Strengthening the Local Dimension of Blended Finance

The primary research question this note addresses is how development finance organizations are adapting to country conditions. The paper provides recommendations for enhanced local approaches, which would in turn, lead to expanded financing opportunities. Many blended finance projects have strong local ownership, responding directly to local demands, resulting from broad consultations, and entailing explicit positive spill-overs at the local level. These provide opportunities to learn from good practice. The analysis also reveals that while all blended finance projects stem from local development considerations, they may be generated from external institutions or follow a standardized approach, and with insufficient considerations for local context and dynamics. They may also be client-driven, but with little consultation with local stakeholders.