Africa’s ‘blended’ finance hits $15b
Nigeria and the rest of Sub-Saharan Africa (SSA) have benefitted from over 40 per cent of global blended finance deals which have hit $15 billion.
Blended finance is defined as use of catalytic capital from public or philanthropic sources to increase private sector investment in developing countries to realize the Sustainable Development Goals (SDGs).
Blended finance deals have reached a five-year high, growing to $15 billion, as multilateral development banks (MBD) and development finance institutions (DFI) are investing in greater sums to tackle climate change.
Convergence’s State of Blended Finance reports noted that DFI and MBD activity was central to the market rebound with commercial financing from these groups growing by 140 per cent in 2023 from $2billion in 2022 to $4.9bilion in 2023.
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According to it, climate blended finance transactions have been concentrated in SSA (48 per cent of transactions between 2020 and 2022), followed by Latin America and the Caribbean (24per cent). The proportion of transactions that are focused in SSA, it noted, grew 14 percentage points between 2017-2019 and 2020-2022, representing an absolute increase of nearly 90per cent Convergence’s State of Blended Finance reports— published since 2017— focus on climate blended finance which sees the mobilisation of private investment to emerging markets and developing economies (EMDE).
Just over half of the commitments to climate blended finance transactions between 2020- 2022,it continued , have come from public sector investors, while development agencies comprise a growing share of public sector activity, accounting for 49 per cent of commitments in 2020-2022 and are increasingly the primary suppliers of concessional capital.
Since 2017, Convergence has captured $12.9 billion of investment committed to climate blended finance transactions by commercial investors. However, financing flows from the private sector are declining —from $7.13 billion between 2017-2019to $5.87 billion between 2020 and 2022.
To date, Convergence’s database contains 1,123 blended finance transactions with a total deal volume of $213 billion. Over the last decade, the blended finance market has comprised 85 deals per year on average.
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