvqjlouG/view "Link to the Blended Finance in Sub-Saharan Africa data brief").*

Convergence’s latest Data Brief explores how blended finance approaches have been deployed in Sub-Saharan Africa (SSA) to date.

Blended finance – the key to bridging Sub-Saharan Africa’s infrastructure gap?

Convergence has added three new members to its Funding Committee. The Funding Committee plays a critical role in Convergence’s [Design Funding](https://www.convergence.finance/design-funding) program, which offers feasibility study and proof of concept grants for practitioners to design catalytic blended finance solutions that aim to attract private capital to sustainable development at scale. 

The new Funding Committee Members include: [Kaylene Alvarez](https://www.convergence.finance/about/governance/6W1AvgS2wEWq7eaZObQc73), Co-Founder of Biduk Indonesia and Founder & CEO of Athena Global Alliance; [Fabian Huwyler](https://www.convergence.finance/about/governance/7hk7vbuNAElBac9PxG3VZV), Founding Partner of Posaidon Capital; and [Jesse Ang](https://www.convergence.finance/about/governance/5m48cj1cN7oot9eInpZKF9), Independent Director at the Bank of the Philippine Islands Capital Corporation. They will join our existing Funding Committee Members: [Agnes Dasewicz](https://www.convergence.finance/about/governance/4vWm1tJqrSuYYyYGoggQws), Rockefeller Foundation Fellow; and [Rick Nogueira](https://www.convergence.finance/about/governance/2dOnALydP2yQKwEo8UQqcY), Board Member at the DC Green Finance Authority. 

The Funding Committee plays a key role in the success of the Design Funding program, by applying their unique insights and experience to advise Convergence on the evaluation of Design Funding applications. 

Convergence has two open windows currently accepting applications: i) the [Indo-Pacific Design Funding Window](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window), initially focused on sustainable and resilient infrastructure and funded by the Australian Government, and ii) the [Asia Natural Capital Design Funding Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window) funded by [RS Group](http://www.rsgroup.asia/). 

To learn more about the Design Funding program,  please click [here](https://www.convergence.finance/design-funding), or contact design.funding@convergence.finance. 


New members: Kaylene Alvarez, Co-Founder of Biduk Indonesia and Founder & CEO of Athena Global Alliance; Fabian Huwyler, Founding Partner of Posaidon Capital; and Jesse Ang, Independent Director at the Bank of the Philippine Islands Capital Corporation. 

New Design Funding Committee Members 

Convergence announces new Design Funding Committee Members 

Our Design Funding Manager [Adhiti Gupta](https://www.convergence.finance/about/team/3f9TCaaBW1x33qJ4rUvmhB) explains that concessional capital can be additional if it 1) deploys financial instruments that are currently unavailable or undersupplied in the market, or 2) if it addresses a market failure.

Watch more videos from our #ConvergenceAnswers series [here](https://www.youtube.com/channel/UCG1QV2Lpspj59AnYua2PihQ). 

Our Design Funding Manager Adhiti Gupta explains that concessional capital can be additional if it 1) deploys financial instruments that are currently unavailable or undersupplied in the market, or 2) if it addresses a market failure.

What is additionality in blended finance?

Last week the Organization for Economic Cooperation & Development (OECD) held its annual Private Finance for Sustainable Development (PF4SD) week, which brought together over 600 participants, including policy makers, investors, and development finance institutions. As we enter the “Decade of Delivery”, the focus of this year’s edition was on the imperative to align finance with the 2030 Agenda. 

Blended finance emerged as an important theme, with several dedicated sessions, including one co-hosted by Convergence and Moody’s on risk mitigation approaches to mobilize investment in developing countries. 

Three blended finance takeaways emerged from the week that are worth highlighting: 

## The role of pension funds in financing sustainable development 

A recurring topic at PF4SD was the role of pension funds in achieving the Sustainable Development Goals (SDGs). Pension funds invest pension payments from policy holders to pay for future retirement benefits. This fiduciary responsibility means pension funds face stringent restrictions on riskier asset classes. One way pension funds could support the SDGs, is to invest in renewable/non-renewable infrastructure in developing countries. Such assets have low correlations with existing assets, provide inflation adjusted cash flows, have enhanced yields and have a longer tenor that better matches the liability structure of pension funds. However, pension fund representatives at PF4SD cited that an inadequate understanding of alternatives and their risk profiles limited their activities in developing markets. 

Blended finance can play an enabling role by introducing pension funds to new asset classes and opportunities and helping them build robust portfolios structured to minimize their risk exposure. 

