Private-finance blending for development: risks and opportunities

Aid donors increasingly seek to inject private-sector resources into development by ‘blending’ official development assistance (ODA) with private finance. There is little evidence of the development impact, and projects often do not align with country ownership, transparency and accountability.

It is not always clear whether ODA subsidies are necessary. Blending could support pro-poor projects, such as easing credit constraints for small- and medium-size enterprises. At a minimum, donors must subject blending projects to development effectiveness principles.