Impact Policy Tracker Policy

SDG Loan Fund



The SDG Loan Fund is a large-scale blended finance vehicle launched in 2022 with a total fund size of approximately USD 1.1 billion, making it one of the largest blended finance funds brought to market in recent years. The Fund was conceived by Allianz Global Investors (AllianzGI) in partnership with the Dutch development bank FMO, with the objective of mobilising institutional capital at scale to support sustainable development outcomes in emerging and frontier markets.

The SDG Loan Fund operates across more than 80 emerging and frontier markets in Africa, Asia, Eastern Europe, and Latin America, in line with FMO’s development mandate and aims to deploy 100-120 loans over an investment period of 25 years. Investments focus on three core sectors - renewable energy, financial institutions, and agribusiness - supporting local companies and intermediaries that serve small and medium-sized enterprises and contribute to inclusive and sustainable growth. The Fund explicitly targets SDG 8 (Decent Work and Economic Growth), SDG 10 (Reduced Inequality), and SDG 13 (Climate Action), and is classified as an Article 8 fund under the EU Sustainable Finance Disclosure Regulation (SFDR).

Once fully invested, the Fund is expected to support approximately 60,000 jobs and avoid around 450,000 tonnes of CO₂-equivalent emissions annually, based on FMO’s historical performance.

Highlights

  • DFIs as Catalysts for Private Capital Mobilisation: The SDG Loan Fund showcases the powerful role of development finance institutions in crowding in private investment. FMO’s participation demonstrates how taking on higher-risk, catalytic positions can unlock substantial additional capital, achieving a mobilisation ratio of 1:9 - for every dollar committed by the DFI, nine dollars of private capital were mobilised. By anchoring the fund’s risk structure, FMO enables institutional investors to participate in markets and sectors they would not typically access on their own, illustrating how DFIs can move beyond traditional lending roles to act as true market enablers at scale.

  • Strategic Partnerships to Mobilise Capital at Scale: The success of the SDG Loan Fund rests on a highly aligned partnership in which each actor plays to its comparative advantage. Allianz Global Investors brings deep knowledge of institutional investor requirements and credibility with global asset owners; FMO contributes origination capacity, market presence and development expertise in emerging markets; and the MacArthur Foundation acts as a catalytic partner, using philanthropic tools to strengthen the overall structure.

Government’s Role:
Market Participant


Country:
the Netherlands

Policy Type:
Funding Programmes

Year: 2023

Responsible Institution:
Dutch Development Bank FMO

Additional Information:
Convergence Blended Finance Fact Sheet – SDG Loan Fund

Funding Programmes

What are funding programmes?

Funding programmes - which provide financial resources in the form of grants, loans, equity, and guarantees - can be used by governments and public institutions to address financing gaps and attract private sector participation, often through dedicated funding windows, government-backed funds, and public-private partnerships, towards businesses that place social and/or environmental impact at their core. By doing so, they help grow a pipeline of mission-oriented organisations capable of addressing systemic challenges while contributing to inclusive and sustainable economic development.

This support can take various forms: capital provided directly to enterprises to meet early-stage or growth financing needs; investments channelled through intermediary funds to reach a broader range of businesses; or blended finance models where public or philanthropic actors absorb higher risks to make investments viable for private investors. The design of these mechanisms is often catalytic, helping to build investor confidence, promote financial inclusion, and strengthen the resilience of social enterprises across diverse sectors and geographies.