FP Virtual Dialogue: Mobilizing Financing for Inclusive Development
How public and private capital can work together to fuel resilient economic recovery and growth
The world’s least developed countries (LDCs) face a severe financing gap that has not been sufficiently covered by official development assistance (ODA) and has been compounded by the economic crisis of the COVID-19 pandemic. To date, private capital has largely stayed on the sidelines, due to underdeveloped financial industries and investor risk perceptions. Not only is the financing gap constraining LDCs’ ability to build critical infrastructure, advance social services, and recover from the pandemic, but it also impedes progress towards the UN Sustainable Development Goals (SDGs).
Governments around the world need to stimulate inclusive and resilient growth to recover from the pandemic, while at the same time addressing rising environmental and sustainability challenges. Blended finance—which combines public, donor, and private funds into the same investments—is increasingly considered a promising means of financing critical projects in least developed markets. These models provide a unique opportunity to diminish perceived risk and strengthen local markets for investment, while also relieving budgetary pressures and stimulating economic activity for governments. While there has been success with launching sustainability projects with blended finance across LDCs, more needs to be done to fill the massive financing shortfall and access to capital.
Foreign Policy, in partnership with Microsoft, hosted a conversation examining the role blended finance is playing to support sustainable economic growth across LDCs. Funders and project developers will shed light on a range of projects benefiting from this collaborative financing model and the impacts this approach is having on lives and livelihoods. This conversation explored strategies to close the financing gap, scale project finance, and increase investments that will expand economic opportunity across the least developed countries.
Join the conversation online with #BlendedFin4LDCs