The Danish Climate Investment Fund is a great example of using blended finance to attract pension funds to SDG aligned investments in developing countries.  The Fund applied a preferred return structure where the pension fund investors receive a preferential return of up to 6% per annum, without exposing public money to disproportionate downside losses. It’s managed by the Danish Investment Fund for Developing Countries (IFU), the Danish development finance institution, and has mobilized ~$133 million from leading Danish pension funds including PensionDanmark, Pensionskassernes Administration (PKA), and Paedagogernes Pension (PBU). Building on the fundraising success of this blended finance structure, IFU has applied the same structure to raise the Danish SDG Investment Fund, which has seen participation from a wider group of pension fund investors, who have contributed a total of ~$350 million towards the capitalization of the fund.  Open and regular communications between the Danish state (concessional capital provider) and Danish pension funds have helped create a strong foundation for identifying mutually beneficial opportunities and co-financing an investment vehicle. 

Bridging the gap between real and perceived risk of investing in emerging markets is another way to engage pension fund investors. USAID’s [Mobilizing Institutional Investors to Develop Africa’s Infrastructure ](http://www.mida-infra.org/)(MiDA) program was cited as a good example to this end. This initiative, managed out of USAID’s Office of Private Capital & Microenterprise, works with the pension fund community in the United States to expand global partnerships, facilitate co-investment opportunities, and provide transaction support, with a focus on African countries. 

Finally, it is also critical to engage domestic pension funds in financing the SDGs. These organizations have an important role in generating long-term financial resources and facilitating the growth of capital markets. Any discussion on the role of pension funds in financing the SDGs must take this local context into account. 

## Development impact of blended finance funds & facilities 

Every year, the OECD releases updated data from their Survey on Blended Finance Funds & Facilities, which consolidates evidence of the latest blended finance market trends. In addition to market trends, it is also important to explore how the development impact of these funds and facilities is being tracked and evaluated. This was the focus of an OECD [working paper released during PF4SD](https://www.oecd-ilibrary.org/development/blended-finance-funds-and-facilities-2018-survey-results-part-ii_7c194ce5-en;jsessionid=zCaujXU5fkDi2RhjV2KhwSpQ.ip-10-240-5-180).

Key findings from the working paper include:

- Over half of the 180 respondent blended finance vehicles anchor their investment strategies to one or more of the SDGs. More than 70% of the vehicles target No Poverty (SDG 1) and Decent Work & Economic Growth (SDG 8), while Life below Water (SDG 14) and Peace, Justice and Strong Institutions (SDG 16) are amongst the least targeted SDGs.
- 63% of blended finance vehicles (funds particularly) adopt quantitative targets to monitor progress towards their development objectives, which are most frequently economic, followed by environmental. 37% of respondents did not adopt any quantitative target.

## Community of practice on private finance for sustainable development 

During her closing remarks at the PF4SD conference, Susanna Moorehead, Chair of OECD’s Development Assistance Committee (DAC), announced the formation of a Community of Practice on Private Finance for Sustainable Development with a specific emphasis on blended finance. The Community will bring together DAC members, private sector representatives and other key stakeholders around issues related to blended finance. Additional information around activities and next steps still to come.  


Three blended finance takeaways from Private Finance for Sustainable Development week

OECD’s Private Finance for Sustainable Development week

Three takeaways from OECD’s Private Finance for Sustainable Development week

Our Associate [Ayesha Bery](https://www.convergence.finance/about/team/3u0qeg7AKQCWmoY2QwG0s4) explains which sectors are commonly seen in blended finance transactions—energy and financial services—and which sectors have great potential to benefit from blended finance.

Watch more videos from our #ConvergenceAnswers series [here](https://www.youtube.com/channel/UCG1QV2Lpspj59AnYua2PihQ). 

A quick explainer on which sectors are commonly seen in blended finance transactions—energy and financial services—and which sectors have great potential to benefit from blended finance.

What are the top sectors for blended finance?

Our latest [Data Brief ](https://www.convergence.finance/resource/5PAj3xuR3plAO3yscfutrE/view)outlines key trends in the use of blended finance approaches for the energy sector in developing countries. Energy has been one of the most common focus sectors for blended finance transactions, second only to financial services. In our database of [historical blended finance transactions](https://www.convergence.finance/blended-finance), we have identified 128 blended finance transactions focused on the energy sector, representing an aggregate $67.7 billion in total financing. Most transactions have focused exclusively on the energy sector, but a few have broader mandates (e.g., green growth, clean technology). 

