The budget commits CAD 1.5 billion (US$1.15 billion) over the next five years, with a further CAD 493 million annually thereafter, to support innovation in Canada’s international assistance.

“Canada will do more to help vulnerable people around the world by making the largest new investments in international assistance in more than a decade,” says Finance Minister Bill Morneau.

This CAD 1.5 billion signals Canada’s commitment not only to innovative development finance, but to blended finance. The new budget states that these new funds will give the government greater flexibility for financing arrangements and partnerships and allow it to explore new and innovative ways to achieve its objectives, including the use of financial instruments such as guarantees, equity and conditionally repayable contributions.

There is ample evidence over the past decade that governments can strategically deploy a portion of their international assistance budgets to attract private sector investment into a country or project the private sector would otherwise not invest in. This has the potential to catalyze significantly larger amounts of investment into developing countries.

Here is a look at what CAD 2.1 billion per year would mean for Sub-Saharan Africa (SSA):

  • Financing to local financial institutions to provide loans to women-owned and women-managed SMEs
  • Financing to water projects in rural villages, which would save families (usually women and girls) hundreds of hours per year spent procuring water for household use.
  • Project finance to renewable power projects to bring clean electricity to low income households.
  • Financing to education projects, companies, and ministries to raise the quality of education.

Read the full article about Canada's innovative financing from Convergent Finance at ImpactAlpha.