Chapter 08 · Finance, data & evidenceSustainable Finance & Investment
Development finance
Definition
Development finance encompasses the grants, concessional loans, equity, guarantees and private capital mobilised to promote the economic development and welfare of developing countries. Its best-defined component is official development assistance (ODA): government aid to countries on the OECD DAC list, concessional in character, with defined grant-element thresholds. The OECD DAC has measured these flows since 1961, and ODA makes up over two-thirds of external finance for least-developed countries.
References
Overview
What it means
The funding architecture behind the SDGs — from aid grants to blended finance and multilateral development bank lending.
How it is used
The term structures aid targets, concessional lending rules, and debates on mobilising private capital and reforming development banks.
Why it matters
Sustainability outcomes in developing economies depend on the scale, terms and additionality of development finance; it is the reference frame for climate-finance and biodiversity-finance commitments.