Convergence Eventbrite

__Thursday, November 11 2021, 9am – 11:30am Singapore time (GMT +8):__

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This 2.5-hour (150 minutes) interactive workshop will cover:

- Overview of the role and activity of commercial investors in the blended finance ecosystem
- The rationale and considerations for commercial investors to 1) leverage blended finance as a structuring approach and 2) participate in blended finance transactions 
- Case studies on blended finance transactions with commercial investor  participation
- Recommendations on how best to actively engage and mobilize commercial capital into transactions  

To date a majority of commercial investment in blended finance has been on an opportunistic basis, with little sustained movement towards strategic and scaleable capital. Current stable blended finance flows will mobilize “billions to billions” rather than “billions to trillions” largely due to the under-participation of commercial investors in blended finance. As a part of this training participants will get an overview of how this particular stakeholder group approaches blended finance transactions and learn from real life case studies in which commercial investors have participated. 

This is the fourth training in our five-part series “How Investor Types Blend”.

*The training has limited space to ensure an intensive and practice-driven learning experience. Each Convergence member organization has two complimentary seats in each training, please apply the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*

How Commercial Investors Blend (Asia/West Coast)

'How Commercial Investors Blend' is the third training in Convergence's series "How Investor Types Blend".

How Commercial Investors Blend, Asia/West Coast

__Wednesday, November 10 2021, 9am – 11:30am Eastern time (GMT -4):__

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This 2.5-hour (150 minutes) interactive workshop will cover:

- Overview of the role and activity of commercial investors in the blended finance ecosystem
- The rationale and considerations for commercial investors to 1) leverage blended finance as a structuring approach and 2) participate in blended finance transactions 
- Case studies on blended finance transactions with commercial investor participation
- Recommendations on how best to actively engage and mobilize commercial capital into transactions  

To date a majority of commercial investment in blended finance has been on an opportunistic basis, with little sustained movement towards strategic and scaleable capital. Current stable blended finance flows will mobilize “billions to billions” rather than “billions to trillions” largely due to the under-participation of commercial investors in blended finance. As a part of this training participants will get an overview of how this particular stakeholder group approaches blended finance transactions and learn from real life case studies in which commercial investors have participated. 

This is the fourth training in our five-part series “How Investor Types Blend”. 

*The training has limited space to ensure an intensive and practice-driven learning experience. Each Convergence member organization has two complimentary seats in each training, please apply the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*


How Commercial Investors Blend (Europe/East Coast)

'How Commercial Investors Blend' is the fourth training in Convergence's series "How Investor Types Blend".

How commercial investors blend (Europe/East Coast)

We invite you to join us virtually for the launch of the 5th edition of the State of Blended Finance on __Wednesday, October 27th at 9:00 - 10:00 am EST__. The State of Blended Finance is Convergence’s annual report on blended finance trends, opportunities, and challenges.

This year's report provides an updated analysis of the blended finance market, including blending approaches, sectors, regions and investor trends. For the first time, the report will also include a thematic focus on how to achieve scale in the blended finance market, highlighting key challenges and recommendations. The report will include guest op-eds from prominent stakeholders (e.g. BlackRock, USAID, IFC) in the blended finance market, including development agencies, MDBs and DFIs, think tanks, and private investors.

In the meantime, you can see the last edition of The State of Blended Finance [here](https://www.convergence.finance/blended-finance/2020). 

__Agenda__

9:00-9:05am: Welcome remarks - Joan Larrea, CEO, Convergence

9:05-9:25am: Presentation of key highlights of the report - Convergence Content Team

9:25-9:30am: Q&A

9:30-9:35am: Challenges facing blended finance - Joan Larrea, CEO, Convergence

9:35-10:15am: Panel discussion moderated by Joan Larrea

Panellists:

__Cameron Khosrowshashi__, Senior Investment Advisor, Prosper Africa

__Kruskaia Sierra-Escalante__, Senior Manager, International Finance Corporation (IFC)

__Chinua Azubike__, CEO, InfraCredit Nigeria

__Nancy Lee__, Senior Policy Fellow, Center for Global Development (CGDEV)

__Rael McNally__, Senior Portfolio Manager, Global Renewable Power, BlackRock

10:15-10:25am: Q&A

10:25-10:30am: Closing remarks - Joan Larrea, CEO, Convergence

State of Blended Finance 2021 report launch

5th edition of The State of Blended Finance on __Wednesday, October 27th at 9:00 am EST__. The State of Blended Finance is Convergence’s annual report on blended finance trends, opportunities, and challenges.

State of Blended Finance 2021 launch

__Wednesday, September 29 2021, 9am – 11:30am Singapore time (GMT +8):__

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This 2.5-hour (150 minutes) interactive workshop will cover:

- Overview of the role and activity of donor agencies in the blended finance ecosystem
- The rationale and considerations for donor agencies to use blended finance as a structuring approach
- Case studies on blended finance transactions with donor agency participation
- Recommendations on how best to actively engage and mobilize donor capital into transactions  

Donor agencies are the most prominent actors in the blended finance ecosystem, accounting for over half of all transactions in the Convergence historical deals database. Over the last few years, donor governments have started to proactively organize themselves strategically and operationally to participate in blended finance transactions, refining key policies and approaches. As a part of this training participants will get an overview of how this particular stakeholder group approaches blended finance transactions and learn from real life case studies in which donor agencies have participated. 

This is the third training in our five-part series “How Investor Types Blend”.

*The training has limited space to ensure an intensive and practice-driven learning experience. Each Convergence member organization has two complimentary seats in each training, please apply the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*

How Donor Agencies Blend (Asia/West Coast)

'How Donor Agencies Blend' is the third training in Convergence's series "How Investor Types Blend".

How Donor Agencies Blend, Asia/West Coast

In June The President of Ghana launched [The Country Financing Roadmap](https://www.weforum.org/reports/country-financing-roadmap-for-the-sdgs-ghana), a strategic guide to leveraging private capital to achieve the SDGs.

Highlights from the report will be shared during this webinar organized by the SDGs Advisory Unit, Office of the President, in addition to a keynote by our Managing Director, Africa, [Ladé Araba](https://www.convergence.finance/about/team/5qoY2w7CUMeyE4wgAioiW2). The webinar will also feature a panel with:

- __Solomon Asamoah__, MD of Ghana Infrastructure Investment Fund (Infrastructure) 
- __Lina Osmond__, Regional Head of Sustainable Finance For MEA, Standard Chartered ( Sustainable Finance)
- __Gottfried Odamtten-Sowah__, Head of Programs- Agro-Processing & Agribusiness - Mastercard Foundation ( SME Development)
- __Yaw Asamoah__, Seasoned Managing Director, Global Financial Markets (Ghanaian with global presence) 

Achieving the SDGs through impact investing: The Critical role of FDI

CFR WEBINAR DRAFT PROGRAMME

Achieving the SDGs through impact investing

__Wednesday, September 8 - 10 2021, Zurich:__

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To use public funds more effectively and mobilize private investment to achieve the Sustainable Development Goals (SDGs) has become a key concern of many development agencies and donor organizations. While the idea to create blended finance models is compelling, one specific approach holds particular promise: empowering high impact enterprises with market-based solutions to scale and deliver positive impact in a sustainable way – a bottom-up approach.

This actionable, practice-driven program is specifically designed for providers of public or philanthropic funding, who strive to maximize the impact of their grants or investments and want to be on top of the most innovative solutions and trends. It includes outstanding lecturers, features inspiring live cases and received exceptional feedbacks in several program runs since inception in 2018.

The three day program will provide valuable insights on strategies and instruments to “leverage” own resources by blending it with private investment for small and growing businesses in developing and emerging countries. It will also shed light on the whole spectrum of finance for impact and international development. A specific focus will be on catalytic financing tools that are able to attract additional capital for high impact enterprises.

The program is organized by the [Initiative for Blended Finance at the University of Zurich](https://ibf-uzh.ch/education/), with program partners [Roots of Impact](https://www.roots-of-impact.org/), [Center for Sustainable Finance and Private Wealth at the University of Zurich](https://www.csp.uzh.ch/en.html), and [Convergence](https://www.convergence.finance/).

*The program is booked out, but you can apply for our [waiting list](https://www.csp.uzh.ch/en/executive-education-training/professionals/impact-investing-blended-finance/iibf-2020-application-page0.html). If you have any questions, please reach out to Christina Moehrle (Education Lead): cmoehrle@roots-of-impact.org  
(We will closely oberserve COVID-related restrictions and inform about any changes on this site).*

Impact Investment & Blended Finance for Development Agencies and Foundations

IIBF Flyer

IIBF Agenda

Impact Investment Blended Finance 

__Wednesday, August 25 2021, 9am – 11:30am Eastern time (GMT -4):__

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This 2.5-hour (150 minutes) interactive workshop will cover:

- Overview of the role and activity of philanthropic organizations in the blended finance ecosystem
- The rationale and considerations for philanthropic organizations to use blended finance as a structuring approach
- Case studies on blended finance transactions with philanthropic organization participation
- Recommendations on how best to actively engage and mobilize philanthropic capital into transactions  

Foundations in the blended finance space have most commonly played a small but catalytic role, either providing small amounts of financing to seed large-scale and ground-breaking initiatives or providing smart forms of subsidy and risk mitigation (e.g., interest rate reductions and/or concessional capital) to crowd-in the private sector. In this training participants will get an overview of how this particular stakeholder group approaches blended finance transactions and learn from real life case studies in which philanthropic organizations have participated. 

This is the second training in our five-part series “How Investor Types Blend”. 

*The training has limited space to ensure an intensive and practice-driven learning experience. Each Convergence member organization has two complimentary seats in each training, please apply the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*


How Philanthropic Organizations Blend (Europe/East Coast)

'How Philanthropic Organizations Blend' is the second training in Convergence's series "How Investor Types Blend".

