JAKARTA (TheInsiderStories) – The Asian Development Bank (ADB), together with other development finance institutions (DFIs) reported used about US$1.2 billion in concessional funds to support nearly $9 billion in private investment projects in emerging markets in 2017.
These projects included $3.9 billion of commercial financing from DFIs as well as $3.3 billion from private lenders and investors, according to a new DFI report that highlights how blended concessional finance can be key to mobilizing private investment in challenging environments.
Blended concessional finance involves combining concessional funds with private sector and DFI commercial financing, also allows DFIs to support private sector investment in order for investors and lenders to provide financing to projects that they would normally not be able to, particularly in higher-risk countries.
The report highlights that projects financed by DFIs are increasingly leveraging this type of financing to channel private investment into challenging markets particularly in low and lower-middle-income countries.
In 2017, 80 percent of ADB’s blended concessional finance transactions were in lower-middle-income countries, including a new geothermal project that will pioneer the use of dual flash geothermal technology in Indonesia, which increases resource utilization.
The report also notes best practices and improvements in governance, decision-making processes, documentation, training, and effective monitoring to ensure concessional funds are used efficiently.
Indonesia as a developing nation continues financing the current infrastructural development, – Islamic Commercial Finance and Islamic Social Finance that are significant. However, in order to be successful, there is substantial need to maximize the role of private sector by providing space and heightening public participation.
“Indonesia has enjoyed strong economic growth and is making significant advancements in its efforts to end extreme poverty,” said the World Bank Group President Jim Yong Kim in his opening remarks at the 2018 Annual Meetings.
Indonesia’s GDP per capita has risen from 785 dollars in $2,000 to more than $3,800 in 2017. And the poverty rate here has been cut nearly in half – from 19.1 per cent in 2000 to 9.8 per cent today.