ReDesigning Development Finance Initiative

The document defines blended finance as the strategic use of development and philanthropic funds to attract private capital into emerging and frontier markets, focusing on three pillars: leverage, impact, and returns. It identifies five primary barriers to private investment—low risk-adjusted returns, inefficient markets, knowledge gaps, limited mandates, and difficult investment climates—and proposes a framework of supporting mechanisms (technical assistance, risk underwriting, and market incentives) and direct funding (preparing, pioneering, facilitating, anchoring, and transitioning) to overcome them. The report argues that blended finance is essential to fill the estimated $3.1 trillion annual investment gap required to achieve the Sustainable Development Goals (SDGs).

• Blended finance is defined by three core characteristics: leverage, which is the "Use of development finance and philanthropic funds to attract private capital into deals"; impact, meaning "Investments that drive social, environmental and economic progress"; and returns, which are "Financial returns for private investors in line with market expectations, based on real and perceived risks."
• There is a significant annual investment gap of approximately $3.1 trillion in sectors critical to the Sustainable Development Goals (SDGs), as total needs are estimated at up to $4.5 trillion per year between 2015 and 2030.
• Private capital is deterred from emerging and frontier markets by five fundamental barriers: returns perceived as too low for the risk, inefficient local financial markets, knowledge and capability gaps, limited investor mandates/incentives, and challenging local and global investment climates.
• Development funders can use 'Supporting Mechanisms' to attract private investment, including Technical Assistance to "supplement the capacity of investees and more generally lower the transaction costs", Risk Underwriting to "fully or partially protect the investor against various forms of risk", and Market Incentives to provide "guarantees of future payments contingent on performance".
• Direct funding is applied across five market segments of a project's life cycle: Preparing (offsetting upfront costs), Pioneering (supporting early-stage innovation), Facilitating (improving risk-return profiles for growth), Anchoring (signaling viability to 'crowd-in' capital), and Transitioning (creating a pipeline for fully commercial exit).
• The report identifies several risks associated with blended finance, including the potential for 'crowding out' where public funds support projects that "would have been commercially viable" without support, and the challenge of balancing transparency with "commercial confidentiality".
• A survey by the ReDesigning Development Finance Initiative (RDFI) found 74 pooled public and private blended finance funds with a total of $25.4 billion in committed assets.

APA

World Economic Forum (2015). ReDesigning Development Finance Initiative. https://www3.weforum.org/docs/WEF_Blended_Finance_A_Primer_Development_Finance_Philanthropic_Funders.pdf

Chicago

World Economic Forum. ReDesigning Development Finance Initiative. 2015. https://www3.weforum.org/docs/WEF_Blended_Finance_A_Primer_Development_Finance_Philanthropic_Funders.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=ReDesigning Development Finance Initiative |date=September 2015 |url=https://www3.weforum.org/docs/WEF_Blended_Finance_A_Primer_Development_Finance_Philanthropic_Funders.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2015redesigning, author = {{World Economic Forum}}, title = {{ReDesigning Development Finance Initiative}}, institution = {World Economic Forum}, year = {2015}, month = sep, url = {https://www3.weforum.org/docs/WEF_Blended_Finance_A_Primer_Development_Finance_Philanthropic_Funders.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }