What Are Blended Investment Agreements?
Blended investment agreements combine different types of capital - commercial, philanthropic, and public - to achieve both financial returns and social impact. These structured arrangements use concessional capital to de-risk investments and attract commercial capital to projects that might otherwise be considered too risky.
In Ghana's development landscape, blended finance is increasingly used to address infrastructure gaps, support SMEs, and fund social enterprises while providing attractive risk-adjusted returns to commercial investors.
Typical Capital Stack Structure
First Loss Capital (Philanthropic/Public)
Absorbs initial losses, typically from foundations or development agencies. Accepts lower or no returns to catalyze investment.
Mezzanine Capital (Impact Investors)
Provides middle layer with moderate risk-return profile. Often from impact funds seeking both financial and social returns.
Senior Commercial Capital (Private Investors)
Top layer with lowest risk, attracted by first-loss protection. Seeks market-rate returns with reduced risk.
How You Earn Returns
Risk-Adjusted Returns
Returns commensurate with your position in the capital stack.
Impact Premium
Additional returns for achieving social or environmental targets.
Example Blended Finance Structure
GHS 10 million affordable housing project: GHS 2 million first-loss capital from development agency (0-3% returns), GHS 3 million mezzanine from impact fund (6-8% returns), GHS 5 million senior debt from commercial banks (10-12% returns). First-loss capital protects senior investors, enabling project viability.
Key Features
Risk Mitigation
Concessional capital absorbs first losses
Enhanced Returns
Commercial capital achieves better risk-return profile
Scalable Impact
Leverages commercial capital for development goals
Diverse Participation
Multiple investor types with different objectives
Common Applications in Ghana
Infrastructure
Renewable energy, water sanitation, transportation projects
Agriculture
Smallholder farmer financing, agri-processing facilities
SME Development
Credit guarantees, working capital for growing businesses
Affordable Housing
Low-income housing development and mortgage financing
Risks to Consider
Structural Complexity
Complex legal and financial structures require expertise.
Coordination Risk
Multiple stakeholders with different objectives and timelines.
Impact Measurement
Difficulty tracking and attributing social outcomes.
Quick Facts
Typical Investor Roles
Legal Framework
Blended investments in Ghana are governed by:
- • Companies Act, 2019
- • Securities Industry Act, 2016
- • Development Finance Regulations
- • International Investment Agreements