__Wednesday, July 21 2021, 9am – 11:30am Singapore time (GMT +8):__

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This 2.5-hour (150 minutes) interactive training will cover:

- Overview of the role and activity of MDBs/DFIs in the blended finance ecosystem
- The rationale and considerations for MDBs/DFIs to leverage blended finance as a structuring approach
- Case studies on blended finance transactions with MDB/DFI participation
- Recommendations on how best to actively engage and mobilize MDB/DFI capital into transactions  

Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs) are amongst the most prominent actors in the blended finance ecosystem, accounting for over a third of all transactions in the Convergence database since 2017. In this training participants will get an overview of how this particular stakeholder group approaches blended finance transactions and learn from real life case studies in which MDBs/DFIs have participated. Convergence members will share their insights, and participants will discuss current initiatives in small groups.

This is the first training in our five-part series “How Investor Types Blend”. 

*The training has limited space to ensure an intensive and practice-driven learning experience. Each Convergence member organization has two complimentary seats in each training, please apply the __discount code__ you received by e-mail. Non-members can register for a fee of USD150.*

How MDBs/DFIs Blend (Asia/West Coast)

'How MDBs/DFIs Blend' is the first training in Convergence's series "How Investor Types Blend".

How MDBs/DFIs Blend, Asia/West Coast

*This webinar is happening on May 20, 2021 - 9 PM EST / 9 AM (May 21) SGT, HKT*

Convergence is currently accepting applications for the [Indo-Pacific Design Funding Window](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window), which funds the design of blended finance structures that target at least one of the following:

1) Climate finance

2) Gender equality

To ensure applicants submit their strongest proposals, we are hosting a webinar to offer insights on this Design Funding window and Convergence's selection process.

Register for the webinar today to:

- Get your Design Funding questions answered
- Get insight into our decision making process

The next submission deadline is __June 30, 2021__, for the Indo-Pacific Window. Complete eligibility & evaluation criteria are [here](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window).

Convergence's Design Funding program supports the design and launch of new blended finance solutions that aim to catalyze private investment in developing countries and towards the Sustainable Development Goals. Since the establishment of the program, Convergence has awarded nearly USD 7 million in funding to 23 solutions, which have gone on to mobilize over USD 650 million from public, philanthropic, and private investors.


 The Indo-Pacific Design Funding Window - How to Apply (For those based in Asia)

Convergence is currently accepting applications for the Indo-Pacific Design Funding Window, which funds the design of blended finance structures that target climate finance and/or gender equality. 

The Indo-Pacific Design Funding Window

In January 2021, the United Nations published the [Adaptation Gap Report 2020](https://www.unep.org/resources/adaptation-gap-report-2020#:~:text=The%20UNEP%20Adaptation%20Gap%20Report%202020%20finds%20that%20while%20nations,floods%20and%20sea%2Dlevel%20rise.), warning of "huge gaps" in financing climate adaptation. Unfortunately, this gap is even more pronounced for women who are disproportionately impacted by climate change.

The [Women Impact Investment Network](https://www.wiin-network.com/) (WIIN) and Convergence, jointly invite you to a conversation about how this financing approach can address the gender-climate change nexus.

Host: Dipa Sharif-Ahmed (WIIN Co-Founder), Director, AV Ventures

Panelists:

[Andrew Apampa](https://www.convergence.finance/about/team/6vagDS0aL4cusKnOrWB6o), Senior Associate, Convergence

[Ayesha Bery](https://www.convergence.finance/about/team/3u0qeg7AKQCWmoY2QwG0s4), Senior Associate, Convergence

Moderator: Holly Li (WIIN Board Member), Managing Director, Polymer Wealth Management (HK)

Webinar Details:

Date: Wednesday, May 19th, 2021
Time: 12:00pm-1:15pm Eastern Daylight Time

Blended Finance and the gender & climate change nexus

The Women Impact Investment Network (WIIN) and Convergence, jointly invite you to a conversation about how this financing approach can address the gender-climate change nexus.

*This webinar is happening on May 18, 2021 - 10 AM EST / 4 PM CET*

Convergence is currently accepting applications for the [Indo-Pacific Design Funding Window](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window), which funds the design of blended finance structures that target at least one of the following:

1) Climate finance

2) Gender equality

To ensure applicants submit their strongest proposals, we are hosting a webinar to offer insights on this Design Funding window and Convergence's selection process.

Register for the webinar today to:

- Get your Design Funding questions answered
- Get insight into our decision making process

The next submission deadline is __June 30, 2021__, for the Indo-Pacific Window. Complete eligibility & evaluation criteria are [here](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window).

Convergence's Design Funding program supports the design and launch of new blended finance solutions that aim to catalyze private investment in developing countries and towards the Sustainable Development Goals. Since the establishment of the program, Convergence has awarded nearly USD 7 million in funding to 23 solutions, which have gone on to mobilize over USD 650 million from public, philanthropic, and private investors.


 The Indo-Pacific Design Funding Window - How to Apply (For those based in North America & Europe)

Hosted by the UN Peacebuilding Support Office, the German Federal Foreign Office, and the Republic of Colombia. 

The financing landscape for peacebuilding, development and humanitarian affairs is increasingly diversified. While an array of innovative financing instruments for the mobilization of private funds – such as blended finance, impact bonds and guarantees – has become available, implementing such instruments towards peacebuilding efforts is particularly challenging in conflict-affected settings. 

Join this event where our CEO Joan Larrea will moderate an expert roundtable on Blended Finance for Peacebuilding, with:

Mr. Bernt Brun, Vice President, Norfund

Ms. Fanta Conde, Deputy Head West Africa Advisory, CrossBoundary

Ms. Zodwa Mbele, Executive Manager, Development Bank of Southern Africa

Mr. Pontus Ohrstedt, Chief of the UN Resident Coordinator’s Office, Colombia

Mr. Jean-Philippe De Schrevel, Founder & Managing Partner, Bamboo Capital

Ms. Kruskaia Sierra-Escalante, Acting Director / Senior Manager, Blended Finance, International Finance Corporation

Innovative Financing for Peace: Finding new solutions to meet local peacebuilding needs

Blended finance and peacebuilding

The Japan International Cooperation Agency (JICA) is the development aid agency of the Japanese government, tasked with distributing the bulk of Japan’s Overseas Development Assistance (ODA). It is one of the largest bilateral development organizations in the world with 96 overseas offices, projects in 150 developing countries, and approximately USD 1,5 billion approved for Finance and Investment Cooperation in 2019.  JICA is increasingly active as a blended finance actor in the Asia-Pacific region.  

We spoke to Ms. Megumi Muto, Vice President, and Mr. Hiroyuki Tomita, Deputy Director General, Governance and Peace Building Department, about current blended finance transactions JICA is undertaking, outcome measurement, applying a gender lens to deals, and the challenges JICA faces when engaging in blended finance.

__Why has JICA started to put its capital into blended finance transactions instead of doing pure stand-alone grants?__

__Megumi:__ Being a bilateral agency, we tend to start our stories from the relationship of Japan with our counterpart country, but more and more we're finding that we cannot reach scale within the scope of bilateral relations only, especially in the era of the Sustainable Development Goals (SDGs). So, we wanted to get into blended finance structures to expand our impact collectively and help achieve the SDGs. 

At the same time there is an appetite for blended finance in Japan itself. There's so much pension/institutional capital in Japan. We are an aging society, and increasingly we have many retirement funds that are looking for investment opportunities for purpose. So far, we have been issuing bonds, like social bonds - we've launched a gender bond in September, and that has primarily been the channel, but more and more investors, like these pension funds, require individual structures that give them an opportunity to invest. So, we’re also looking at blended finance as way to appeal to this class of investors. 

__Can you describe one or two blended deals JICA has been involved in? What was the outcome? __

__Megumi:__ Currently we have partnered with the Asian Development Bank (ADB) on an innovative scheme called [Leading Asia’s Private Infrastructure Fund (LEAP)](https://www.adb.org/what-we-do/funds/leap), an infrastructure co-financing trust fund that aims to increase access to finance for quality-oriented infrastructure projects in Asia, in sectors such as energy, water, wastewater, transport, ICT, and health. LEAP’s unique offering, combining both commercial and concessional capital, is designed to fill critical infrastructure gaps and reduce bankability constraints in a wide range of quality private sector-led infrastructure transactions.  JICA has capitalized the fund with $1.5 billion in equity, while ADB deploys and administers the fund’s capital. In this way, we are learning from ADB’s expertise as well as participating as the co-financier for the projects. We see this partnership, with its expansiveness and scale, as something we hope to replicate in the future. 

Before our partnership with ADB, we were mostly engaged in individual blended finance transactions on an ad hoc basis. For example, in the 2000s in the Philippines, we teamed up with USAID and set up a water revolving fund so that municipalities’ water utilities could get access to large volumes of private finance. This was possible through a loan JICA made to the Development bank of the Philippines and a guarantee coming from USAID- then Development Credit Authority (DCA), this combination ultimately catalyzed the commercial banking sector within the Philippines to invest. More recently, we teamed up with the European Bank for Reconstruction and Development (EBRD) in establishing a wind farm in Mongolia, which was first initiated by the SoftBank group. The Tsetsii Wind Farm can generate [50 megawatts](https://www.jica.go.jp/english/publications/j-world/1910_04.html), enough to cover approximately 5% of Mongolia's energy requirements. The project utilized the Japanese government’s trust fund established in EBRD to fund the necessary substation associated with the project, which was under the Mongolian government. 

As we expand our blended finance activities, we are aiming to replicate more ambitious blended finance initiatives, like our partnership with ADB, to do more at scale. 

__How are outcomes from blended finance transactions measured differently from traditional grant making?__

__Megumi:__ There are things that are the same and things that are different. What remains the same is development impact. Whether it’s a straightforward government to government (sovereign) loan, as we have been doing in the past, or blended finance, we always look at the development impact. We measure ex-ante as well as ex-post and we publish the results in an independent evaluation report. 