## Achieving universal access

Universal access to energy is crucial to achieving many of the Sustainable Development Goals (SDGs) and embodied in Goal 7 (Affordable & Clean Energy). Yet, more than [one billion people ](https://unstats.un.org/sdgs/report/2016/Goal-07/)still live without electricity, including 65% of the population in Sub-Saharan Africa. The persistent challenge is to promote universal access while reducing the environmental footprint of the energy sector. To achieve this, a broad range of energy technologies are needed, including new sources of energy (e.g., solar, hydropower) and improved carbon capture and energy efficiency. 

The majority of blended finance transactions have focused on power generation, including the financing of greenfield and brownfield energy infrastructure projects. These energy projects have most commonly leveraged solar technology, with about one-third of solar projects being off-grid solutions. Beyond solar, transactions have focused on hydro and wind technologies, and then oil and gas. Of the transactions focused on oil and gas, approximately 60% have focused on developing new production capacity, with the remaining 40% focused on transportation, storage, and other logistical infrastructure to increase access and affordability. 

## Three reasons it’s time to scale-up blended finance for energy access

Regardless of the technology, achieving universal energy access will require significant capital investment in power generation, transportation, storage, transmission, and other logistical infrastructure, as well as operations and maintenance. Our recent [Research Note ](https://www.convergence.finance/resource/4h6HXzcZsMmJkjDqP6ktDl/view)identifies at least four SDGs that are “ready to scale”, including Goal 7 (Affordable & Clean Energy). Blended finance is well established in the energy sector – and now it is time to scale proven solutions that achieve development impact (i.e., greater energy access and affordability) and mobilize additional private sector investment. 

__1)	The pipeline is ripe for scale:__ The median blended finance transaction in the energy sector has been $123 million in total size, which is approximately double the median transaction size across all sectors. The majority (55%) of blended finance transactions in the energy sector have been larger than $50 million, with 23% of transactions between $100-250 million in total size and another 15% of transactions between $500 million and $1 billion. The energy sector represents a real opportunity for development organizations to allocate catalytic / concessional capital funds to blended finance vehicles that have the capacity to achieve development impact (e.g., greater energy access and affordability) at scale.

![energy transactions by total size](//images.ctfassets.net/4cgqlwde6qy0/3wKtL74HpsjoketuFKnkLi/0f1589f20e214a9f2397bb55ebee7ab2/energy_transactions_by_total_size.png)

__2)	There is room for more portfolio solutions:__ Energy is one of the few sectors where blended finance solutions have been most commonly structured at the project level. Nearly half of transactions targeting the energy sector have been individual projects, double the proportion of projects seen across all blended finance transactions. Companies that have benefitted from blended capital are also common in the energy sector, such as off-grid solutions like d.light and M-KOPA. While there are many stand-alone projects large enough to attract investors, diversification across projects could reduce risk and mobilize greater total volumes of private sector investment.

![Transactions by blended vehicle type](//images.ctfassets.net/4cgqlwde6qy0/1I1vSf6lDiyrjQyeP60sij/1a92a79f3309125a61a497cfdf78b4a9/Transactions_by_blended_vehicle_type.png)

__3)	Specialized blending facilities are facilitating coordination:__ Public concessional funds – both bilateral and multilateral – have played an important role in blended finance transactions in the energy sector, accounting for about 70% of concessional commitments. Specialized multilateral instruments, like the Green Climate Fund (GCF) and Climate Investment Funds (CIF) (e.g., Clean Technology Fund (CTF)), are among the most active public concessional capital providers in the space – and these facilities hold great potential to increase coordination and cooperation. This supports the shift away from creating redundant solutions and towards scaling up or refining existing models that achieve development impact and mobilize private sector capital at scale.

*Become a [member](https://www.convergence.finance/membership) and read the [full brief](https://www.convergence.finance/resource/5PAj3xuR3plAO3yscfutrE/view).*


Our latest Data Brief outlines key trends in the use of blended finance approaches for the energy sector in developing countries. 

Blended finance in the energy sector

It’s time to scale-up blended finance for energy access 

*Originally published in [Impact Alpha](https://impactalpha.com/asia-pacific-is-the-next-frontier-for-blended-finance/).*

The Asia-Pacific region has seen enormous economic growth in the last few decades, which has lifted hundreds of millions out of extreme poverty. According to the Asian Development Bank (ADB), from 2002 to 2015 the region saw a fourfold decline from [1.11 billion people in extreme poverty to 264 million](https://www.adb.org/publications/key-indicators-asia-and-pacific-2019).

The work is not done. This growth has often come at the expense of the environment, leading to deterioration of land, freshwater, and marine ecosystems and exacerbating water and food insecurity and climate vulnerability. At the same time, 264 million in extreme poverty is still a daunting challenge, especially considering  the [recent ADB finding](https://www.adb.org/publications/ado-supplement-december-2019) that growth in Asia is slowing.

