Blended Finance Evaluation: Governance and Methodological Challenges

There is an urgent need to better understand the role that the use of blended finance in development co-operation can play in achieving the SDGs. By adopting the “Blended Finance Principles for Unlocking Commercial Finance for the SDGs” in 2017, members of the OECD’s Development Assistance Committee have committed to “monitor blended finance for transparency and results”. The practical implications of monitoring and evaluating blended finance are currently being explored with a view to providing further policy guidance on the implementation of such Principles. This paper contributes to the ongoing consultation process s by discussing governance and methodological challenges in blended finance evaluation and proposing a few options to deal with them.In their review of the present practice of blended finance evaluation, as of end 2018, authors identify some key issues that need to be addressed and put forth initial ideas in order to ensure that evaluations improve the knowledge base on blended operations. The paper starts with a discussion of some key management and organizational challenges that influence how blending operations are monitored and evaluated. It continues with an overview of main evaluation methodologies that could be used for blended finance evaluation and challenges associated with applying them, and it outlines the challenges of assessing additionality. The paper concludes with a summary of identified issues from a review of a sample of completed evaluations of blended finance, highlighting the methodological challenges that they reveal.