What’s different is that with blended finance we are also aiming to measure the capital mobilized, because we cannot achieve the SDGs at scale with only ODA. We must bring in the private sector as well.  I’m part of the technical working groups of OECD-DAC identifying how to measure the capital mobilized. These are ongoing discussions and there are some methodologies developed already, which we will eventually follow and internalize as our key performance indicators. We’re eager to show how we're doing in terms of mobilization, but we’re still in the process of formalizing things. 

__Does JICA apply a gender lens when making blended finance deals?__

__Megumi:__ Right now, we only apply a gender lens to individual deals. We decide ahead of time which deals will specifically target women. We have been an active participant from the very beginning of the 2X challenge, which encourages development finance institutions to ramp-up direct development finance for women lead entrepreneurship. We have participated in funds that target women, for example with fund manager Women’s World Banking, and that is helping us reach women beneficiaries. With Blue Orchard we have also participated in the [Japan ASEAN Women Empowerment Fund (JAWEF)](https://www.convergence.finance/resource/5AR5njuJR45khZMkblhjOa/view), which is a blended fund that provides loans to microfinance institutions that serve female entrepreneurs in the ASEAN region. 

So, we have deals that specifically support women, but when it comes to gender, we know it’s not enough for specific transactions to target women, we must mainstream a gender lens into all types of projects. We know there is much more work to do there.  

__As one of the main donor agencies active in blended finance in the Asia Pacific what are some interesting or unexpected challenges you faced?__

__Megumi:__ For us there are two types of areas that we think pose different challenges, one is in climate-adaptation/resilient infrastructure and the other is supporting the start-up ecosystem in developing countries. 

In terms of the first challenge, historically we have done a lot of concessional finance for traditional government-supported infrastructure, but more and more, blended finance schemes and public private partnerships are required in the areas of green, sustainable, and climate adaptation/resilient infrastructure. But producing a pipeline of bankable infrastructure projects in that arena is really a challenge, because usually they are areas where there isn’t real underlying cash flow. A flood control project doesn’t create cash. So, making something like that blended is a big challenge. Blending in climate adaptation and disaster risk reduction is really a challenge. 

__Hiroyuki:__ Based on its long history of government-to-government (G-to-G) concessional finance and technical assistance, JICA has a strong channel to national governments in many sectors.  In addition to the current expansion to blended finance, we are now trying to refocus and utilize this G-to-G technical assistance and concessional finance to encourage governments of developing countries to create an enabling environment for social impact start-ups and impact investing. The ultimate goal is to encourage the development of policies that create an ecosystem that provides financial opportunities and enables socially-motivated entrepreneurs to start businesses, and encourage investment into these businesses.  

So, JICA is going to work with each national environment to bring about the changes needed to create an ecosystem that supports these start-ups and businesses, and thus mobilize private investment into emerging markets.  Now, we are implementing pilot projects in South and Southeast Asian countries.  

__How do you see JICA’s engagement in blended finance evolving in the future? __

__Megumi:__ Blended finance is not the end goal. To achieve the SDGs, we really need to work together with other partners and it is one of the powerful tools available to facilitate that. I believe we can work together with the private sector, combining their capital with our capital, tools, knowledge and ecosystem, to get more capital flowing to the SDGs. We consider blended finance as one of the very promising options for our work moving forward and we really wish to learn from the Convergence community.


We discussed current blended finance transactions JICA is undertaking, outcome measurement, applying a gender lens to deals, and the challenges JICA faces when engaging in blended finance.

Member spotlight: Japan International Cooperation Agency

Member spotlight with Megumi Muto and Hiroyuki Tomita of the Japan International Cooperation Agency

Convergence's [Design Funding](https://www.convergence.finance/design-funding) program offers a unique market acceleration opportunity for practitioners to secure feasibility study and proof of concept stage design funding to develop and launch catalytic blended finance vehicles that aim to attract private capital to sustainable development at scale.

This webinar explains the application process for Convergence's two open Design Funding Windows, the [Indo-Pacific Window](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window) for solutions targeting gender AND/OR climate in the Indo-Pacific Region, and the [Asia Natural Capital Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window) for solutions focused on natural capital in Asia. Please visit Convergence’s Design Funding page for submission deadlines: www.convergence.finance/design-funding

Watch it [here](https://www.youtube.com/watch?v=gLOcpWr-BoA).

A webinar on how to apply for Convergence's Indo-pacific and Asia Natural Capital Design Funding Windows. 

How to apply for design funding

WEBINAR - Convergence's Design Funding Windows: How to Apply

Convergence, the global network for [blended finance](https://www.convergence.finance/blended-finance), is joining the Ocean Risk and Resilience Action Alliance (ORRAA) as an institutional partner. Blended finance is the use of catalytic capital from public or philanthropic sources to increase private sector investment in sustainable development. 

The partnership will draw on the expertise of both parties to support ORRAA’s overall mission to build resilience in the regions and communities most vulnerable to ocean risk, by pioneering finance and insurance products that incentivise investment into coastal nature. 

The collaboration will support ORRAA in gaining a deeper insight into blended finance, with the ultimate result of making ocean-focused products a more significant part of blended finance transactions. 

Convergence generates blended finance data, intelligence, and deal flow to increase private sector investment in developing countries. It exists to help realise the United Nations Sustainable Development Goals (SDGs), which face an annual $2.5 trillion funding gap. SDG 14, Life Below Water, which is the area of ORRAA focus, is one of the least invested in of all the SDGs.

As an institutional partner, Convergence will collaborate with ORRAA, its members and project delivery partners to accelerate and increase the impact of and investment in ORRAA’s work and projects. 

Karen Sack, co-chair of ORRAA commented: “This partnership represents the coming together of likeminded organisations to further our mission of driving $500 million of investment into coastal nature by 2030, which includes the creation of at least 15 novel finance products by 2025. We look forward to working together with Convergence and benefiting hugely from their invaluable insights and expertise in blended finance.”

Adhiti Gupta, Associate Director of Market Acceleration and Design Funding at Convergence commented: “Traditional development aid from public and philanthropic sources is not enough to realise the SDGs so we’re working to strategically utilize blended finance to attract private sector investment. Joining forces with ORRAA supports this goal and benefits both organisations with a wealth of experience, data and potential to funnel vital funds to ocean focused solutions.”

Convergence joins the Global Fund for Coral Reefs as an ORRAA institutional partner. Full members of ORRAA include the UK and Canadian Governments, AXA, the WWF, Ocean Unite, Willis Towers Watson, Swiss Re, The Nature Conservancy, the Stockholm Resilience Centre, Conservation International, Deutsche Bank, IUCN, Greensquare Ventures and Rare.

About ORRAA

ORRAA is focused on driving investment into coastal and marine natural capital, mitigating risk and building resilience in communities adapting to climate change. 

The powerful international alliance brings together the finance and insurance sectors, governments, environmental organisations and stakeholders from the Global South to scale solutions and accelerate action.
Its aim is to drive $500 million of investment into coastal nature by 2030, and surface at least 15 novel finance products by 2025, with a focus on protecting the regions and communities that need it most.

For media enquiries please contact:

Rishi Bhattacharya
rishi@impactandinfluence.global
+44 (0) 7767 654 070

Nicola Forsyth
nicola@impactandinfluence.global
+44 (0) 7809121015

Convergence, the global network for blended finance, is joining the Ocean Risk and Resilience Action Alliance (ORRAA) as an institutional partner. 

Convergence and ORRAA enter strategic partnership

Convergence and ORRAA commit to blending expertise in new partnership

The first tranche of a new Development Impact Bond (DIB) for refugees in Jordan and Lebanon was [launched today](https://koisinvest.com/wp-content/uploads/2021/09/RefugeeImpactBond-Launch.pdf) by the IKEA Foundation, Novo Nordisk Foundation, Norad, the U.S. Development Finance Corporation (DFC), Ferd, and KOIS. This will fund a micro-enterprise creation program, delivered by the Near East Foundation (NEF), to help refugees and vulnerable host communities recover their livelihoods and build their resilience.

Convergence [awarded KOIS](https://www.convergence.finance/design-funding/grant-portfolio/5L4vm2SIEgeuKiCUkQoCyI/view) design stage [grant funding](https://www.convergence.finance/design-funding) through our Global Emerging Markets Design Funding Window, funded by the Canadian Government, to conduct a feasibility study and subsequently structure, fundraise and launch the Refugee Impact Bond.

“We supported KOIS and the Refugee Impact Bond because it’s a bold idea that attempts to address one of the most urgent needs of refugees: gainful employment. This impact bond can demonstrate the viability of a mode of humanitarian financing in addition to traditional aid that can pave the way for funding such programs sustainably” says Adhiti Gupta, Associate Director, Market Acceleration and Design Funding.

DFC and Ferd will provide a four-year results-based risk investment to fund a vocational, entrepreneurship and resilience-building program. This will support 4,400 refugee and host population trainees and provide 3,400 business start-up grants in Jordan. Communities with large refugee populations will be selected based on higher than national average rates of food insecurity, poverty, indebtedness, and unemployment. Women and youth, who are disproportionately impacted by crises, will take priority. 

In case of failure to achieve these results, the IKEA Foundation, Novo Nordisk Foundation and Norad will support 80% of program costs. NEF and its local delivery partners will have the flexibility to adapt programming and innovate to achieve the desired results. NEF is further incentivized through a performance bonus.

The second tranche of the DIB, focused on Lebanon, is expected to launch in the near future. 

__About Convergence’s Design Funding Program__

The Design Funding program offers a unique market acceleration opportunity for practitioners to secure feasibility study and proof of concept stage design funding to develop and launch catalytic blended finance vehicles that aim to attract private capital to sustainable development at scale. 

