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:

1. Public sector collaboration with the private sector when designing blended finance structures.
2. MDBs need to resolve issues within their business models, such as those related to incentives for institutional markets and capital recycling.
3. Reforming financial regulations. 
4. Encouraging private sector-led innovation in infrastructure financing solutions.

Scaling up Blended Finance

PricewaterhouseCoopers (PwC)