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Blended Finance Can Help U.K. Achieve African Development Investment Goals

Devex: Opinion: U.K.’s ambition to invest in Africa is an opportunity for blended finance
Christopher Clubb, managing director at Convergence

“This week, the United Kingdom announced its ambition to become the largest G7 foreign direct investor in Africa by 2020. To make this happen it aims to generate up to £8 billion ($10.26 billion) of U.K. public and private investment in Africa. … [H]ow can the U.K. government mobilize £4 billion of private sector financing to African countries when they’re considered high risk and there is such a mismatch between the countries’ investment needs and the investment criteria of private investors? The answer to these challenges is blended finance — the use of development capital from development agencies and philanthropic foundations to attract commercial capital from private-sector investors. Blended finance makes it possible to create investments that meet the criteria of most private investors by (i) reducing risk to an acceptable level and (ii) bridging the huge gap between perceived and realized risk in developing countries. … In the last few years, there has been a surge of interest and optimism in the potential of mobilizing private capital toward the Sustainable Development Goal[s]. Blended finance offers a unique opportunity to channel this optimism into real-world impact” (9/5).