Convergence currently has two open Design Funding Windows, the [Indo-Pacific Window](https://www.convergence.finance/design-funding/open-window/indo-pacific-open-window) for solutions targeting gender AND/OR climate in the Indo-Pacific Region, and the [Asia Natural Capital Window](https://www.convergence.finance/design-funding/open-window/asia-natural-capital-open-window) for solutions focused on natural capital in Asia.  Please visit Convergence’s [Design Funding](https://www.convergence.finance/design-funding) page for submission deadlines.

Convergence also acts as the sole independent evaluator to the United Nations Joint SDG Fund for operationalizing the Call on SDG Financing Component 2: Catalyzing Strategic Investments. So far $41M has been awarded in funding to UN country teams to design financial structures to catalyze additional investment for the SDGs, based on Convergence recommendations.


Convergence awarded KOIS design stage grant funding through our Global Emerging Markets Design Funding Window, funded by the Canadian Government, to conduct a feasibility study and subsequently structure, fundraise and launch the Refugee Impact Bond.

Development bond for refugees launches

Convergence supported $14 million development impact bond for refugees launches 

Over the past few years, the Sustainable Development Goals (SDGs) have led to a push towards the achievement of inclusive growth. For this to become a reality, access to clean, affordable, and environmentally friendly energy is critical. The attainment of positive outcomes in health and education, as well reductions in the cost of doing business, unlocking economic potential, and creating jobs are all propelled by access to reliable and affordable energy.  

We have seen many people lose their sources of livelihood in the face of the COVID-19 pandemic, and millions were unable to transition to remote working and learning due to their limited access to electricity, computers and smart devices. With more than one billion people globally still living without electricity, the economic and social disruptions caused by the pandemic further emphasized the importance of universal access to electricity.  

Many of the people living without electricity are in Africa. According to a 2019 report by the International Energy Agency, in spite of Africa being home to 17% of the world’s population, the continent currently accounts for [__just 4% of global power supply investment__](https://www.iea.org/reports/africa-energy-outlook-2019). As a result, approximately 65% of the population in Sub-Saharan Africa, predominantly in rural areas, do not have access to clean energy for cooking or for electricity. This greatly undermines the continent’s potential. 

Ensuring universal access to energy is a costly feat. It is estimated that annual investments of [__USD 120 billion__](https://www.iea.org/reports/africa-energy-outlook-2019) are required for Africa to achieve reliable electricity supply for all by 2040. This is nearly a fourfold increase in current funding directed towards electricity generation. Public funding is insufficient to meet this demand, so it is essential that the energy sector tap into capital held by the private sector and the capital markets if it is to increase investments in the sector. This is where blended finance comes into play. 

__What is blended finance__ 

[__Blended finance__](https://www.convergence.finance/blended-finance) solutions leverage concessional capital from public and philanthropic sources to de-risk transactions to attract private investment. Blended finance allows each investor in a transaction to meet their objectives, whether commercial, impact, or a combination. Additionally, real investment risks such as currency volatility, inflation risk, and credit risks, which greatly inhibit investments in the continent, can be mitigated through blended finance structures. Finally, bringing in the private sector allows limited public funding to be strategically utilized, which will help the capital go further.  

Blended finance has played a key role in financing projects within the energy sector. Convergence’s database of [__historical blended finance transactions__](https://www.convergence.finance/blended-finance#sectors) has captured over 180 transactions that target the energy sector with a total deal volume of USD 76 billion. This accounts for 27% of all the transactions captured within the database. 

__PPPs together with blended finance can catalyze greater private investment __ 

Well-structured public-private partnerships (PPPs) can additionally create broad benefits to the energy sector by not only increasing the flow of private capital (with blended finance approaches providing risk mitigation), but also through the efficiency gains and technical expertise of private companies. The South African Renewable Energy Independent Power Procurement Programme (REIPPP) provides a compelling example with many valuable insights.  

REIPPP is one of two programmes, the other being the Small Projects IPP Procurement Programme, that were designed to increase the installed electricity generation capacity in South Africa through a transparent private procurement process. REIPPP is a PPP that encourages independent energy producers to submit bids on the development and design of large-scale renewable energy power plants within South Africa to address the nation’s pernicious power shortages and outages. 

The program was launched in 2010 and has seen the procurement of more than 6,000 megawatts of renewable energy in just 10 years. It has further reduced South Africa’s carbon emissions by 33 million tons, and water use by 39 million kilolitres. Additionally, over 38,000 jobs have been created, predominantly in local communities near the power plants, with many economic and social benefits for women and youth. The program has also attracted over [__ZAR 209.4 billion__](https://futuregrowth.co.za/insights/reippp-comes-of-age/#:~:text=The%20Renewable%20Energy%20Independent%20Power,economic%20development%20in%20South%20Africa.) (USD 15 billion) in committed private sector investment, which has alleviated pressure on the fiscus.  

As the program’s structure involves competitive bidding windows, REIPPP has also resulted in a significant decrease in the price of renewable energy for electricity supply. Such initiatives, which increase the participation of independent power producers can be coupled with blended finance structures to unlock private sector investment into economically viable solutions. The blended finance structures allow for concessional capital to mitigate prevailing risks and adjust the risk return profile of projects to crowd in private capital. Blended finance has enabled the financing of several projects under the REIPPP.  

One example is the XiNa One Solar Project, a 100MW concentrated solar power (CSP) plant in the Cape Province.  The project received a concessional loan from the Clean Technology Fund (CTF) via a cross-currency swap, initiated by the African Development Bank (AfDB). This allowed CTF to lend in local currency (ZAR), alongside the other domestic commercial debt providers. The arrangement allowed XiNa to service the loan in ZAR and make debt repayments to the AfDB, who would then swap the local currency amounts into USD before repaying CTF. Given the prevailing foreign exchange risk, the arrangement reduced Xina’s exposure to dramatic foreign exchange fluctuations and reduced CTF's potential hard currency losses due to exchange rate changes. The concessional loan also lowered the overall cost of capital for the project. XiNa further secured debt from the Development Bank of Southern Africa (DBSA), as well as from commercial banks, including Absa, Nedbank, and FirstRand, alongside a USD 37 million loan from the International Finance Corporation. Equity investors included the Industrial Development Corporation (IDC), the Public Investment Corporation (PIC), KaXu Community Trust, and Abengoa Energia.  

__For impact, optimize and replicate a transparent independent power procurement process__  

REIPPP is an example of a solution that could be adapted across the region to close the energy funding gap. Replicating REIPPP and ensuring proper program management and deployment could rapidly improve energy access and transparency within the energy procurement program. 

The success of REIPPP suggests that private sponsors and financiers are more willing to invest in renewable energy if the procurement process is transparent. REIPPP further ensures extensive due diligence on developers, which is published publicly with independently reviewed evaluation criteria. This has helped to create a level playing field for all participants and has boosted private sector confidence in the process.  

Another insight from REIPPP is drawn from the exemption of SA domiciled companies from following the national PPP law, to allow a customized procurement process. This streamlined approach attracted experienced project developers from around the world, increased the number of eligible companies, and quickened the process for bringing new power generation capacity to market, in light of South Africa's worsening power deficit. The process can be replicated to significantly contribute to the region making faster advancement toward the SDGs. 

There exists a huge opportunity for the region to chart its own path to reliable electricity supply. Deliberate efforts towards scaling access to clean energy for all are therefore imperative. Countries can learn from what has worked, and they can improve on and replicate these solutions. Moreover, through blended finance solutions, we can create bankable projects that are commercially attractive and can attract private investors to help the region close the existing funding gap and ultimately, inch closer towards achieving the SDGs. 

Sustainable Development Goals (SDGs) have led to a push towards the achievement of inclusive growth. For this to become a reality, access to clean, affordable, and environmentally friendly energy is critical. 

Scaling Access to Clean Energy in Sub-Saharan Africa

Scaling affordable access to Clean Energy in Sub-Saharan Africa through Blended Finance and PPPs 

Project finance is the financing approach typically applied to the long-term construction and development of natural resource and physical infrastructure assets. Equity and debt funding is provided upfront by multiple investors, with this financing ultimately being repaid from the [cashflows of the operating assets](https://www.dentons.com/en/insights/guides-reports-and-whitepapers/2013/april/1/a-guide-to-project-finance). 

Project finance in the developing world is beset by numerous risks (e.g., political and regulatory risks, operating risks, [etc.](https://ppp.worldbank.org/public-private-partnership/financing/risk-allocation-mitigation)). Blended finance can help address some of these challenges. Concessional financing in the form of below-market guarantees or concessional debt or equity, for example, can improve projects’ credit ratings by mitigating risk, enabling them to access private financing on better terms, while technical assistance can produce better-prepared projects at the pre-investment stage, integrating ESG considerations early on.

Convergence’s latest data brief analyzes the 153 blended project transactions recorded by the Convergence database (representing total committed financing of USD 73.3 billion) and presents insights from interviews with key stakeholders.

Below are some key takeaways from the Brief:

__Blended finance has been effective at mobilizing private investors into large projects. Projects have a larger deal size compared to other blended structures (median size of USD 115 million), a good indication for scale:__

Most projects in our dataset target renewable energy (42% of projects), energy efficiency (17%), and natural gas (10%). With energy and infrastructure projects typically being large-scale, projects have a median size of USD 115 million (vs USD 58.6 million for all transactions), with 55% of them being over USD 100 million in size (vs 38% of all). For example, the USD 7.7 billion [Sankofa Gas Project](https://www.worldbank.org/en/country/ghana/brief/what-is-the-sankofa-gas-project) looks to increase the availability of natural gas for clean power generation in Ghana, and was backed by a USD 500 million World Bank payment guarantee and USD 217 million of MIGA political risk insurance cover.

