Blended finance is most relevant for investments with high sustainable development impact that are not attracting private investment but still have a solid business rationale and potential cash flows. While blended finance can be an option to support post COVID-19 recovery efforts, a new approach to blended finance is necessary to improve its impact. This approach should include: Developing country-led blended finance analysis, within an Integrated National Financing Framework (INFF), to guide development partners on where and how to use blended finance; Shifting focus to sustainable development impact, rather than bankability and leverage volumes; Enhancing transparency in reporting and monitoring, and providing capacity development; Using non-concessional resources (such as from development banks) when possible. This would allow official development assistance (ODA) to be used directly for support of social sectors that may be less suitable for blended finance transactions.

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  • Published online: 22 Jun 2021
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