New York, 5 November 2018— The United Nations Capital Development Fund (UNCDF) launched today its flagship report, “Blended Finance in the Least Developed Countries”. This first-of-its-kind report argues that, to achieve the Sustainable Development Goals, increases in public and private finance must benefit the world’s 47 least developed countries. For this to happen, the report challenges the development community to make a wider range of financing instruments work effectively for underserved markets and smaller-sized projects.

There is growing interest in blended finance for its potential to mobilize private finance for development-related investments that would otherwise be overlooked. In least developed countries, the barriers to attracting private capital are often higher than elsewhere, a reflection of real risks and the perceptions of risk; a lack of investment-ready opportunities; and weak policy or regulatory frameworks.

Of $81 billion of private capital mobilized by official development finance in 2012–2015, 7% was for least developed countries, though the trend is one of growth. Average amounts of private finance mobilized per transaction in least developed countries are less than one third of those in developing countries overall. This may reflect the smaller size of private-sector transactions and/or the greater use of concessional finance required per transaction in least developed countries.

As multilateral development banks and other providers of concessional resources increase the use of blended finance, they must take steps and innovate to ensure that countries most in need and investment areas critical to leaving no one behind are not sidelined. If blended finance becomes an increasingly important modality of development cooperation, donors must ensure that those countries where it has proven more challenging do not experience a decline in their share of development finance.

Blended finance is not a silver bullet; project and country characteristics, macroeconomic conditions and national policy priorities should determine which financing model—public, private or blended—is best suited for which investment.

The report puts forth an action agenda for pursuing blended finance strategies effectively in least developed countries. It calls for:
• providers of concessional finance to take more risks to support blended transactions, when appropriate, throughout their lifecycle;
• least developed countries to be fully included in global discussions about blended finance;
• blended strategies to support sustainable outcomes, including by actively seeking out suitable domestic investors and supporting transactions in local currencies;
• improvements in impact measurement and transparency of blended deals; and
• increased knowledge-sharing and evidence to improve blended finance practices.

Presenting the report, UNCDF’s Executive Secretary Judith Karl said: “While turning the ‘billions into trillions’ is essential, it should not just be about quantity, but also about quality and geography. Increased public and private financial flows must be made to work also for the world’s most vulnerable countries and for communities at risk of being left behind. We need to shift the dynamics of how resources are allocated and to come up with better ways of making finance work for poor people.”
Achim Steiner, UNDP Administrator, underscored that: “We cannot be satisfied that the bulk of private investments supporting development bypass vulnerable countries. To meet the Sustainable Development Goals, we must effectively and efficiently harness a broader range of financing options – including blended finance when appropriate – to benefit the least developed countries. This means we, as the development community, need to move out of our comfort zone, take more risks and adopt more flexible approaches to get finance going to where it’s most needed.”

The report was prepared by UNCDF in collaboration with the OECD, Convergence, the United Nations Foundation and Southern Voice on Post-MDG International Development Goals, a network of think tanks from the global South. The report benefited from strong support from the United Nations Department of Economic and Social Affairs. New analysis shows that in least developed countries over 2012-2015:
• The amount of private finance mobilized varies significantly among countries, but it is positively correlated to gross national income per capita. The three least developed countries benefiting from the largest amounts of private capital mobilized were Angola (over $1 billion), Senegal and Zambia (over $500 million each).
• High-income countries—other than the provider—were the largest source of private finance mobilized (almost $2 billion). The second largest source stemmed from the beneficiary countries themselves, with over $1.3 billion mobilized, suggesting that many deals involve domestic investors.
• Credit and risk guarantees generated the largest absolute mobilization of private capital (over 70% of the total). The World Bank Group is the largest mobilizer of private finance. The United States and France are the bilateral donors mobilizing the highest volume of private finance.
• Over one third of the deals reported mobilized less than $1 million in private capital; fewer than 5 percent mobilized more than $50 million.

The report and its executive summary are available at
For more information, contact the report’s authors Samuel Choritz ( or Simona Santoro (

Follow the launch event on and on Twitter by using the hashtag #BlendedFinance and by following @UNCDF.

The United Nations Capital Development Fund (UNCDF) makes public and private finance work for the poor in the world’s 47 least developed countries. With its capital mandate and instruments, UNCDF offers ‘last mile’ finance models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local economic development.

UNCDF’s financing models work through two channels: savings-led financial inclusion that expands the opportunities for individuals, households and small businesses to participate in the local economy, providing them with the tools they need to climb out of poverty and manage their financial lives; and by showing how localized investments—through fiscal decentralization, innovative municipal finance and structured project finance—can drive public and private funding that underpins local economic expansion and sustainable development.

By strengthening how finance works for poor people at the household, small enterprise, and local infrastructure levels, UNCDF contributes to SDG 1 on eradicating poverty and SDG 17 on the means of implementation. By identifying those market segments where innovative financing models can have transformational impact in helping to reach the last mile and address exclusion and inequalities of access, UNCDF contributes to a number of different SDGs.