![Project transactions by total transaction size](//images.ctfassets.net/4cgqlwde6qy0/20kjbGFGxrxrZTVhqZBbVo/97d494e91ce89d7f15dcd2b9ae6f6ece/Project_transactions_by_total_transaction_size.png)

Convergence has previously [noted](https://www.convergence.finance/news-and-events/news/2ODjLTknchuuvzPWa4rty4/view) that development guarantees have most frequently been used to mobilize additional private sector investment for larger ticket sizes (i.e., USD 100 million and above), partly because guarantees appear more in projects than in the overall market (48% vs 31%). Guarantees have various advantages: they can (i) [bridge the gap](https://www.convergence.finance/news-and-events/news/2ODjLTknchuuvzPWa4rty4/view) between perceived and actual risk (funds are only disbursed in the event of payment default) and thereby mobilize private capital by [protecting](https://ppiaf.org/documents/5798/download) project investors from risks they’re unwilling to bear; (ii) [promote capital efficiency](https://www.convergence.finance/news-and-events/news/2ODjLTknchuuvzPWa4rty4/view) for issuing public institutions (i.e., capital is only disbursed in the case of losses); and (iii) mobilize local currency resources. However, according to our respondents, they can still be more broadly used, particularly in a world where governments are looking for alternative sources of liquidity and to lower their cost of funding.

![Blended project by blended archetype](//images.ctfassets.net/4cgqlwde6qy0/vmQM5KnW6WuiJjQJRUeXo/b32f899b50464aded98e9c52644c7a16/Blended_project_by_blended_archetype.png)

__Technical assistance is underutilised; project preparation grant funding to support host governments, alongside standardised and bankable project documentation, is needed for scaling:__

Technical assistance can be [key](https://www.oecd.org/environment/resources/Making-Blended-Finance-Work-for-Water-and-Sanitation-Policy-Highlights.pdf) to project development, but it appears in projects less frequently than in the wider market (17% vs 32%). Others have [observed](https://www.climatepolicyinitiative.org/blending-finance-for-risk-mitigation/) the large gaps in accessing early-stage risk financing for project preparation (e.g., the [DBSA Project Preparation Fund](https://www.icafrica.org/en/project-preparation/the-fund-finder/facility/dbsa-project-preparation-fund-5/) looks to finance the preparation of infrastructure projects that fall short of the needs of the public and private sectors), with the recognition that inadequate project preparation has been among the [main impediments](https://blogs.worldbank.org/ppps/simple-way-close-multi-trillion-dollar-infrastructure-financing-gap) to attracting private financing into sectors like infrastructure. Likewise, our respondents noted the challenge posed by poorly prepared projects, the need for open and competitive tendering procedures, and the key role that MDBs and DFIs need to play in providing transaction advisory support to host governments, working with them to improve the bankable suite of standardised project documentation, and thereby helping the commercial market finance projects more easily. 

__Infrastructure projects generally don’t specify women as end beneficiaries, though awareness of how a gender lens can improve projects’ development outcomes and risk-adjusted returns is growing:__

Most projects (64% vs 36% of all transactions) target the general population as end beneficiaries, while women appear as end beneficiaries in only 8% of projects (vs 15% of all transactions). Examples of projects specifying women as end beneficiaries  include the [Café Selva Norte Project](https://www.idhsustainabletrade.com/uploaded/2020/02/LDN-Report-5.3-Peru.pdf) in Peru, which looks to improve the sustainability of local coffee value chains partly by funding the construction of a processing plant, using technical assistance to bolster female leadership and gender equality.

Become a [member](https://www.convergence.finance/member) and read the [full brief](https://www.convergence.finance/resource/2bf9fe0d-4795-425b-a45f-746ae61b8ecb/view).


Convergence’s latest data brief analyzes the 153 blended project transactions recorded by the Convergence database (representing total committed financing of USD 73.3 billion) and presents insights from interviews with key stakeholders.

Blended finance and project finance in the developing world

How can blended finance support project finance in the developing world?

*Network Voices is a series where Convergence amplifies blended finance opinions and activities from our network. *

*By the Green for Growth Fund*

The pandemic has made stark many of the challenges and inequities faced by developing markets around the world, slowing down the momentum towards achieving the United Nations Sustainable Development Goals by 2030. 

One of the challenges faced by smaller markets that has been exacerbated by the pandemic is foreign currency risk, which refers to the losses incured due to currency fluctuations.

Many of these markets have been hit harder by the pandemic because they have fewer resources to protect their economies compared to larger EU markets. They are facing the twin challenges of increased debts and reduced exports, which leaves them with a reduction in their stocks of foreign currency which then increases their risk of a budget deficit. The currency exchange risk is also higher because there is more volatility in the market. At the same time the tourist economy which many countries depend on, has all but disappeared. In 2020, Ukraine, for example, saw its [local currency depreciate almost 20% ](https://www.oecd.org/eurasia/competitiveness-programme/eastern-partners/COVID-19-CRISIS-IN-UKRAINE.pdf)against the US Dollar as its economy contracted.

To get back on track, these countries will need to manage their exposure to foreign currency risk.

__Understanding Exchange Rate Volatility__

In smaller markets where lending in foreign currency is common, businesses and households typically face a trade-off between upfront borrowing costs and exposure to exchange rate risk. Global economic uncertainty and heightened exchange rate volatility in these markets make economies sticky, slowing down lending from the biggest bank to the smallest household, both in foreign and in local currency, as neither party feels comfortable with the risks involved.

Often, businesses and households unfavourably compare the published borrowing rates for foreign currencies – which are typically lower – with their local currency and believe it would be cheaper to borrow in Dollars or Euros. For example, the average interest rate in Georgia for household/private loans in local currency can be as high as 17%, in comparison to roughly 6% in foreign currency. This decision can leave them vulnerable to economic shocks and local currency depreciation that can wipe out any benefits from a lower interest rate and lead to challenges in repaying a loan.  

Exposure to foreign exchange risk is not spread evenly across borrowers. Larger clients such as corporates might have foreign currency denominated income or can find other ways to balance or hedge their risk, while smaller firms and households, earning their income in local currency, are left exposed. 

__A new funding mechanism to address foreign exchange risk__

Addressing foreign exchange risk is critical for the [Green for Growth Fund](https://www.ggf.lu/) (GGF). GGF is an impact investment fund that mitigates climate change and promotes sustainable economic growth by investing in measures that reduce energy consumption, resource use, and CO2 emissions. GGF’s lending agreements with partner institutions can span several years, and loan periods to the end-clients can be even longer, so predicting currency exchanges on such a timescale is fraught with uncertainty.

The GGF’s new initiative offers partner banks and lending institutions access to local currency finance. This gives them the confidence to lend domestically without the risk of currency fluctuations, while simultaneously investing in a greener and more sustainable future. This is particularly important for businesses and households that would otherwise be impacted by currency considerations.

To improve access to local currency finance, GGF created a new funding mechanism, known as “L shares,” which acts as a buffer share class to absorb any losses due to the depreciation of the local currency before any other share classes are jeopardized. This takes away the exchange rate risk from the partner banks and lending institutions, spurring green finance, to help businesses and households mitigate and adapt to climate change faster. Moreover, boosting affordability will be crucial as economies recover at different rates from the pandemic, while still needing to make ambitious progress towards climate goals. 

The L shares mechanism as part of the fund’s [blended finance scheme](https://www.ggf.lu/investors) was launched in 2020 with an investment of EUR 42.5 million from the EU and the German Federal Ministry for Economic Cooperation and Development. Through these L-shares, financing in local currency plays a vital role in promoting responsible green finance and contributing to sustainable economic growth across Southeast Europe, the European Eastern Neighbourhood Region, and the Middle East and North Africa.

*GGF Capital Structure*

![GGF Capital structure](//images.contentful.com/4cgqlwde6qy0/7EJL225oeH1rjnRGokNACV/9c2f0d8b07b59fddb2d9c664ac0121f3/GGF_Capital_structure.jpg)

Additionally, the L shares sit between the junior shares (C shares) and senior shares (A and B shares), providing increased protection for the private investors who are at the ‘top of the pyramid’ and would suffer a net loss only when all other share classes are depleted. (See waterfall distribution below)

![LShare waterfall structure](//images.contentful.com/4cgqlwde6qy0/7pKzillRKq9lXJTfOrnuJ9/ea0b412943c661035a693ec8bf6d5807/LShare_waterfall_structure.png)

__Financial Institutions Eligible for Local Currency Financing__

Banks, leasing companies, and microfinance institutions that are keen to expand their green lending activities are encouraged to apply for finance in local currency and follow the existing GGF partner institutions that are already receiving such funds. As an impact investor, the GGF is dedicated to developing a diversity of partner institutions, ranging from large banks to small lenders that are embedded in local communities. Last mile clients can often be overlooked due to their modest size, but small energy efficiency loans, for example, are among the most impactful measures per their cost.

GGF combines its lending with tailored technical assistance to help partner institutions build capacity in green lending and make them effective champions for supporting climate action. As part of these efforts, several partner financial institutions are currently running awareness-raising campaigns to inform businesses and households of the benefits of borrowing in local currency, which have only been underscored by the challenges of the past year. These efforts play an important role in delivering a green recovery that places resilience and sustainable livelihoods at its heart. 

Ultimately, GGF’s use of blended finance ensures the strategic leverage of concessional capital. “Strategic” refers to mobilizing additional private capital for underserved regions or topics. It also refers to pushing innovation and employing versatile approaches to address key aspects in responsible finance. Local currency finance is one example. Supporting the ability of the local financial sector to provide businesses and households with financing in their market’s own currency means contributing to sustainable growth on both an institutional and individual level. 

