Is blended finance the key to health and development?

How can we better align our spending and finance with the Sustainable Development Goals (SDGS)? This was one of the central questions at the Organization for Economic Cooperation and Development’s (OECD) third high-level annual conference ‘Private Finance for Sustainable Development’, held in Paris on January 29th 2020. On January 28th, I participated as a panelist in an expert discussion on blended finance in the health sector preceding this conference.

The conference’s main goal was to promote better alignment of global financial flows with Agenda 2030. The often quoted estimate of USD 2.5 trillion investment gap – money we miss on an annual basis to reach the Sustainable Development Goals (SDGs) by 2030 – “is actually not really missing”, Jorge Moreira da Silva (DCD Director of the OECD) stresses multiple times throughout the conference. “USD 2.5 trillion constitutes less than 1% of total financial resources in our global economy”. The international donor community believes mobilisation and alignment of financial flows to the SDGs can be promoted by ‘blended finance’. This is an instrument for governments’ use of official development aid (ODA) to support private actors to direct their finance towards social and environmental improvement where most needed.

Misalignment

Recent OECD data on blended finance show that between 2012-2018, private finance has been mobilized, but it’s been mainly directed towards upper middle-income countries. Only 6% went to least developed countries. When you look at climate change, figures from 2018 unfortunately show that there has been an increase of investments in fossil fuels and a decrease in renewables for energy. There’s clear misalignment here!

Investments via blended finance are often not helping those who are furthest left behind in terms of access to quality health services, and even risk widening inequality gaps in health. The public funds that are involved are diverted from their core aim: reduction of poverty and inequality, also in health.

Leave no one behind: think twice about blended finance in health

So what about the health sector? During the panel ‘Can blended finance fill the gap in the health sector? A CSO perspective’, held by Development Initiatives (DI), Oxfam GB, Reality of Aid, Eurodad, International Trade Union Confederation (ITUC), OECD DCD, and Wemos, panellists shared data and insights on the opportunities but also the clear threats that come with blended finance in a vulnerable and rights-based sector like health.

On behalf of Wemos, I shared insights from our recently published case study of the use of ODA to strengthen and engage private-for-profit sector actors in health-related development. Our case study and the evidence presented by other panellists showed that directing blended finance towards health is not automatically good and well-aligned with the SDGs, as many might think. Investments via blended finance are often not helping those who are furthest left behind in terms of access to quality health services, and even risk widening inequality gaps in health. The public funds that are involved are diverted from their core aim: reduction of poverty and inequality, also in health.

Among the reactions there were suggestions for clearer and more restrictive guidance regarding blended finance when applied in a sector like health. In his closing words for our side event, Jorge Moreira da Silva invited us as civil society to participate in the process of defining such guidance. We look forward to taking up the challenge!