The Financiera de Desarrollo Nacional (FDN) is Colombia’s infrastructure development bank, offering innovative products and services to attract resources that facilitate the private sector’s participation in development projects in Colombia. They engage in the pre-investment phase to ensure a better investment climate and a quality pipeline of projects that are fiscally and financially viable, and provide funding for projects in the infrastructure sectors.
We spoke with Enrique Cadena, Vice President of Structured Finance at FDN about their priorities, the effects of diminishing foreign aid budgets, how they engage in blended finance, the opportunities they see for blended finance in Latin America, and more.
Tell us about FDN. What are key priorities for the organization and what are you focusing on right now?
FDN is a mixed-capital institution, majority-owned by the government. We combine public purpose with private sector discipline, operating with technical independence, strong governance, and a long-term development vision. Our mission is to close financing gaps, structure strategic projects, and mobilize capital to build a more sustainable and inclusive country.
We work across two complementary fronts. First, through project structuring, we turn complex ideas into bankable projects by designing robust technical, legal, and financial frameworks that unlock investment. And second, through project financing, we provide tailored solutions that respond to each project’s unique risks and development impact, ensuring viability and scale.
Over the past decade, FDN has played a catalytic role in some of Colombia’s most transformative infrastructure initiatives. From supporting the landmark 4G highway program—Latin America’s largest road infrastructure effort—to leading the structuring and co-financing of Bogotá Metro Line 1, we have helped reshape how infrastructure is planned, financed, and delivered in the country.
In recent years, based on our experience in project finance and project structuring, we are trying to replicate this experience in sustainability projects, especially in small and utility scale renewable energy, water, and telecommunications. Today, our key priorities include mobilizing concessional capital from public and philanthropic partners, alongside FDN’s own resources to unlock investment in emerging sectors, particularly renewable energy and the energy transition (small and utility scale), while also crowding in private and institutional investors to scale sustainable infrastructure.
With deep technical expertise and market credibility, FDN has become a regional reference in sustainable infrastructure finance. We see blended finance not just as a tool, but as a catalyst that allows us to combine public purpose, private capital, and concessional resources to turn complex challenges into opportunities for development.
How do you engage in blended finance? Can you describe one or two blended finance transactions that FDN has been involved in?
FDN is committed to advancing innovative financial structures that optimize financing schemes and catalyze private capital mobilization. A recent flagship initiative is the structuring and financing of an innovative project to deploy individual solar photovoltaic systems for vulnerable households in La Guajira—one of the regions with the highest levels of social inequality in the country. The project provides reliable electricity access to communities historically excluded from basic energy services, contributing to the long-term transformation of one of Colombia’s most underserved territories.
This transaction was executed through a blended finance structure that combined concessional funding from the Climate Investment Funds (CIF), channelled through the Inter-American Development Bank (IDB), with a risk-mitigation instrument provided by FDN. This approach unlocked private investment and established a scalable, replicable framework for financing projects with meaningful social and environmental impact.
Another illustrative example is a solar initiative developed in partnership with the Tayrona Indigenous community. A defining element of this project is the active participation of the community not only in its development but also as equity investors in the solar park,demonstrating a model of inclusive ownership and co-creation that strengthens social license and long-term sustainability.
Both transactions used blended finance structures combining concessional CIF resources, channeled through the IDB, with FDN’s risk-mitigation instruments. These structures successfully mobilized private capital and reinforced the viability of deploying similar models across high-impact, community-centered infrastructure projects.
How do you measure the impact of blended finance transactions?
FDN measures the impact of blended finance transactions through multiple lenses, aligned both with our institutional strategic objectives and the requirements of concessional resource providers. Our impact assessment framework typically incorporates financial, environmental, and social dimensions.
From a financial and risk perspective, we evaluate the level of private capital mobilized, the replicability of the structure across other projects or sectors, improvements in the project’s credit quality, and enhancements in financing conditions that help make projects bankable. From an environmental perspective, we assess indicators such as avoided CO₂ emissions, new installed renewable energy capacity (MW), and the deployment of low-carbon technologies—for instance, the number of electric buses incorporated into fleets.
From a social perspective, we measure the number of beneficiaries reached, jobs generated, and the extent to which vulnerable or underserved populations benefit , among other relevant indicators.