*Finance in Motion is the Advisor to GGF*


Network Voices: Green financing in local currency

The opportunity to blend private capital with philanthropic and public funding has been heralded by financial heavyweights from [Blackrock ](https://www.convergence.finance/news-and-events/news/2jFhXJomA6wW4W6w2PKgPw/view)to the billionaire-backed [Breakthrough Energy](https://impactalpha.com/business-leaders-rally-to-u-s-infrastructure-bill-to-mobilize-capital-for-climate-solutions/) as a way to advance investments aligned with the U.N. Sustainable Development Goals.

Over the last few years, blended finance has grown from a niche field to a central topic at major conferences and boardrooms around the world. The conversation has moved beyond whether blended finance is a part of the solution to closing the $2.5 trillion SDG investment gap, to determining how it can be best deployed. 

A quick refresher: blended finance is the use of catalytic capital from public or philanthropic sources to increase private sector investment in sustainable development. Convergence is the global network for blended finance. According to our data, blended finance has mobilized nearly[ $160 billion](https://www.convergence.finance/blended-finance#market-size) to-date towards sustainable development. 

As blended finance becomes more prosaic and widespread, it also attracts more skeptics, and for good reason. Private sector involvement in development should always warrant close scrutiny, and the complex structures and [financial jargon](https://www.convergence.finance/news-and-events/news/4iJAtdNIAelZLSTnDuCEz9/view) that accompany blended finance transactions can make them opaque and difficult to comprehend. 

At Convergence, we don’t see blended finance as a silver bullet that will solve every development challenge. However, we know that traditional development aid will not meet the volumes required to achieve the SDGs by 2030. To do that, we’ll need the private sector, and to get the private sector, we’ll need blended finance. The money’s there; $2.5 trillion represents less than 1% of global finance markets.

To provide a bit more clarity on the role of blended finance in sustainable development, we’ve put together some responses to common critiques of blended finance that we come across.

__Critique #1: Blended finance doesn’t support low-income countries __

Most blended finance deals invest in [lower-middle income countries](https://www.convergence.finance/blended-finance#regions) rather than in low-income countries (as noted in our 2020 State of Blended Finance [report](https://www.convergence.finance/resource/1qEM02yBQxLftPVs4bWmMX/view), 56% of blended finance transactions have targeted lower-middle income countries, while 26% have targeted low-income countries). That’s because it should only be used for transactions where there are underlying revenues. This is reflected in the blended finance market; blended finance has [most commonly](https://www.convergence.finance/blended-finance#sectors) been applied to commercially oriented sectors, such as financial services and energy (i.e. renewable and clean energy projects, not extractives). 

We believe that most Official Development Assistance (ODA) should be distributed traditionally; that is, to support basic needs such as health and education, especially for those in Least Developed Countries and fragile and conflict affected states. However, in places that still need development aid but have the potential to attract investment, using a small allocation of ODA to draw in that investment frees up more ODA to be used (in pure grant form) in the places that really need it.  

As blended finance becomes more prominent, there’s a misperception that a huge amount of traditional ODA is being diverted towards it. However, ODA being channeled towards blended finance and private sector instruments was only [$3.4 billion](https://devinit.org/blog/blended-finance-oda-best-use-limited-resource/) in 2019 – a fraction (~1.9%) of the [$158 billion](https://www.oecd.org/dac/financing-sustainable-development/development-finance-data/ODA-2019-detailed-summary.pdf) in total ODA provided by member countries of the Development Assistance Committee (DAC) that year. We hope to get this number to 5%. This additional funding going into blended finance, if used strategically, could then draw in many times that amount in private capital, which could mean hundreds of billions dollars more towards the SDGs. 

__Critique #2: Blended finance initiatives lack transparency and accountability__

There is widespread recognition in the industry of the importance of data sharing, simplifying structures and boosting transparency and impact reporting (particularly ex-post) to increase understanding and achieve scale. 

However, the lack of transparency on impact outcomes reflects a larger issue in the official development community. For example, the [Aid Transparency Index 2020 report](https://reliefweb.int/report/world/aid-transparency-index-2020-0), by the Publish What You Fund campaign, found that only a small minority of donors published the results of their projects, and even fewer published project reviews and evaluations.

To improve transparency and accountability, it is critical that donors demand accountability when deploying their capital. That accountability comes in the form of metrics and reporting on financial and impact outcomes.

__Critique #3: There is no proof of effectiveness or impact__

We disagree. The goal of blended finance is to increase funding towards the SDGs and all blended finance transactions involve the presence of development actors, whether it be a government or a philanthropic foundation. Blended finance transactions are therefore subject to the same rigorous approval processes and due diligence practices, including those used to assess impact, as other development projects, including those funded by ODA. No donor, whether public or philanthropic, places scarce resources into private-sector-led financial constructs without asking hard questions about value for money. Ultimately, this brings us back to the answer above, there simply isn’t enough transparency around effectiveness and impact in the larger development community. 

Finally, at Convergence we like to think of [blended finance impact on two levels](https://www.convergence.finance/news-and-events/news/VFvwRWHnMi9R2FP3t3RU3/view): the impact related to the underlying activities financed (e.g., improving the resilience of smallholder farmers), and the impact of the blended finance approach itself (e.g., mobilization of additional capital for the SDGs, demonstrating the viability of new markets and new business models to private investors). 

__Critique #4: Blended finance can distort markets __

All ODA and philanthropic funding, whether operating via traditional channels or used in blended finance, carries the risk of market distortion, since non-market-priced capital is entering the market.

To reduce market distortion, blended finance must adhere to the principles of minimal concessionality and additionality. What this means is that concessional financing should only be used in cases where a transaction is outside the risk / return mandate of private investors, and where concessional financing can bring in additional dollars that would not otherwise be invested (i.e. additionality). 

Organizations such as the OECD have determined [principles on minimum concessionality](https://www.oecd-ilibrary.org/development/the-oecd-dac-blended-finance-guidance_ded656b4-en?_ga=2.75757138.69152816.1624655236-418862069.1621539456) to help donors assess the appropriateness of blended finance and concessional financing. 

__Critique #5: The complex governance of blending erodes local ownership and accountability__

Except for regional development banks, the [most common funders](https://www.convergence.finance/blended-finance#investors-overall) in blended finance are development organizations in North America and Europe. This reflects their outsized role in the development finance space more generally. At the same time, most commercial investors in blended finance are also from developed countries. That’s because the scale of the private sector in developed economies is significant and the money is looking for places to go. 

However, local participation of funders and stakeholders is imperative to ensure that blended structures are appropriate for the given market, and thus improve blended finance’s overall effectiveness and efficiency. As blended finance funds economic activities that help grow domestic economies and as governments in the developing world increasingly embrace private sector mobilization as a key component of their development targets, our expectation is that more local investors will start participating in blended finance deals. In addition, organizations like Convergence are supporting capacity building and education in boosting local participation in blended finance.

The point of blended finance is to mobilize private capital, whether that’s domestic resource mobilization or cross-border mobilization. Examples of blended structures that have attracted local financing include the Acorn Holdings Corporate Bond launched in 2020 to finance the construction of student housing in Kenya, and achieved a dual listing on the International Securities of the London Stock Exchange (LSE). The bond received a guarantee from GuarantCo, an intermediary whose mandate is to provide catalytic guarantees that attract local currency financing, to adjust the risk-return profile for private investors. Blended structures such as these promote participation from local investors and support the development of local capital markets. 

*Originally published on ImpactAlpha, access [here](https://impactalpha.com/five-critiques-of-blended-finance-and-five-responses-from-convergence/)*

Convergence responds to five common blended finance critiques, including lack of accountability, distorting markets, and much more. 

Five common blended finance critiques

Five critiques of blended finance – and five responses from Convergence

We are excited to welcome two new board members!

[Victoria Sabula](https://www.convergence.finance/about/governance/5GBixD6CQhIOFjdvX3gVHs) is the CEO at Africa Enterprise Challenge Fund (AECF), where she leads strategic efforts to achieve a prosperous and enterprising rural Africa. AECF provides catalytic funding, advisory support and market linkages to early and growth stage businesses in the Agriculture and Renewable Energy sectors across sub-Saharan Africa.

[Rachna Saxena](https://www.convergence.finance/about/governance/3ypCnbPXb9Ea2XWElO5o5L) is a Partner at Dalberg Advisors, where she co-leads the firm’s Finance and Investment Practice as well as its Justice, Equity, and Economic Mobility practice.

They will be joining [David Creighton](https://www.convergence.finance/about/governance/37unfziubYUsMaEUM0cmU6), Senior Advisor, EMPEA and Founder, Cordiant Capital Inc. (Chair); [Jim Bildner](https://www.convergence.finance/about/governance/2urd6KRClKEG8yMcIgakA0), CEO, Draper Richards Kaplan Foundation; [Phil Bennett](https://www.convergence.finance/about/governance/4fmoxGGiQ3CA0Kx9BM2d8t), Senior Advisor, Endeavor; and [Will Poole](https://www.convergence.finance/about/governance/6NPdjd5rNKSu8IS4e0E88), Managing Partner and Co-Founder, Capria.


Victoria Sabula and Rachna Saxena have joined Convergence's board. 

Convergence welcomes new board members

Convergence welcomes new board members Victoria Sabula & Rachna Saxena

The Catalytic Capital Consortium (C3) announced that its C3 Grantmaking program has awarded $1.2 million in grants to an initial group of leading impact investing networks: Convergence, the Global Impact Investing Network, Mission Investors Exchange, and Toniic. As the first grants made by C3 Grantmaking, the funding will help these organizations increase the knowledge, awareness, and use of catalytic capital among a diverse set of investors globally, with a focus on the identification and diffusion of best practices.

Launched in 2019 by three strategic partners, the John D. and Catherine T. MacArthur Foundation, The Rockefeller Foundation, and Omidyar Network, the Catalytic Capital Consortium is a global initiative to help the impact investment field realize its full potential for creating inclusive growth, achieving equity, improving health, and fighting climate change, along with reaching the United Nations’ Sustainable Development Goals. Together, the Catalytic Capital Consortium strategic partners are jointly funding C3 Grantmaking, a program housed at the [New Venture Fund](https://newventurefund.org/). 

