Blended Finance: The case for realism and reform

Nick K. Kolev and Amil Aneja ()
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Amil Aneja: Independent Consultant

Development Finance Agenda, 2025, vol. 10, issue 5, 6-8

Abstract: Blended Finance is a structuring approach in which concessional resources from sovereigns or philanthropies are used to crowd private-sector investors into financial vehicles with significant development impact. According to some, the performance of Blended Finance has been disappointing. As performance cannot be judged accurately in the absence of a suitable benchmark, this paper examines briefly four elements of Blended Finance: the generation of development impact, the use of concessional resources, the tension between bankability and viability, and the availability of proper legal forms. The analysis leads to the conclusion that Blended Finance faces fundamental hurdles that inhibit its growth. Therefore, the expectations of Blended Finance, on the basis of which its performance has been deemed lackluster, appear unrealistic. Upon identifying fixable hurdles, practical recommendations consistent with prevailing laws and norms are made.

Date: 2025
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