The Sustainable Markets Initiative (SMI) and Investor Leadership Network's (ILN) "Blended Finance Best Practice" playbook aims to standardize the design of blended finance instruments, increasing their replicability and driving capital mobilization.
Key enablers of successful blended finance vehicles include:
- Top-down sponsorship to accelerate design, implementation, and deployment
- Flexible vehicle design to align stakeholders
- Risk management tools and catalytic capital to improve risk-return profiles and investment ratings
- Local knowledge to boost investor confidence
- A robust project pipeline and credible track record
In addition, several key propellers can significantly enhance the blended finance ecosystem including:
- Standardization of templates, frameworks, and impact metrics to reduce incubation time and transaction costs
- Market-wide accelerators like consolidated pools of catalytic capital, guarantee mechanisms, and development bank support to reduce time-to-market and attract new participants
- Regulatory and policy support at national and international levels to remove barriers and encourage greater investment
The booklet also highlights notable blended finance transactions, including the Catalytic Transition Fund, Emerging Africa Infrastructure Fund, and GAIA.
