Additionality of mobilized private capital: Crowding-in or crowding-out?
News from 2020-07-16 / KfW Research, KfW Development Bank
Development in Brief
The ambitious global sustainability goals (SDGs) explicitly call for a commitment by the private sector, in cooperation with the established state institutions, since the SDGs cannot be achieved without additional private capital. With this in mind, the OECD is currently developing guidelines for the OECD DAC Blended Finance Principles adopted in 2017, which are intended to pool existing knowledge on the topic and at the same time focus on practical design and implementation. As one aspect of blended finance, the keyword "additionality" is used to discuss how additional private capital can be mobilized and additional effects achieved through state intervention, if possible without distorting the market.
In this edition, "Development in Brief " takes a closer look at additionality in private capital mobilization and draws attention to the challenges and its growing importance in mobilizing or crowding in additional private capital.