Better Blending: Making the Case for Transparency and Accountability in Blended Finance

This paper explores integrity issues that might arise at various stages of the blended finance project cycle. It highlights four key areas where transparency and accountability of blended finance should be strengthened – 1) disclosures, 2) standards and information sharing, 3) grievance mechanisms, and 4) incentives and upward versus downward accountability – with a particular focus on the role of DFIs as project mediators. The paper provides tangible recommendations for DFIs to improve their integrity management systems, ensure transparent and competitive tendering processes, conduct robust due diligence on potential partners, and develop open and accessible grievance mechanisms. It also stresses the need to ensure that blending is first and foremost about development outcomes; where the profit motive becomes the end of blending rather than just the means, the integrity risks outlined above are likely to be heightened.