Increasingly Asian governments have embraced blended finance as a way to reach key development and environmental objectives, while attracting private investment into their countries.

## Early models

The Government of Indonesia, for example, has several ambitious targets around sustainable energy and deforestation, including increasing the renewables mix from 6% to 23% over the next 5 years and restoring 2 million hectares of peatland by 2020.

In response to these ambitious targets, the Tropical Landscapes Financing Facility  ([TLFF](https://www.convergence.finance/news-and-events/news/IbDiFPoCwmW0cOuImQqOg/view)) was established as a blended finance partnership between ADM Capital/ADM Capital Foundation, BNP Paribas, UN Environment and World Agroforestry Centre, to provide long-term financing for renewable energy and smallholder livelihood projects in Indonesia. In 2018 the TLFF closed its inaugural deal, which was also Asia’s first corporate sustainability bond – a $95 million bond to support socially inclusive, climate friendly production of natural rubber, including a collaboration with WWF focused on conservation.

BlueOrchard launched the Japan ASEAN Women Empowerment Fund (JAWEF), another blended finance example, in 2016. The fund was backed by the Japanese government and has also attracted institutional investors. JAWEF is the first fund investing with female micro entrepreneurs in emerging markets and frontier markets in Southeast Asia. Due to strong financial performance, the fund underwent a second fundraising round last year and doubled in size to [$241 million](https://www.blueorchard.com/expansion-prestigious-women-empowerment-fund/) to reach a final close.

## Regional expansion

In 2019 we saw evidence that the blended finance market has been expanding across Asia. Asia-Pacific is now the second most targeted region for blended finance, after Sub-Saharan Africa. According to the Convergence [State of Blended Finance 2019 report](https://www.convergence.finance/resource/13VZmRUtiK96hqAvUPk4rt/view), the proportion of blended finance transactions targeting Asia – including both East Asia and the Pacific and South Asia – has increased, rising from 27% of transactions in 2010-2012 to 31% of transactions in 2016-2018. 

Many of these transactions have focused on the energy and financial services sectors.

Despite the finding that growth in Asia is slowing, growth projections for East Asia and South Asia are over 5% and we expect the blended finance market in the broader Asia-Pacific region to continue to expand in 2020, as the need for investment in the region increases and governments look to alternatives for investments aligned with the Sustainable Development Goals (SDGs).

To develop a truly robust blended finance market in the region, however, will require more concrete and deliberate action. The seeds have been sown, but now it’s crucial that the right environment is created to cultivate them. 

## De-risking design

While blended finance holds significant potential to crowd in additional capital to achieve the SDGs, these transactions can be complex, time intensive, and highly costly to structure and launch. Funding is often needed early on just to support the design and structuring of transactions that may otherwise be too risky to pursue.

[Design-stage funding ](https://www.convergence.finance/news-and-events/news/4AbNtNMW3WmkSh3dlEcbC7/view)can be a particularly useful tool for supporting the development of blended finance solutions in frontier markets and nascent sectors. By providing grant funding to teams at a stage where the investment concept is under development, design funding gives critical support early on to teams that are looking to take investment products to market. This eventually leads to transactions reaching the market that otherwise may not have, contributing to building the market and ultimately catalyzing additional investment in the region. More deals in the market sends a signal to investors that these transactions are happening and are viable. As investor demand increases, deal sponsors have a better indication of potential investors for new investment structures, leading to the propagation of more deals.

Design funding has been most commonly provided through grant programs such as Convergence’s recently launched [Indo-Pacific Design Funding Window](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window), funded by the Australian government, and the [Asia Natural Capital Design Funding Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window), funded by RS Group, which together offer more than $5 million in funding.

Other similar programs include the Rockefeller Foundation’s [Zero Gap Portfolio](https://www.rockefellerfoundation.org/our-work/initiatives/innovative-finance/), USAID’s [Development Innovation Ventures](https://www.usaid.gov/div), and Blue Haven Initiative’s [Catalytic Investments fund](http://www.bluehaveninitiative.com/portfolio/initiatives/). 

Asia has the building blocks for hosting a strong blended finance ecosystem, including local funders, investors, intermediaries, and entrepreneurs, and well-developed capital markets. More targeted design funding in the region will be crucial to accelerating the market by identifying key players and generating new investable transactions.

Asia has the building blocks for a strong blended finance ecosystem, including local funders, investors, intermediaries, entrepreneurs, and well-developed capital markets. Find out how design-stage funding can help accelerate its blended finance market.