Decentralizing Development Finance through Capital Markets Integration: The Emergence of Cabo Verde's Blue Sustainable Finance Exchange

In January 2020, the Bolsa de Valores de Cabo Verde (Cabo Verde Stock Exchange) and the UN in Cabo Verde, under UNDP technical leadership, began designing a platform to facilitate greater exchange between the supply and demand sides of sustainable finance.

The blue finance exchange (Blu-X) platform - a regional platform for listing and trading sustainable and inclusive financial instruments, such as blue bonds, green bonds, social bonds and sustainability bonds - connects issuers and investors in sustainable bonds and supports public-private partnerships. The platform attracts investment and resources towards strategic sustainable development objectives, notably towards the blue economy as a catalyst for SDG acceleration.

The case of Cabo Verde’s Blu-X platform illustrates three insights for the implementation of sustainable finance instruments for achieving sustainable development objectives:

1. Strategic context and political-economic institutions matter;
2. Focus on building the institutional capacity necessary to develop instruments;
3. Integrating an instrument horizontally (across sectors) and vertically (local-global) through, in the case of Cabo Verde, an INFF process can diversify development finance, while transcending the public-private divide.

Lessons from Cabo Verde can inform policy approaches in other contexts, especially in small island developing states, African middle-income countries, Portuguese-speaking African countries and others seeking to integrate capital markets into sustainable development financing strategies.