C3 Grantmaking supports research, networking, peer learning, and other field building activities intended to help increase the amount, effectiveness, and impact of catalytic capital investments in the field. It does this by building a stronger evidence base about the role and value of catalytic capital and equipping investors with the knowledge and tools they need. With a focus on catalytic capital investments made by foundations, development finance institutions, family offices, and ultra high net worth individuals, the program will award approximately $10 million in grants over the next three years.

Today’s awards are the first grants made by C3 Grantmaking. The next set of grants will be announced later this year and will focus on projects that show why and where catalytic capital is needed, how it has been used, and its potential impact. 

Working with their respective investor communities, each other, and the field, the grantees will identify and share catalytic capital best practices, develop informational resources, host convenings, and undertake other activities that strengthen and expand the use of catalytic capital throughout the global impact investment field.

__Organizations Receiving Grants__ 

Convergence 
Convergence is the global network for blended finance, generating blended finance data, intelligence, and deal flow to increase private sector investment in developing countries.

“We will draw on our deep connections in the development finance community to act as a bridge between them and C3 on the critical issue of acting catalytically, of achieving impact beyond any single institution’s own actions,” said Joan Larrea, CEO of Convergence. 

[Global Impact Investing Network ](https://thegiin.org/)
The Global Impact Investing Network (GIIN) is the global champion of impact investing, dedicated to increasing its scale and effectiveness around the world. The GIIN builds critical infrastructure and supports activities, education, and research that help accelerate the development of a coherent impact investing industry.

“As global crises mount, impact investing—and particularly, investors leveraging catalytic capital—must play an even greater role in helping to address the world’s most pressing challenges,” said Amit Bouri, Co-Founder and CEO of the Global Impact Investing Network. “The Catalytic Capital Consortium’s support will play a critical role in helping the Global Impact Investing Network explore the ways that catalytic capital can amplify the effectiveness of impact investing. This funding also helps to unlock emerging investment models that will extend the reach of the industry’s impact. In particular, we are incredibly excited to study practices among institutional asset owners in the deployment of catalytic capital in the realm of climate solutions.”

[Mission Investors Exchange](https://missioninvestors.org/) 
Mission Investors Exchange (MIE) is the leading impact investing network for foundations dedicated to deploying capital for social and environmental change. 

"Mission Investors Exchange is thrilled to partner with the Catalytic Capital Consortium to help expand the use and impact of catalytic capital investing among our network of foundation members and the broader impact investing community," said Matt Onek, President and CEO of Mission Investors Exchange. "The support from C3 Grantmaking will enable MIE and our network to share best practices and implement new strategies to bring flexible, patient, and risk-tolerant capital to our most critical social and environmental issues, as well as catalyze change to build more equitable and just communities."

[Toniic ](https://toniic.com/)
Toniic is a global community of high net wealth individuals, family offices, and foundations seeking deeper positive net social and environmental impact with their assets.

"Impact investors are clustering at the ‘market rate’ end of the spectrum, leaving many high impact opportunities underfunded," says Adam Bendell, CEO of Toniic. "This project is supporting a deep dive with our members to understand how to foster greater deployment of catalytic capital and to share those learnings with the public."

__Catalytic Capital Consortium Strategic Partners__

[John D. and Catherine T. MacArthur Foundation](https://www.macfound.org/)
The John D. and Catherine T. MacArthur Foundation supports creative people, effective institutions, and influential networks building a more just, verdant, and peaceful world. MacArthur is placing a few big bets that truly significant progress is possible on some of the world’s most pressing social challenges, including advancing global climate solutions, decreasing nuclear risk, promoting local justice reform in the U.S., and reducing corruption in Africa’s most populous country, Nigeria. In addition to the MacArthur Fellows Program and the global 100&Change competition, the Foundation continues its historic commitments to the role of journalism in a responsive democracy as well as the vitality of our headquarters city, Chicago. In addition, MacArthur is working to build the field of impact investing and provide catalytic capital to address social and environmental challenges around the world.

[The Rockefeller Foundation](https://www.rockefellerfoundation.org/)
The Rockefeller Foundation is a pioneering philanthropy built on collaborative partnerships at the frontiers of science, technology, and innovation to enable individuals, families, and communities to flourish. Rockefeller works to promote the well-being of humanity and make opportunity universal.  Their focus is on scaling renewable energy for all, stimulating economic mobility, and ensuring equitable access to healthy and nutritious food.  For more information, sign up for their newsletter at rockefellerfoundation.org and follow them on Twitter @RockefellerFdn.

[Omidyar Network](https://omidyar.com/)
Established by philanthropists Pam and Pierre Omidyar, Omidyar Network is a social change venture that has committed more than $1 billion to innovative for-profit companies and nonprofit organizations since 2004. Omidyar Network works to reimagine critical systems and the ideas that govern them, and to build more inclusive and equitable societies in which individuals have the social, economic, and democratic power to thrive. 


Convergence is thrilled to be a grantee in the Catalytic Capital Consortium's (C3) Grantmaking program, which awarded $1.2 million in grants to an initial group of leading impact investing networks.

Convergence awarded grant by Catalytic Capital Consortium

Catalytic Capital Consortium Announces $1.2 Million to Leading Impact Investing Networks 

*Blended finance can improve the quality of India's spending on healthcare and education; and bring the country closer to achieving its development goals.*

As India works through the health, financial, and socio-economic implications of COVID-19, it is evident that the country needs to dramatically increase and improve the quantity and quality of spending on healthcare and education. This increased investment will be critical to maintaining its development trajectory and delivering inclusive, poverty-alleviating growth.

In the immediate term, emergency government spending on social welfare and traditional development aid are crucial to minimising the impact of COVID-19. But what about the longer-term? How can the structural weaknesses in the healthcare and education system—made stark by the pandemic—be changed in the long run?

Blended finance offers one possible pathway to this.

__What is blended finance?__

Blended finance is the use of [catalytic capital](https://ssir.org/articles/entry/what_investors_need_to_know_to_embrace_catalytic_capital) from public and/or philanthropic sources to increase private sector investment in developing countries towards sustainable development. Simply put, catalytic capital accepts a reduced rate of return (ie higher risk) to generate a positive impact. In doing so, it makes third-party investments (that would otherwise not have been possible), possible.

Blended finance addresses the two main barriers that private investors face when considering investments in developing countries: a) high perceived and real risk and, b) poor returns for the risk taken compared to other investments. The presence of public and/or philanthropic capital within a transaction improves its risk-return ratio, making these investments more attractive for commercial investors.

Over the past few years, India has been amongst the most targeted countries as far as blended finance transactions are concerned. At Convergence, where I work, we maintain a database of [historical blended finance deals](https://www.convergence.finance/blended-finance#regions). According to this database, since 2010 approximately 13 percent of all transactions have targeted India. In keeping with global trends, these transactions have primarily targeted the energy, financial services, and agriculture sectors.

__Improving healthcare in India with blended finance__

The setback of COVID-19 for[ Sustainable Development Goal](https://sdgs.un.org/goals) (SDG) 3 (Good Health and Well-Being) has been obvious. India was woefully unprepared due to persisting challenges such as a relatively [weak health system](https://www.bbc.com/news/av/world-asia-india-57201304), lack of quality infrastructure, and substandard service delivery.

A good example of a blended finance transaction that is seeking to address these systemic issues is the [Utkrisht Development Impact Bond ](https://www.convergence.finance/resource/93d7cc2b-dbdd-4b61-b83f-8f9bf9a2b242/view)(Utkrisht DIB). This was the first of its kind in the healthcare sector globally; its development was supported by Convergence’s [Design Funding Programme](https://www.convergence.finance/design-funding).

The Utkrisht DIB seeks to reduce maternal and newborn deaths by using a pay-for-success model where a private investor fronts the cost of an intervention. In this case, the [UBS Optimus Foundation](https://www.ubs.com/global/en/ubs-society/philanthropy/optimus-foundation.html) (using UBS client funds) provides initial working capital to the service providers [Population Services International](https://www.psi.org/) and [Hindustan Latex Family Planning Promotion Trust](https://hlfppt.org/). This, in turn, enables the two organisations to work with private healthcare facilities in Rajasthan to improve the standard of quality and care. Following this, the results of the intervention are measured by clear, predetermined metrics (ie. reduction in maternal and newborn deaths). Finally, if the intervention achieves pre-agreed outcomes, an outcome funder—in this case [USAID](https://www.usaid.gov/) and [MSD for Mothers](https://www.msdformothers.com/)—repays the investor and provides a return on the investment. If outcomes are not achieved, the investor generally stands to lose not only the potential returns but also the principal. From the outcome funder’s perspective, money is disbursed only against documented results.

An interesting aspect of this transaction involves the role of the Government of Rajasthan, which participates in the oversight of the impact bond. If the programme is successful, the Rajasthan government will likely become the outcome funder for the next phase of interventions. Assuming a consistent improvement in the quality of care provided by private healthcare facilities, the programme will likely save an estimated 10,400 lives over five years.

The Utkrisht DIB transaction template is currently being replicated in other areas of the healthcare sector in India. The Pimpri-Chinchwad Municipal Cooperation in Maharashtra and the [United Nations Development Programme](https://www.undp.org/) (UNDP) have [recently](https://economictimes.indiatimes.com/news/politics-and-nation/undp-and-pimpri-chinchwad-municipal-corporation-to-co-create-indias-first-social-impact-bond/articleshow/80012354.cms) signed an MoU for a blended finance transaction. Through it, private funds will enable the municipality to upgrade its healthcare infrastructure, build its staff’s capacity, and establish protocols that can improve the quality of healthcare.

