BLENDED FINANCING (MURRAY, SPRONK)

Flashcards on blended finance, Canadian foreign aid policy, and alternatives.

Blended finance

A development strategy that combines public funds with private investment to finance development projects, aiming to leverage private sector capital for public development goals, often by mitigating financial risk for investors.

FinDev Canada

Subsidiary of Export Development Canada. Development finance institution launched to implement blended finance strategies by providing loans, equity, and guarantees to mobilize private investment in development projects.

Financialization of Development

The increasing role of financial actors, markets, and instruments in shaping development policy, often at the expense of traditional redistributive or rights-based approaches.

Global Affair’s Canada (GAC)

The Canadian government department responsible for foreign affairs and international development, which collaborates with FinDev Canada to implement blended finance programs.

Neoliberal Aid Paradigm

An approach to development assistance that emphasizes market efficiency, private investment, and minimal state intervention, often critiqued for weakening public accountability and equity.

Former-CIDA’s Investment Cooperation Programme

Was cancelled because of an almost complete lack of alignment with development priorities and a dismal project success rate of 15.5%.

Addis Ababa Action Agenda

The global action plan to finance the SDGs—highlights the importance of unlocking the transformative potential of private finance—that is, blending—as the key to massively scaling up financing for development.

Cascade approach

A financing strategy that prioritizes the use of public funds to leverage private investment for achieving development goals. It encourages the use of blended finance to maximize available resources.

Public-public partnerships (PuPs)

The partnering of two public entities such as water and sanitation utilities.

What critique do the authors offer about the effectiveness of blended finance?

They argue that there is limited empirical evidence that blended finance achieves meaningful poverty reduction, especially in least-developed countries and marginalized populations.

Authors’ concerns about transparency of blended finance

Highlight limited public oversight, vague reporting standards, and insufficient data on development outcomes, making it hard to assess the effectiveness and accountability of these investments

What shift in aid philosophy does blended finance represent in Canadian policy?

A move from traditional grant-based assistance to a more investment-oriented approach that seeks to leverage private sector resources.

What are the two central Canadian institutions involved in blended finance initiatives?

FinDev Canada and Global Affairs Canada (GAC).

What is the main argument of the article regarding Canada’s adoption of blended finance?

The article argues that Canada's shift toward blended finance reflects a neoliberal transformation in foreign aid, emphasizing private sector involvement and financial returns over traditional goals of poverty alleviation and global equity.

What are the risks associated with blended finance as highlighted by the authors?

The risks associated with blended finance include a lack of transparency, prioritization of investor returns over developmental impacts, diversion of aid from the poorest countries, and a notable absence of evidence demonstrating its effectiveness.

How does the article relate blended finance to broader trends in development policy?

The article discusses how blended finance aligns with global shifts towards market-oriented development strategies, prioritizing investment and economic growth, often at the expense of marginalized communities.