Latin America and the Caribbean (LAC) is the region most affected socioeconomically by COVID-19, with FDI flows plummeting by 45% in 2020. The pandemic has exacerbated pre-existing socioeconomic issues like low productivity, high inequality and informality, and deficient public services and institutions. Nonetheless, the region remains a popular area of interest for blended finance practitioners, and blended finance can play a pioneering role, working alongside local governments by deploying catalytic capital into emerging segments and pockets of competitiveness, paving a road for private capital to follow.
This brief analyzes how blended finance approaches have been deployed in LAC to date, presenting insights from interviews conducted with industry stakeholders. The Convergence database has recorded 138 blended transactions targeting South America, Central America, and the Caribbean in part or in full, representing aggregate committed financing of $19.7 billion.