New Delhi [India], August 25 (ANI): Governments must provide regulatory certainty and support policy reforms to attract private capital, while creating a predictable policy environment that can help unlock greater investment in development projects, Arturo Franco, Director of Strategy at the World Bank, said on Tuesday.
"Blended finance has nothing to do with regulatory certainty. This is the work of governments," Franco said, adding that governments have a key role in removing barriers that prevent private capital from flowing into development projects.
Speaking at the AVPN Global Conference 2026 in New Delhi, Franco stressed the challenge of scaling development finance. He said not every development challenge can be funded by the private sector because not all development challenges have a commercial aspect.
However, he also shared that many more development challenges could be funded by the private sector than are currently being financed through investment and commercial means.
"One of the first things that our current president, Ajay Banga, did early in his term was bring together a group of about 15 CEOs from the asset-owning companies, which is called the Private Sector Investment Lab," Franco said.
The Private Sector Investment Lab identified five major obstacles that need to be addressed to enable greater private capital deployment in emerging markets and developing countries, he said.
"The first one was regulatory certainty. So blended finance has nothing to do with regulatory certainty. This is the work of governments," Franco said.
He said philanthropy can help create institutional capacity, while the World Bank can support policy reforms through funding.
"Philanthropy, by the way, can help by creating institutional capacity. The World Bank helps by funding policy reforms. But it is really government that can open up that obstacle to the private sector," he said.
Franco also identified foreign exchange (FX) risk and political risk arising from policy changes as other challenges facing investors.
"The next two are just the nature of the world. One is FX risk, and the other one is political risk of policy changes, etc.," he said.
On the demand side, Franco highlighted the lack of a strong pipeline of investable projects in emerging markets and developing economies.
"There is no standardisation of emerging markets or developing economy projects that are related to sectors that are investable -- agriculture, health, water, etc.," he said.
He said multilateral institutions are working to originate projects that can subsequently be distributed to the market.
Franco also said concessional private equity, particularly the junior tranche of a blended structure, remains scarce.
"Private equity, and particularly the junior tranche of a blended structure, so concessional private equity, is the most scarce type of capital out there," he said.
While blended finance has a role in mobilising private investment, Franco said it is only one of the five obstacles identified by the Private Sector Investment Lab.
He also stressed the need for an outcome-led approach, under which governments, philanthropy, multilateral institutions and private capital align around clearly defined development priorities. (ANI)
Govts must provide regulatory certainty to attract private capital: World Bank's Franco
