Blended finance has been “on the rise” in the past decade and has reached highs of $138bn globally, of which 42% is flowing into sub-Saharan Africa, according to the African Development Bank.
The bank did not make it clear how much of the global blended finances were going to Africa in the past.
‘Blending’ means combining concessional public finances – such as aid – with commercial finance, to fund development-related activities.
At a forum hosted by AfDB last week, Ladé Araba, Africa region representative for Convergence Global Finance, said: “There is obviously a lot of appetite in this region but we do need to increase significantly the number of deals that are available.”
The bank said that attracting private investment “is still a major hurdle” for the continent and that blended finance could be “an important vehicle to raise capital”.
A consultation paper by the Blended Finance Taskforce at the start of the year suggested an additional $1trn could be found through blending, which could help fill the financing gap for the Sustainable Development Goals.
The SDG funding gap is estimated at between $2trn and 3trn a year.
At the forum, Jan-Martin Witte, director for Southern Africa at KfW Development Bank, highlighted that blended finance should be accompanied by ongoing reforms. “We need to continue to reform market fundamentals and create an attractive investment climate,” he said.
