Making blended finance work for sustainable development : The role of risk transfer mechanisms

Six years after the private sector has been called upon to help deliver the Sustainable Development Goals (SDGs), the financing gap remains tremendously high and mobilisation figures – how much development actors mobilise from the private sector – remain stubbornly low. Mobilising commercial investment at the portfolio level can be an effective way to match the needs of small scale borrowers in developing countries, and channel the large amounts of capital held by institutional investors towards their sustainable development. Risk transfer mechanisms (RTM) can be one effective way to intermediate between recipient and provider.