What role do you see blended finance playing in financing infrastructure projects in LAC?
Latin America and the Caribbean (LAC) is among the regions with the greatest need for sustainable infrastructure investment to enhance social well-being and support long-term economic growth. While the region has demonstrated strong capacity to generate well-structured, high-impact, and financially attractive projects in recent years, it continues to capture a relatively small share of global blended finance flows despite these favourable conditions.
In this context, blended finance has a critical role to play in helping the region unlock greater private sector participation in strategic sectors such as energy, mobility, education, and health. By addressing key barriers—including perceived risk, limited track record in emerging sectors, and affordability challenges—blended finance can help close financing gaps and enable more transactions to reach financial close.
Looking ahead, LAC has the potential to assume a stronger leadership role, not only by developing a robust pipeline of sustainable infrastructure projects but also by designing and executing blended finance structures that mobilize private capital at scale. This will ultimately allow the region to accelerate investment, expand access to essential services, and deliver broader social and environmental impact.
As a development bank, has the trend of countries diminishing their foreign aid budgets affected FDN’s operations?
Yes, reduced foreign aid envelopes have had a tangible effect. Concessional and grant-based resources remain essential for infrastructure development in Colombia, especially for upstream work such as project preparation, capacity building, and structuring support that makes projects bankable. One concrete example was the closure of USAID resources that had already been planned for certain topics and projects, aimed at leveraging and mobilizing public and private finance to support Colombia’s climate adaptation and mitigation targets. This created an immediate gap that required operational reprioritization and rapid mobilization.
However, we also viewed the shift as a strategic opportunity. It accelerated our efforts to diversify funding sources and deepen relationships beyond traditional donors. We moved quickly to engage alternative partners , like the Climate Investment Funds, the Green Climate Fund, as well as other multilateral and bilateral agencies, and explore complementary instruments, reducing reliance on any single channel. In short, while the international aid environment is clearly changing, we are adapting proactively—using this moment to broaden our coalition of allies and to build new bridges with a wider ecosystem of public, philanthropic, and private actors.
What are some opportunities you see for blended finance in Latin America? What are some challenges?
Latin America presents significant opportunities for blended finance because the region combines large infrastructure and climate investment needs with limited fiscal space. The strongest near-term opportunities are in sectors with clear development outcomes and scalable cash flows—such as renewable energy and grid upgrades, resilient transport, water and sanitation, nature-based solutions, and social infrastructure—where catalytic funding can de-risk projects and crowd in private capital.
At the same time, the market context is shifting quickly. As some traditional aid budgets tighten, the region is seeing “newcomers” in blended finance and development support. Gulf countries are increasingly visible in these schemes, and China has strengthened its presence in recent years. While some funding sources may be declining, others are emerging, creating a real opportunity to diversify financing sources and instruments, both concessional and non-concessional.
The key challenge is execution. This includes understanding evolving investor requirements, aligning incentives across partners, and ensuring that projects are truly bankable. In many cases, the decisive bottleneck is upstream—insufficient pre-investment preparation, weak risk allocation, limited data, and inconsistent impact frameworks. The priority is to build high quality, high impact pipelines from the earliest stages so projects become attractive, investable opportunities for a broader range of financiers.
How do you see FDN’s blended finance activities evolving in the future?
FDN’s solid track record in resource mobilization, project structuring, and execution, positions the institution as a strategic partner for the designing blended finance solutions that enable high impact infrastructure projects. Recently, in a single year, FDN deployed concessional resources originally planned for disbursement over a five-year horizon—demonstrating the institution’s operational agility, execution capacity, and robust pipeline of viable projects.
Looking ahead, FDN aims to deepen and expand its role in the blended finance ecosystem, strengthening its leadership in Colombia while positioning itself as a regional benchmark for innovative, scalable, and high-impact blended finance transactions.
Our corporate strategy explicitly recognizes blended finance as a core pillar for achieving our development mandate. FDN will continue strengthening its capacity to design catalytic financial instruments, collaborate with concessional resource providers, and mobilize private capital toward sectors with high economic, social, and environmental impact. Through this approach, we expect to scale up blended finance operations, replicate successful structures across multiple sectors, and contribute to bridging the region’s infrastructure and climate investment gaps.
