Country cases: Blended finance in development

How do governments use blended finance to attract private sector in development cooperation projects? The Trade Union Development Cooperation Network (TUDCN) has conducted field studies in Chile and the Philippines. Through them, the TUDCN shows that governments and donors must revise their use of blended finance and align private investments in development programs with the Sustainable Development Goals.

Whether investing in solar energy in Chile’s Atacama Desert or modernising Manila’s light rail lines, the involvement of private sector in development cooperation has not delivered any sustained and sustainable improvement for the populations in these countries. On the contrary, the studies show that short-term business objectives have driven the projects instead of the principles of development effectiveness and the SDGs.

Blended finance in development: Chile
“Chile: A shift from people’s needs to business demand”
This project is serving the needs of the energy-voracious mining industry despite being a development project that should benefit the people of Chile, notably the most deprived. Moreover, donor countries have openly approached this project as an opportunity to provide market access to their national enterprises, in clear breach of the development effectiveness principles.

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Blended finance in development: Philippines
“Philippines: Poor governance jeopardises development results”
This project is marked by a poor application of the development effectiveness principles and has presented many issues regarding its governance and management, as some wealthy few have pressured to put their interest before the common good of the people of Manila.

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“Cameroon: Weak social and environmental safeguards jeopardise development efforts”
This project is marked by a dangerous neglection of safety measures to protect the communities living around the energy plant. Furthermore, the supply chain of the plant is designed in an unsustainable way involving oil and lorry-based transport to get the fuel.

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