Recently, I had the privilege of leading a workshop at Yale’s Economic Development Symposium on blended finance. Training the next generation of economists, business and policy leaders, I was reminded just how much development finance is changing — and how urgently we must evolve our tools, models, and thinking.

The conversation is no longer just about mobilizing more finance. It’s about mobilizing it better. How do we ensure capital reaches the places and people it often overlooks — especially in Least Developed Countries (LDCs), where development needs are highest and market risks are deepest?

Where and how finance flows has a direct impact on development outcomes

As the UN Capital Development Fund’s (UNCDF) Investment Portfolio Management Advisor, I see the answer every day: structure matters. Speed matters. And most of all — blended finance matters.

UNCDF is the only UN entity with a capital mandate — and the flexibility — to deploy and leverage capital in high-risk, early-stage markets. We offer catalytic financing through grants, concessional loans, and guarantees to both public and private actors. This isn’t just about moving money. It’s about unlocking systems, strengthening local institutions, and creating investable pipelines that larger investors can scale.

We’re also reaffirming our identity as a Fund — not just a technical partner, but a financial one. And this identity allows us to act as a bridge between global capital markets and last-mile communities, working side-by-side with UN agencies, governments, domestic banks, and entrepreneurs.

What moves the needle: de-risking instruments that mobilize private and public capital

Take Burkina Faso, where we provided a $300,000 loan to AES, a local company offering solar-powered irrigation systems to smallholder farmers. The result? Greater productivity, improved water use, and higher incomes for farming families — while building resilience against a changing climate.

Or look at Afghanistan, where UNCDF collaborated with UNDP and the Afghan Credit Guarantee Foundation to unlock $5.5 million in private capital for MSMEs — most of which would have never secured a loan without our $1 million guarantee facility. In a country where fewer than 3% of firms have access to formal credit, this is a game-changer.

In Zimbabwe, with the backing of the United Nations Sustainable Development Goals (UNSDG) Fund we seeded the country’s first national renewable energy fund with $8 million. That early capital — paired with UNCDF’s technical support — has already mobilized millions more from private investors.

And in Tanzania, we supported East Africa’s first subnational water green bond. With technical assistance from UNCDF, the Tanga Water Infrastructure Bond raised over $20 million — 65% from domestic investors. It’s now cross-listed on the Luxembourg Stock Exchange, and a model being replicated by other municipalities.

Patient, risk-tolerant capital is still in short supply and urgently needed

Each of these examples reinforces a core truth: finance must be built for context. It must move with agility. And it must reach those markets and sectors that conventional finance still overlooks.

UNCDF’s role isn’t to replace commercial finance — it’s to pave the way for it. That means offering performance-based incentives. Providing first-loss capital. Building pipelines of investable opportunities. And strengthening domestic financial systems from the ground up.

We do this as a non-credit rated UN fund — one that can take on risks others cannot. Contributions and support from Member-States, Philanthropy and Foundations allow us to de-risk transactions not only for private investors, but also for governments and larger development finance institutions. In this way, we act as a market builder—creating the enabling conditions for sustainable capital flows to take root and scale.

If we want to meet the SDGs in the world’s most vulnerable economies, we need more than promises of finance. We need fit-for-purpose capital — and the institutions willing to go where others won’t. That’s what UNCDF does every day.