Dos and don’ts of blended finance in agrifood systems
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This paper briefly reviews the definition of blended finance and the characteristics of blended funds in agrifood systems. It then focuses on lessons learned and finally makes recommendations to fund managers and concessional investors, that is, investors expecting a financial return below market rate. They are presented as “dos and don’ts” to make the best use of blended finance in agrifood systems and to strike a balance between development ambition and financial viability. The analysis and conclusions are based on the first-hand experience of the FAO Investment Centre with four blended funds supported by the European Commission, existing literature and 70 interviews conducted with donors, development finance institutions, impact investors, banks and assets managers between 2020 and 2025. While there is much debate as to how blended finance can be leveraged to support the transformation of agrifood systems, this document adopts a practitioners’ and agnostic view. Bearing in mind that blended finance is only one approach among others, it intends to provide practical advice for both private and public investors who may be considering exploring or further developing this option.