Blended Finance: Digital Transformation Collaborative Finance Toolkit

Blended finance is an innovative approach to development financing that strategically combines public, philanthropic, and private capital to fund sustainable development initiatives, particularly in low income and developing countries. The OECD defines it as "the strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing countries."

Blended finance works by using public or philanthropic funds (concessional capital) to catalyze private sector investment in projects that contribute to sustainable development but may not otherwise attract commercial funding due to high perceived risks or low returns. This approach has been implemented across various sectors, with a particular focus on infrastructure, energy, and financial services in developing countries, though it has been less prevalent in social sectors like education.