__Narrowing the access to education gap__

The COVID-19 pandemic has also exposed the inadequacies and inequities in India’s education system and impacted the achievement of SDG 4 related to Quality Education. There is a misalignment between needs and resources available, such as having access to broadband and computers for online education. Such gaps provide an opportunity for blended finance transactions to fund the extraordinary efforts required to plug them.

Following the model of the results-based finance mechanism described above, the [British Asian Trust](https://www.britishasiantrust.org/) (BAT) is currently supporting a blended finance transaction in India—[the Quality Education India (QEI) Development Impact Bond](https://qualityeducationindiadib.com/). The QEI brings in additional funds to improve the quality of education delivery through teacher and headteacher training, whole-school development, and educational technology. In doing this, it seeks to improve the quality of literacy and numeracy learning for more than 200,000 primary school children from marginalised communities across four locations (Delhi, Gujarat, Maharashtra, and Uttar Pradesh).

Additionally, in order to address a shortage of skilled healthcare workers and increasing unemployment, the British Asian Trust is also working with the [National Skills Development Corporation ](https://nsdcindia.org/)(NSDC) to launch a similar mechanism to finance innovative skills training models to increase employment for Indian youth during post-COVID-19 recovery.

Another example of how blended finance can be used to support the education sector (especially in the context of COVID-19) is [Varthana](https://varthana.com/), a non-banking finance company (NBFC) that supports private schools for low- and middle-income students. It provides loans to students to attend the schools and loans to private schools so they can offer a higher quality of education. As there is an enhanced perception of risk with respect to their underlying borrowers (the students and private schools), the organisation secured a USD 5 million guarantee from the [United States Development Finance Corporation](https://www.dfc.gov/) (US-DFC), which helped them mobilise 10 times more capital, and scale their intervention.

Even prior to the pandemic, the blended finance market within India was growing, with increasing recognition that collaboration between public, private, and philanthropic capital was critical to unlocking the additional finance required to achieve the SDGs. The crisis precipitated by COVID-19 has put this into even sharper relief. India has suffered a significant setback in achieving its SDGs, but now there is an opportunity to learn from the weaknesses exposed by the pandemic. Though not a silver bullet, blended finance offers India a unique framework for collaboration. It is one way to raise the additional private capital needed for development and to deploy it as productively as possible so that we can build back better.

*This article was originally published on India Development Review and can be viewed [here](https://idronline.org/article/philanthropy-csr/how-blended-finance-can-support-indias-covid-19-recovery/).*

 Blended finance can improve the quality of India's spending on healthcare and education; and bring the country closer to achieving its development goals.

How blended finance can support India’s COVID-19 recovery

The United Nations (UN) Joint Sustainable Development Goals (SDGs) Fund is a unique entity in the UN system. It provides catalytic grants to UN country teams and their partners to develop and implement innovative blended finance initiatives. 

The Fund has partnered with Convergence to identify which initiatives receive funding and to provide technical assistance and support to applicants throughout the process, including coaching and mentoring to deal sponsors, investor matching and facilitation, and opportunities for peer-to-peer learning. 

Earlier this year the Joint SDG Fund and Convergence announced [$41 million in commitments ](https://www.convergence.finance/news-and-events/news/30u4T2V4OOHIImsclOFQ9k/view)to catalyze strategic financing to accelerate the SDGs. Convergence led a rigorous evaluation process and ultimately recommended proposals from __Fiji__, __Indonesia__, __Malawi__, and __Uruguay__ for funding. The Joint SDG Fund is also currently working with an additional [12 countries](https://www.jointsdgfund.org/where-we-work) to nurture new solutions, including in __North Macedonia__, __Madagascar__, __Barbados__, __Kenya__, and __Suriname__. Since 2020, 28 countries have received design grants to study the feasibility of 59 financial instruments, spanning bonds, equity funds and credit enhancement facilities.

We spoke to Lisa Kurbiel, Head of the Joint SDG Fund, about the impact of Covid-19 on the Fund’s objectives, its blended finance initiatives, how the Fund measures the impact of its work, and much more. 

__What are some interesting or unexpected challenges you’ve faced as a blended finance actor in the UN system?__

I think what is so unique about the Joint SDG Fund is that for the first time the UN is directly de-risking transactions, enabling private sector participation and investment in emerging markets. So, the first challenge is really matching the pipeline of ideas and solutions that are created at the country level, with community involvement and multi-stakeholders, with the needs of investors, including mainstream investors. 

Another obstacle is the legwork required to harness investor excitement around the SDGs and channel it into concrete impactful solutions that many countries absolutely need. The other is resource mobilization, how can the UN mobilize grants from the public and philanthropic sector to offset the risks for the private sector partners that we hope to bring in. We're finding resource mobilization particularly difficult given the impacts of the Covid-19 pandemic and that's stalling our capacity to expand and to bring more countries into our pipeline.

__Can you expand a bit more on how Covid-19 has affected your operations?__ 

The Joint SDG Fund flourishes with the generous support of member states. When the pandemic struck there were tremendous demands on member states to support responses to Covid around the world as well as in their own home countries. This naturally put pressure on overseas development assistance budgets, and because of economic contraction and recessions in many countries due to the pandemic, there was just less funding available overall. As we enter the recovery phase of the pandemic, as we try to build forward and build greener, and get back on track, the challenge is that there's a smaller envelope then there was two years ago and so that's really why blended finance and attracting the private sector is more critical now than ever.

__Can you tell us about a couple blended finance initiatives funded by the Joint SDG Fund?__ 

We’re very excited about our first four initiatives in Fiji, Indonesia, Malawi, and Uruguay. I’ll start with our [Fiji programme](https://www.jointsdgfund.org/programme/investing-coral-reefs-and-blue-economy), where we have a coral reef fund which aims to protect the country’s coral reef ecosystems. The programme brings together an international investment manager, local conservation actors, financial institutions, the local government, and the UN system. The initial line-up is of three blended finance transactions, respectively covering eco-tourism, organic fertilizer production and waste management. The first will make 10 Locally Managed Marine Areas market ready to private investment through a special purpose vehicle structure and viable business models featuring eco-tourism, sustainable fisheries, and blue carbon credits. The second is a $14 million deal where private and public capital will be blended to fund a sanitary landfill before replication across the country. The third is a direct investment in an eco-fertilizer factory. In all three transactions, the aim is to reach scale, what we’re trying to do is construct a pipeline of bankable projects that are linked back to those reefs, which local communities rely on for their economic livelihoods. Over the course of four years the target is to attract $50 million of private capital into the local blue economy.  

I’ll also talk about the [Malawi programme ](https://www.jointsdgfund.org/programme/build-malawi-window-specialized-structured-blended-finance-vehicle-agribusiness)which is the first impact fund supported by the Joint SDG Fund, and it specifically focuses on creating jobs and supporting small businesses in the country’s undercapitalized agriculture sector.  It’s a blended finance vehicle that will mobilize $35 million, it will invest patient capital into promising businesses that will then allow them to increase their production capacity to serve a broader customer base and of course improve efficiency and effectiveness. The UN is supporting the technical assistance facility that will help source the pipeline, assisting the businesses to be ready to receive the funding, and then of course managing and reducing any risks in that regard. So far, the program is expected to obtain $28 million in additional investment beyond our first loss contribution and we have a fund manager - Bamboo Capital Partners - that will be establishing and capitalizing the fund by doing additional outreach to DFIs and local pension funds and other investors later this year. Most interestingly is the potential attraction of local pension funds in similar deals.

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

We are currently engaging with the Organisation for Economic Co-operation and Development (OECD) to be one of the very first pilots for their [Impact Standards for Financing Sustainable Development](https://www.oecd.org/publications/oecd-undp-impact-standards-for-financing-sustainable-development-744f982e-en.htm), which were developed by the UN Development Program. We are looking to adopt these standards across our portfolio and aim to use their sector-based standards where available, while also using the value added of the UN in terms of impact management and being an outcome guarantor. In most of the transactions, UN agencies are co-designing the impact management system of the financial instruments proposed. We hope to streamline a whole new generation of impact measurement systems that can contribute to the wider blended finance community.

__How do you see Joint SDG Fund evolving?__

Our timeline for the Joint SDG Fund is through 2030 and we already see momentum in the [+300 plus ](https://sdginvest.jointsdgfund.org/investor-advisory-groups)partners that we’re engaging through our global investment advisory groups or at the country level. In the group you can find impact funds such as Mirova’s Sustainable Ocean Fund of Mirova, many local banks and pension funds (e.g. in Uruguay and Malawi), as well as commercial investors such as Rabobank, Credit Suisse, BNP, Allianz, and Société’ Générale. Our goal is to have proof of concept with our initial pipeline of the countries where we’re working now and then to expand from there. We have high expectations for replenishment of the fund, the target set for us is $300 million annually and we're expecting to exceed that, so I would say we're looking for exponential growth, we're looking to be a credible investment partner, and we want to keep our focus on the impact to ensure that all SDG investments really do have transformational impact.

__Based on your experience in blended finance to date, what gaps do you see in the market that need to be filled?__

We're seeing tremendous growth in committed capital when it comes to impact funds and facilities, it seems like every month there's another type of fund that's focused on the oceans, focused on green energy, etc. This is all extremely powerful and exciting, but what is really the challenge is fundraising for the grant element of the equation, because for blended finance to work you do need that concessional capital to de-risk the transaction and to help expand the work and ensure that the technical assistance, the structuring, and the legalities can really be catered to. So, for us, we’re looking at how we can bring in more grant money to ensure that momentum for blended finance, for investment in the SDGs, can be maintained and we hope that part of your membership can be part of the answer to that challenge.


Convergence spoke to Lisa Kurbiel, Head of the Joint SDG Fund, about the impact of Covid-19 on the Fund’s objectives, its blended finance initiatives, how the Fund measures the impact of its work, and much more. 