Published by
Donor Committee for Enterprise Development (DCED)

This document is a summary of a wider report. It is a one page framework relevant for any practitioner looking to channel innovative finance into their market of operation. 

It unpacks the various definitions in use for the term 'innovative finance', including related terms like 'blended finance' and 'impact investing' - in order to demystify and clarify the field. It then identifies opportunities and challenges for donors in scaling up such approaches.

It lists the obstacles to donor engagement as:

  1. The growing importance of innovative finance in donor strategies and budgets has not yet been matched by a corresponding clarity and consistency of definitions
  2. While positive data on leverage and investor perceptions is emerging, evidence on results is generally fragmented and generally scarce 
  3. Innovative finance has led to a shift in responsibilities of both donors and development finance institutions (DFIs), and there is a need to understand what roles would be best played by donors. 
  4.  Despite their increased engagement in innovative finance, donor agencies tend to have limited expertise and experience in sharing and managing risk.