Blended Finance Innovation to Accelerate Sustainable Development, A Case from Indonesia at AIM Congress
JAKARTA, investor.id - Amid the challenges posed by the climate crisis, developing countries are now seeking ways to accelerate their growth sustainably.
Executive Board of Koalisi Ekonomi Membumi, Lishia Erza, stated that the climate crisis has transformed the global economic landscape, prompting urgent changes, especially in developing countries whose economies are significantly affected by climate change. In response to these challenges, a key emerging factor is innovation in funding.
“Blended finance not only opens new opportunities for investors but also strengthens the local economy’s capacity to manage and utilize natural resources responsibly," said Lishia Erza, who was one of the panelists at the AIM Congress 2024 held in Abu Dhabi recently.
Lishia explained that such financial innovations could encourage more investors to consider high-impact projects, ultimately steering the economies of developing countries towards a greener and more inclusive direction.
Strategic engagement between the government, businesses, and investors is essential for the successful transition to renewable energy, decarbonization of industry and transportation, and the implementation of a circular economy.
At the congress, she stated that the innovative blended finance model is viewed as a strategy with transformational potential. This model combines public funds with private investment to reduce risks and attract more investment into projects with social and environmental impacts.
Although impact investment has shown significant growth—with total assets reaching USD 40 billion in 2022—a report from the Global Impact Investing Network (GIIN) indicates that only about 5% of this total is allocated to Southeast Asia. This figure is relatively low compared to other developing regions such as Sub-Saharan Africa, Latin America, and South Asia, which have averages of around 8-10%.
AIM Congress 2024, attended by over 170 countries, is an initiative of AIM Global Foundation and has become a leading investment platform in the Middle East. The congress aims to trigger positive transformation by creating sustainable investment opportunities and fostering international cooperation in promoting sustainable economic growth.
In the context of impact investment, Lishia added that sectors such as energy, transportation, and industry have received considerable attention. However, it is also crucial to focus on businesses involved in ecosystem conservation, such as forests and peatlands. “These ventures are often small-scale and face high investment risks, but they hold the key to preserving biodiversity and the well-being of local communities,” she said.
Innovative approaches in financing will be crucial. Blended finance offers a promising mechanism to reduce financial uncertainty and enable larger-scale investments in projects that support sustainable development.
By prioritizing blended finance, developing countries not only strengthen their green infrastructure but also ensure that their economic growth occurs fairly and inclusively. “Such initiatives not only accelerate the transition to a more sustainable economy but also bolster economic resilience in the face of increasing global environmental challenges,” said Lishia.
This article was published on investor.id on May 10, 2024, with the title "Inovasi Pendanaan Campuran Buka Jalan untuk Pembangunan Berkelanjutan", https://investor.id/national/361294/inovasi-pendanaan-campuran-buka-jalan-untuk-pembangunan-berkelanjutan
Author: Kunradus Aliandu | Editor: Kunradus Aliandu
