Bali, Indonesia, October 11, 2018—IFC,
a member of the World Bank Group, and other development finance institutions
(DFIs) last year used about $1.2 billion in concessional funds to support
nearly $9 billion in private investment projects in emerging markets, according
to a new DFI report that highlights how blended concessional finance can
be key to mobilizing private investment in challenging environments.
by the DFI Working Group on Blended Concessional Finance for Private Sector
Projects offers an extensive set of data on the extent to which blended
concessional finance is used by DFIs—including where and in what sectors,
and how much private finance is mobilized. It reflects data from IFC and
22 other DFIs—including the African Development Bank (AfDB), the Asian
Development Bank (AsDB), the Asia Infrastructure Investment Bank (AIIB),
the European Bank for Reconstruction and Development (EBRD), European Development
Finance Institutions (EDFI), the European Investment Bank (EIB), the Inter-American
Development Bank Group (IDBG), and the Islamic Corporation for the Development
of the Private Sector (ICD).
“The data in the report is important to help us track the effective use
of concessional resources,” said IFC Vice President Hans Peter Lankes.
“It is critical to use these funds in a responsible and disciplined way.
Last year, the DFI Working Group adopted Enhanced
Principles on blended concessional
finance to ensure concessional funds are used to the minimum extent needed
and to crowd in other investors as much as possible and when justified
by market failures, demonstration effects in pioneering projects, important
affordability considerations, or other economic factors.
Lankes said: “As we address the opportunities and challenges we face with
our partners in the working group, we encourage other partners—including
donors—to adopt the Enhanced Principles
and join the working group to share best practices in the use of concessional
Blended concessional finance involves combining concessional funds and
commercial financing from DFIs and the private sector. It allows DFIs to
support private sector projects beyond what they would normally be able
to engage in, particularly in higher-risk countries. For example, the report
showed that of the nearly $9 billion in project financing unlocked by blended
finance, more than $3.3 billion came from private lenders and investors.
DFIs are increasingly leveraging financing of this type to channel private
investment into challenging markets—particularly in Sub-Saharan Africa
and in low- and lower-middle-income countries. IFC, for example, used blended
finance to support more than 40 percent of its operations in lower-income
and fragile and conflict-affected areas between July 2016 and June 2017.
The report shows in 2017 projects financed by DFIs using concessional finance
included innovative renewable energy projects in Africa and the Pacific,
new technologies in Latin America and North Africa, innovative projects
to mobilize finance for housing, guarantees for financial intermediaries
to stimulate small and medium-sized
enterprises (SMEs) development, and projects
to develop agribusiness.
The report also notes best practices and improvements in governance, decision-making
processes, documentation, training, and effective monitoring to ensure
concessional funds are used efficiently.
The report was released on the sidelines of the Tri Hita Karana (THK) Forum
on Sustainable Development in Bali, where attendees endorsed a complementary
program called the “Tri Hita Karana Roadmap for Blended Finance.” The
THK Roadmap, led by the OECD, covers a broader range of public/private
support for private sector projects beyond the use of concessional finance
and is fully consistent with the DFI Enhanced Principles. The DFI Working
Group contributed to and supports the THK Roadmap, and sees it as providing
important shared values for all stakeholders engaged in supporting private
sector projects for development and achieving the Sustainable Development
For more information, visit IFC
IFC—a sister organization of the World Bank
and member of the World Bank Group—is the largest global development institution
focused on the private sector in emerging markets. We work with more than
2,000 businesses worldwide, using our capital, expertise, and influence
to create markets and opportunities in the toughest areas of the world.
In fiscal year 2018, we delivered more than $23 billion in long-term financing
for developing countries, leveraging the power of the private sector to
end extreme poverty and boost shared prosperity. For more information,