The Case Against Blended Finance
The Case Against Blended Finance “Blended finance” is the strategic use of development finance for sustainable development. It is often couched in the framework of the UN Sustainable Development Goals. But there are reasons to be wary of this trend. It does not bring any additional value to development and undermines Canada’s commitments to Official Development Assistance. It diverts resources from the services and investments poor countries need. Let’s examine the case against blended finance.
Blended finance is a strategic use of development finance to mobilize additional sources of finance for sustainable development
There are two central themes in blended financial analysis: determining the additionality of each source and ensuring data comparability. The former is defined by Business Dictionary as adding to existing inputs to produce a larger aggregate. This is the case with development outcomes and new funding mobilized by blended finance. The latter is defined by the OECD glossary as ensuring that there is a difference between the true value of the inputs and the actual value.
In addition to its OECD definition, blended finance refers to the use of commercial capital to support sustainable development projects and provide financial returns to investors. It is a complementary mechanism to traditional development finance as it increases the amount of resources available to developing countries and complements their own investments and ODA inflows. In particular, it supports the implementation of the Paris Agreement.
It undermines Canada’s ability to meet its commitments to Official Development Assistance
This report draws on two analytical frameworks that define the underlying goals and principles of development assistance. First, it describes the Official Development Assistance Accountability Act, which outlines the main principles of Canadian ODA. Second, it details the concept of ownership. Third, it highlights the importance of engaging local communities and poor perspectives. These principles are key to the success of development assistance programs. Canada’s official development assistance spending is increasing, and its government is doing its part to help meet its international commitments.
In particular, Canadian foreign aid has taken an “extractive turn.” While Canada has long provided assistance to mining companies in developing countries, in 2011 it announced multiple new initiatives to promote the role of the extractive industry in international development. These initiatives have been criticised by many development aid practitioners as undermining Canada’s commitments to its ODA. As such, the Canadian government’s policies must be changed.
It shifts investments away from the poorest countries and services they need
The Canadian government is promoting blended finance to leverage official development assistance and private financing towards the implementation of the United Nations 2030 Sustainable Development Goals. Blended finance is not new and has been around for years, but it represents a new approach to a tried-and-true strategy. It aims to overcome the contradictions of neoliberal development, which shifts investment from the poorest countries to industries with greater profit potential in middle-income countries.
There are many benefits of incorporating private capital into health development programs. For example, blended finance deals can support the development of new technologies and the building of physical infrastructure for health-care delivery. They can also support education and strengthen supply chains for health-care providers, lowering barriers to access and improving access for those in need. In short, blended finance development helps poor countries to receive the services and investments they need.
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