Blended finance is not solution to funding gaps, experts advise

Kampala. Economists across East Africa have cautioned that blended finance should not be pegged on donor inflows but it should be accompanied by domestic resources both from public and private sector.
This, experts say, will guard against over reliance on Official Development Aid (ODA) which continues to dwindle due to economic hardships in donor countries.
At the global scene, United Nations Capital Development Fund says more resources – public and private, domestic and international – need to work together to help developing countries meet Sustainable Development Goals (SDGs) and support inclusive and sustainable growth.
Blended finance is the strategic use of development finance for mobilisation of additional finance towards sustainable growth in developing countries.
According to a new report titled: “Blended finance in the Least Developed Countries,” increases in SDG financing must benefit and include the world’s 47 Least Developed Countries (LDCs) including Uganda, at risk of being left behind. While ODA and domestic public finance remain essential, they will not be enough for LDCs to meet SDGs targets.
Ms Judith Karl, the United Nations Capital Development Fund executive secretary, however, warned that blended finance should not be considered as a cure to LDCs financing challenges.
“We also need to see blending for what it is – not as a cure-all, but as a complement to purely public or private financing options,” she said.
Blended finance, Ms Karl said, is not the easiest way because it requires capacity, time and experience.
Sharing his experience, Dr Julius Muia, the Principal Secretary for Planning, National Treasury, and Ministry of Planning in Kenya, said you never have enough money in public sector to fund development gaps, noting that you need coordinated and focused attention to fund development needs.
Mr Jim Mugunga, the Ministry of Finance director Public Private Partnership Unit, said Ugandans must be involved for blended finance to work.

challenges of blended financing
Makerere University Economics lecturer Fred Muhumuza warned that blended financing presents challenges in matching the expectations of the public and private sector since they all pursue different aspirations. “We are not just blending finance. Private sector is profit-oriented while public sector is service oriented. So, we shall have challenges in matching expectations.”