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April 22, 2015

Canada Announces Development Finance Initiative

Purpose Capital applauds the Government of Canada on its recent decision to establish the Development Finance Initiative. Alleviating poverty in developing countries is a complex issue that can benefit from coordinated engagement across the public, private and social sectors. The private sector has an important role to play promoting social innovation and inclusive wealth generation, by catalyzing market-based approaches to development that generate sustainable livelihoods.

As a complement to philanthropic and development programs, innovative financing strategies can provide patient and flexible capital to test new approaches or scale proven solutions to poverty alleviation. By aligning financial returns and social impact measures, these approaches can enhance access to quality products and essential services, stimulate new entrepreneurial opportunities for youth, provide decent work for rural and female entrepreneurs, and strengthen the resilience of households and communities.

Purpose Capital acknowledges the leadership of Minister Christian Paradis in championing innovative finance approaches for international development, including the possible establishment of a Canadian Development Finance Mechanism. A DFM will complement Canada’s Official Development Assistance budget by providing access to new funding tools – such as low-cost debt, loan guarantees, and quasi-equity investments – that can be directed towards generating compelling economic benefits and measurable social impact in developing countries, while building effective partnerships with the Canadian private sector.