Publication: Blended Finance: A Stepping Stone to Creating Markets
Lauridsen, Morten Lykke
At the heart of International Finance Corporation’s (IFC’s) approach to blended finance are efforts to create and help sustain private markets with strong development impact. This note explores the role of blended finance in creating markets and looks at lessons from three blended finance projects and structures - and how each contributed to the creation of markets that are scalable, sustainable, and resilient. The projects illustrate the value of using blended finance to kick-start markets and to push to achieve long-term financing on commercial terms. They also carry important lessons for using and scaling up blended finance in the future.
Link to Data Set
“Sierra-Escalante, Kruskaia; Lauridsen, Morten Lykke. 2018. Blended Finance: A Stepping Stone to Creating Markets. EMCompass,no. 51;. © International Finance Corporation, Washington, DC. http://hdl.handle.net/10986/30377 License: CC BY-NC-ND 3.0 IGO.”
Other publications in this report series
PublicationBanking on FinTech in Emerging Markets(International Finance Corporation, Washington, DC, 2022-01)Despite near-universal access to financial services in advanced economies, financial exclusion is stubbornly persistent in many emerging markets, leaving huge swaths of low-income populations unbanked or underbanked. FinTech companies, which apply innovative technologies to deliver such services in new ways, have begun to tap into the enormous unmet demand that this represents. These companies are starting to thrive in emerging markets, though regulatory issues, particularly weak consumer protection measures, remain to be resolved in many countries. If these can be overcome, and more progress toward universal access to digital infrastructure can be made, FinTechs will continue to scale and spread.
PublicationSustainability-Linked Finance: Mobilizing Capital for Sustainability in Emerging Markets(International Finance Corporation, Washington, DC, 2022-01)Sustainability-linked finance is designed to incentivize the borrower’s achievement of environmental, social, or governance targets through pricing incentives. Launched in 2017, it has now become the fastest-growing sustainable finance instrument, with over $809 billion issued to date in sustainability-linked loans and bonds. Yet these instruments are still nascent in emerging markets, which represent only 5 percent of total issuance to date. This note shares examples of recent sustainability-linked financing, including several involving IFC in various roles, to highlight how investors can utilize these new instruments in emerging markets and mitigate greenwashing risks
PublicationWhat Gets Measured Gets Done: Using a Corporate Scorecard to Drive Greater Investment Impact(International Finance Corporation, Washington, DC, 2021-12)In 2018, International Finance Corporation’s (IFC’s) shareholders authorized a capital increase of 5.5 billion dollars, the largest increase in its history. The capital increase was based on a strategy that emphasizes creating markets and mobilizing private capital and came with ambitious operational undertakings designed to ensure IFC’s place at the forefront of development finance, and to reinvigorate development in the world’s most challenging environments. To help implement these hefty undertakings, measure progress, and motivate staff, IFC took a fresh look at how the Corporation uses operational targets to achieve strategic goals and overhauled its corporate scorecard. Institutions seeking to implement a transformational strategy, as well as impact investors and development finance institutions balancing financial and impact objectives, can learn from how the revamped scorecard balances risk-taking with prudence, innovation with traditional business priorities, and speed with governance, to drive greater investment impact.
PublicationMunicipal Broadband Networks: Opportunities, Business Models, Challenges, and Case Studies(International Finance Corporation, Washington, DC, 2021-11)The accelerated use of digital services during the COVID-19 pandemic has highlighted the importance of high-speed Internet access. Yet a large share of adults in emerging markets still live in cities where the availability of high-speed Internet is limited. There is a strong case to be made for municipal broadband networks, which are fully or partially facilitated, built, operated, or financed by local governments, often in partnership with the private sector. There are three basic models for creating and operating these networks, and every network must work in the unique context of the city it will serve. But if they are well implemented, these models can offer digital access to city residents, help close the digital divide, and create opportunities for private sector players in both advanced and emerging markets.
PublicationCreating Housing Markets in Emerging Market Economies(World Bank, Washington, DC, 2021-10)At the beginning of the 20th century less than 15 percent of people across the globe lived in cities. This figure has risen to 50 percent (4.4 billion people) today and will exceed 66 percent (7.7 billion) by 2050. There is a significant shortfall of housing to meet the needs of people moving to cities, most of whom have limited resources but strong hopes for better educational and employment opportunities. Direct public provision of housing is not affordable for most national governments, so more than 1.6 billion people will struggle to secure housing by 2025. Addressing this under-provision of housing will require connecting capital with low-income urbanizing populations, including solutions to make the private sector more responsive to the investment opportunities that urbanization presents.