Strengthening the Local Dimension of Blended Finance

This policy brief by the African Center for Economic Transformation (ACET) examines the role of blended finance in mobilizing commercial capital for sustainable development goals (SDGs) in developing countries. It emphasizes the importance of anchoring blended finance to local contexts, priorities, and financial market development, providing recommendations for Development Finance Organizations (DFOs) to improve their organizational strategies, partnerships with local actors, and the use of local currency financing.

• Blended finance is defined as the strategic use of development finance to mobilize additional commercial capital for sustainable development in developing countries, aiming to reduce perceived risks or improve returns to support goals such as poverty reduction, climate action, and reduced inequalities.
• The OECD DAC has established principles for blended finance that require development finance to be anchored in local contexts. This ensures that finance supports local development needs, priorities, and capacities while contributing to the development of local financial markets and a sound enabling environment.
• To increase development impact, Development Finance Organizations (DFOs) should make their policies on local context explicit and intentional and develop country or sub-regional strategies that align with national development strategies to avoid ad hoc investment decisions.
• DFOs are encouraged to strengthen partnerships with local entities—including national development banks, local pension funds, Sovereign Investment Funds (SIFs), and local DFIs—to scale activities. In regions where such local institutions are absent, DFOs should consider providing financial support and technical expertise to establish them.
• There is a critical need to increase the proportion of finance provided in local currency. While some progress has been made in issuing local currency securities, the demand for cost-effective foreign exchange (FX) solutions to mitigate risk for international investors currently exceeds the available supply.

APA

Webmaster (2020). Strengthening the Local Dimension of Blended Finance. African Center for Economic Transformation. https://acetforafrica.org/research-and-analysis/insights-ideas/policy-briefs/strengthening-the-local-dimension-of-blended-finance/

Chicago

Webmaster. Strengthening the Local Dimension of Blended Finance. African Center for Economic Transformation, 2020. https://acetforafrica.org/research-and-analysis/insights-ideas/policy-briefs/strengthening-the-local-dimension-of-blended-finance/.

Wikipedia

{{cite report |last1=Webmaster |title=Strengthening the Local Dimension of Blended Finance |publisher=African Center for Economic Transformation |date=28 June 2020 |url=https://acetforafrica.org/research-and-analysis/insights-ideas/policy-briefs/strengthening-the-local-dimension-of-blended-finance/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{webmaster2020strengthening, author = {Webmaster}, title = {{Strengthening the Local Dimension of Blended Finance}}, institution = {African Center for Economic Transformation}, year = {2020}, month = jun, url = {https://acetforafrica.org/research-and-analysis/insights-ideas/policy-briefs/strengthening-the-local-dimension-of-blended-finance/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }