July 15, 2015 - Addis Ababa, Ethiopia
Check Against Delivery
Thank you, Caroline.
And thank you to the World Economic Forum for hosting this blended finance launch event.
We have reached a pivotal time in development.
Only months from now, the Millennium Development Goal period will come to an end—to be replaced by the more ambitious and far-reaching Sustainable Development Goals.
We know that post-2015, financing the SDGs will be challenging.
To achieve the goals, we will need to mobilize not billions of dollars, but trillions—far more than the world currently puts toward international development.
By most estimates, about 10 times more.
It is clear beyond any doubt that official development assistance, or ODA, while still important, will be insufficient to fully fund the post-2015 development agenda.
But where are these additional resources going to come from?
A fundamental rethinking of traditional approaches to development financing is necessary if we are to eradicate extreme poverty by 2030.
Increasingly, Canada is convinced that the solution lies in mobilizing private capital that supports development in emerging and frontier markets.
This is what we call blended finance: joint investments where governments and the private sector are partners in projects that deliver the development outcomes that governments seek and the financial returns that the private sector needs.
Canada has been a leading proponent of blended finance for some years.
We recognize that partnership is key to convincing private-sector investors to turn their attention to developing countries.
Without it, they are too often discouraged by a perception of risk, by a lack of understanding of the local market, and by a sense that better returns can be found in developed markets with which they are already familiar.
That is why we have worked to bring global partners together to expand the pool of foreign and domestic capital for projects that accelerate social and economic progress in the developing world.
Canada’s partnership with Sarona Asset Management is an example of that.
We provided seed funding of $15 million for a fund committed to investing in small and medium-sized enterprises in emerging markets so they can grow and create new jobs.
With this government support, Sarona was able to mobilize an additional $150 million from the private sector.
Cleary, blended finance works.
And leverage works.
So how do we ensure it happens on a grand scale?
This is where the Redesigning Development Finance Initiative comes in.
It has played an important role in creating awareness of the importance of blended finance and in building knowledge of how it can contribute to development.
As Chair of the initiative’s Steering Committee, I have seen ideas become reality as the RDFI members worked to create innovative solutions to the common challenges of financing the world’s development needs.
And today, flowing from this collaboration, I am pleased to formally announce the next logical step in our pursuit of blended finance.
It is called “Convergence.”
Canada, in partnership with the World Economic Forum, the Global Development Incubator and many partners here today, is launching Convergence to accelerate the scaling up of blended finance.
Convergence is a global platform that will provide information, tools and training surrounding blended finance.
Convergence will connect public and private investors, forge new partnerships and pilot new blended-finance models in developing countries.
Convergence will address a number of the barriers that are preventing the concept from realizing its full potential.
Barriers like a lack of knowledge and data, high search costs of identifying partners, and the high risk associated with testing new blended finance models.
This is an idea whose time has come.
And like all great ideas, it will require partners.
Partnerships will be essential to unlocking the massive potential of blended finance, and we already see many opportunities for Convergence to support initiatives such as the Sustainable Development Investment Partnership, which has been formed to better connect international assistance and private investment.
Convergence will also complement other platforms like the Global Infrastructure Facility, established by the World Bank Group to facilitate public-private partnerships to address massive infrastructure gaps.
Canada is the first co-chair of this important initiative, and I am pleased to announce that we are contributing $20 million to support the GIF.
I am proud that Canada has played a lead role in the creation of Convergence with the tremendous support of other founding members such as the Netherlands, Senegal, Ethiopia, MasterCard and Black Rhino.
So I welcome your views on, and participation in, Convergence. At today’s event you will be able to meet with some of our “ambassadors” who can introduce you to the initiative’s potential.
And I look forward to today’s discussions. Blended finance is the key to unlocking the trillions of dollars we will need to achieve the SDGs.
What we need to hear now is how Convergence can be shaped to best meet your needs and the needs of the people who will benefit from the partnerships that will be created as part of this revolutionary platform.
Thank you.
