To scale blended finance, PwC suggests a strategy that leverages MDB balance sheets as instruments to attract private capital, rather than relying solely on project-level tools like guarantees and subordinated debt.
The report identifies two key challenges currently hindering private investment in sustainable infrastructure in EMDEs - lack of "bankable" projects and high capital costs - exacerbated by project and country-level risks.
PwC recommends a four-point action plan to scale blended finance and address these challenges:
- Public sector collaboration with the private sector when designing blended finance structures.
- MDBs need to resolve issues within their business models, such as those related to incentives for institutional markets and capital recycling.
- Reforming financial regulations.
- Encouraging private sector-led innovation in infrastructure financing solutions.
