Opinion: For blended finance to work, use strategic leverage ratios

It is not the role of private capital to solve global development challenges — but it is the responsibility of governments and development finance institutions to ensure that the conditions for private sector mobilization are optimal to generate the finance needed to address the SDGs and the climate crisis. Blended finance is one viable way to make the leap from mobilization talk to action.

The mobilization of private sector resources for the Sustainable Development Goals and climate finance was a key topic at the recent World Bank Spring Meetings in Washington, building on earlier calls for more private sector mobilization from global leaders such as U.S. Secretary of the Treasury Janet Yellen and U.S. climate envoy John Kerry.

The look to private capital has further intensified with the recent appointment of Ajay Banga to lead the World Bank and its ongoing capital reform agenda. Undoubtedly, Banga’s intention for the World Bank to be a “catalyst for change” starts with bringing in private sector investors for development.