The Editors’ Post: Blended finance woes as upbeat GSG Summit winds up
Blended finance is no magic wand – and there's little reason to use it in most of Asia, one expert says. Plus, more positive sentiments from speakers at this week's gathering in Spain – but a plea for “more African representation” next time.
Blended finance hasn’t delivered what was originally hoped.
This statement came from someone who has more experience than most in the subject – Nick O’Donohoe, current CEO of the UK’s development finance institution, British International Investment, former adviser to the Bill and Melinda Gates Foundation on blended finance, and co-founder of the UK’s social investment wholesaler, Big Society Capital. (By the way, if you need an explainer, Pioneers Post subscribers can check out our Impact 101: What is blended finance?.)
O’Donohoe was speaking at the closing plenary session of the GSG Global Impact Summit 2023, which was held this week in Málaga, Spain.
I see very little reason to deploy blended finance in the vast majority of countries in Asia - Nick O’Donohoe
“There’s too high an expectation from commercial partners that risk will be taken away by a government entity waving a magic wand,” he said. The concessionary finance needed to make such deals work was a scarce resource, he added, and it should only be used to address the most difficult issues.
“I see very little reason to deploy blended finance in the vast majority of countries in Asia,” he said. “But there’s a desperate need in Africa.”
These thoughts came at the end of what had been an event with a generally positive vibe. The Spanish hosts from SpainNAB, which is the country’s national advisory board on impact investment, were riding high with the launch of a government-backed impact investment wholesaler plus new research showing a booming impact investment market. Former UK prime minister Gordon Brown made an appearance on screen to congratulate everyone present on being part of a movement which is working towards a fairer future. Former Danone CEO Emmanuel Faber flagged how positive he was about the potential of the new ISSB standards, which aim to help companies report on their social and environmental performance. And GSG founder Sir Ronald Cohen was upbeat about the promise of a new era of ‘impact transparency’ enabled by recent work by Harvard Business School.
What’s clear – as several speakers pointed out – is that the impact movement needs to work together to find solutions to the massive funding gap that still exists to properly tackle the world’s social and environmental challenges. As Margot Brandenburg of the Ford Foundation said: “To have an intelligent conversation about blended finance, you need diverse stakeholders to be in conversation with each other.”
And for that to happen, everyone must be represented. Zambian Dolika Banda, a founding partner of leaders’ network Mondiale Impact, development finance expert and GSG ambassador, made a plea in her closing statement for “more African representation on the panels at the next GSG meeting”. Perhaps even, she added, the summit could be hosted in Africa one day.
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Top image: Delegates at the GSG Global Impact Summit in Malaga, Spain this week (credit: GSG)
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