Scaling Up Blended Finance: The Key to Closing The Infrastructure Investment Gap in Emerging Markets

The global infrastructure gap in emerging markets surged from $0.7 trillion in 2017 to $3 trillion in 2022. Public resources alone are insufficient, and private investors remain hesitant due to high risks and a lack of bankable projects. 

Blended finance offers a solution by combining public and private capital, sharing risk, and improving project viability. The G20’s MDBs Capital Adequacy Framework stresses the need for strong partnerships among MDBs, DFIs, and private investors. To scale blended finance, a dual approach is needed: expanding beyond project-level tools to include hybrid capital instruments and broader MDB balance sheet use. 

Shifting private capital toward emerging markets requires rethinking risk and return dynamics. Blended finance can transform high-risk markets into viable investment destinations, unlocking capital for sustainable development.