Blended Finance

in the Least Developed Countries

About the Report

Three years after the adoption of the Addis Ababa Action Agenda and the 2030 Agenda for Sustainable Development, there is a consensus that public and private finance will both be needed—at scale—to meet the SDGs. Blended finance is receiving increasing attention for its potential to maximize the catalytic impact of concessional finance by sharing risks or lowering costs to adjust risk–return profiles for private investors. This works to crowd in private or commercial capital for SDG-related investments that would otherwise be overlooked.

Still, to date there has been limited evidence of where, how, why, and in which sectors blended approaches are being deployed in LDCs; what are the opportunities and challenges with blended strategies; and under which conditions blended finance is best applied.

The report ‘Blended Finance in the Least Developed Countries’ - prepared by UNCDF in collaboration with the Organisation for Economic Co-operation and Development, Southern Voice on Post-MDG International Development Goals, Convergence and the United Nations Foundation - aims to help fill in these gaps.

Through a rich evidence base, data analysis, and detailed case studies, the report explores how to implement and adapt blended finance approaches to LDCs to maximize their effectiveness in crowding in private capital while minimizing risks. The report also proposes an Action Agenda to guide decision-makers in their blended finance approaches.


Increased public and private financial flows must be made to work also for the world’s most vulnerable countries and for communities at risk of being left behind

Judith Karl
Executive Secretary
UN Capital Development Fund

The world’s 47 least developed countries (LDCs) face
a substantial challenge to mobilize the resources they need to achieve the Sustainable Development Goals (SDGs).

While a comprehensive estimate is not available, various data points confirm the extent of the financing gap for achieving the SDGs in LDCs. For instance, the cost to achieve universal access to electricity in LDCs alone is estimated at $20–30 billion per year. The overall infrastructure funding gap, including the water, communication and transportation sectors, is most likely a multiple of that figure. It is estimated that micro, small and medium enterprises (MSMEs) need hundreds of billions of dollars to grow.

LDCs are a diverse group of countries, with different levels of growth, vulnerability, demographics, geography, and size of the economy. Some are on a fast track to middle-income country (MIC) status, and others are affected by crises. LDCs are home to 1 billion people, one third of whom live on less than $1.90 per day.

Despite many LDCs recording impressive improvements in human development, long-term growth projections point to 35 percent of the population in LDCs remaining in extreme poverty by 2030. Gross domestic product (GDP) growth in LDCs, estimated to reach 5.4 percent in 20188, is higher than projected global growth,9 but still below the 7 percent annual rate called for by SDG 8. Individual country performances vary: 5 LDCs achieved the 7 percent target in 2017, down from 14 in 2012; at the same time, 9 of the LDCs for which data are available have

The Report

  • Why a focus on blended finance in LDCs?


Blended Finance by the Numbers


Population, total (millions)
in LDCs

33% urban population
in LDCs


GDP Total, 2011 purchasing power
parity, $ billions in LDCs

$2,536 GDP per capita
in LDCs


Foreign direct investment
net inflows (% of GDP) in LDCs

4.5% Net ODA received
(% of GDP) in LDCs


Domestic credit provided by financial sector (% of GDP, 2010-15) in LDCs

3.87% Remittance inflows (% of GDP) in LDCs

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