OECD Private Finance for Sustainable Development Conference, 29 January 2018

In order to achieve the Sustainable Development Goals (SDGs) the global development community has to mobilize significant resources beyond the 145 billion USD provided as official development assistance in 2016 – this was the main message of the Private Finance for Sustainable Development Conference organized at the OECD on 29th January 2018.
The opening conference of the Blended Finance Week organized for the first time between the29th January and 1st February 2018 by the OECD examined how the private sector could contribute to sustainable development. Near 200 participants took part in the event open to the press, representing governments of OECD countries, emerging donors and developing countries, multilateral development banks, the private sector and academia.

Photo: OECD

The OECD has made a great step towards the modernization of development finance and a more effective use of ODA by elaborating the “Blended Finance Principles”, a concept born in the practice of international development. According to the OECD’s definition blended finance is the strategic us e of development finance for the mobilization of additional finance, mainly from the private towards sustainable development in developing countries. Blended finance offers an opportunity to move towards market based financing in support of the SDGs. Between 2012 and 2015 official development finance has mobilized 81 billion USD in private finance for development. However, the majority of these flows was directed into middle-income countries offering bigger potentials than low-income countries most in need.

Jorge Moreira da Sliva, Director of the Development Cooperation Directorate of the OECD emphasized that in the future strategic planning and alignment to geographical and economic contexts of blended finance instruments must be strengthened. This is the objective of the 5 Blended Finance Principles elaborated by the OECD, to be applied on a voluntary basis:

1.) Anchor blended finance use to a development rationale
2.) Design blended finance to increase the mobilization of commercial finance
3.) Tailor blended finance to local context
4.) Focus on effective partnering for blended finance
5.) Monitor blended finance for transparency and results

Criticism against the new concept highlights the lack of information and data about the impact and results of blended finance and the lack of involvement of the South. Skeptical voices add that the expansion of blended finance could increase the ratio of tied aid, which have a negative impact on development efficiency. Furthermore, in absence of increasing the overall volume of ODA, it could decrease the volumes of public investment to the poorest countries.

Anita Obermayer