05.02.2020 - Development cooperation with private funding – do the poorest target groups also benefit?
Combining public with private resources for development cooperation – also known as blended finance – is increasingly being used as an approach to increase funding for development cooperation. In blended finance, private investors are encouraged to get involved in development projects for instance by public donors bearing most of the risk. Such cooperation arrangements have repeatedly been criticised for not including particularly poor target groups.
Led by DEval team leader Magdalena Orth, an international working group on the impact of blended finance approaches last week presented a checklist in Paris for evaluating the impact of blended finance on the poorest sections of the population. This working group is one of five involved in the 'Tri Hita Karana Roadmap for Blended Finance', an international framework for achieving the Sustainable Development Goals (SDGs) using blended finance. The framework is supported by government institutions, development banks and private investors. Magdalena Orth is leading the working group on impact together with Nancy Lee of the Center for Global Development.
The checklist is designed as a simple and flexible tool for all investors involved in blended finance who wish to capture the impact of their investment on particularly poor sections of the population. It contains a comprehensive list of questions and indicators that should be (a) addressed before a blended finance investment in order to determine its potential impact, (b) applied after an investment in order to measure its actual impact, and (c) considered in advance in order to capture possible risks of investments for poor target groups.