There are trillions of dollars worth of profitable sustainable investment opportunities in developing countries, and there is latitude for at least USD 1.3 trillion of private investment per year. The United Nation Conference on Trade and Development (UNCTAD) has calculated that if we are able to achieve the SDGs, there is about an annual USD 2.5 trillion of financing gap in investments that can be uncovered for low-and middle-income countries. A combination of blended finance instruments, sewn comprehensively and in partnership with key stakeholders, can be very effective, both in terms of mobilizing international capital for development countries and mobilising more domestic capital for businesses.
In reality, there are a number of bottlenecks that prevent the flow of investment to developing countries. This report reviews a number of reasons why it has been so difficult to attract sufficient private capital to low and middle-income countries, as well as recommendations on how development financial institutions can effectively play a role in mobilizing international private capital. One of the key takeaways include building partnerships in order to exploit synergies and have greater impact. Development cooperation with other financial players will allow different parties to use complementary measures to achieve considerably more together.