The Local Finance Initiative is an innovative tool for poverty reduction through local development, providing a vehicle for domestic capital – including local banks and pension funds – to invest in local development.

This programme exemplifies not only UNCDF’s leveraging capability, but also how UNCDF demonstrates that localized public finance can drive public/private funding for local infrastructure needs to underpin local economic expansion. It also shows that small but catalytic investments through this programme are having a transformational impact on local economies, supporting food security, women’s empowerment, job creation, and clean energy. 

In Tanzania, UNCDF has provided technical support and seed capital to structure public / private partnerships for hydropower. The Benedictine Sisters of St. Gertrud Convent Imiliwaha, for example, are developing the Lupali Small Hydro-Electric Power Project, a 317KW hydro-power project based in the Njombe District. The project will increase rural electrification to an estimated population of 5,625 people. In addition, the project will improve social service delivery of education and health services in the area by increasing access to electricity for 1 hospital, 4 dispensaries, 3 secondary schools, 7 primary schools, and 6 nursery schools. 

Through the provision of clean energy, the project will support the sustainable local economic development of the district, by improving the operational efficiencies of local businesses. The project will also be catalytic in improving food security, as refrigeration in the project area which will extend the shelf life of food. And it will support women’s economic empowerment, as it is owned and managed by women and addresses barriers to women’s economic participation. Access to reliable electricity for consumptive and productive use will enable women to shift time spent on unpaid care work dedicated to collecting firewood toward income-earning activities and education.

Scaled up, seed investments of about $6m through the Local Finance Initiative are expected to yield $100 million in investment from local banks in that country for such projects. This initiative is now emerging as a national platform for investable projects.