The United Nations Capital Development Fund (UNCDF) today awarded TZS 2.4 billion seed capital grants to public and private sector project developers during an Award Ceremony held in Dar es Salaam. Mr. Jumanne Sagini, Permanent Secretary from the President’s Office, Regional Administration and Local Government (PO-RALG), and Mr. Peter Malika, UNCDF Representative in Tanzania, handed out six checks to representatives from public and private developers, including TZS 1.6 billion for commercially viable projects developed by local authorities in Tanzania. 

The Award Ceremony also served to provide an overview of key achievements of the Local Finance Initiative (LFI), a UNCDF programme in support of social and economic actors involved in projects that contribute to local economic development and to transform local communities in Tanzania. 

During 2015, the LFI Technical Team provided targeted technical support and seed capital to over 30 projects, nine of which are now in advanced stage and thus ready for investment including six of them that were awarded funding today during the ceremony:

1. Kibaha Town Council for construction of a modern commercial bus terminal and market: TZS 1.07 billion.
2. Moshi Municipal Council for construction of a modern commercial bus terminal: TZS 509 million
3. Ileje Municipal for community radio tower infrastructure in partnership with private sector: TZS 226 million
4. Ensol Ltd a private solar power generation (village grid) project in rural Korogwe district: TZS 265 million
5. Lupali, a private small hydro-power plant owned and operated by women in rural Njombe District: TZS 107 million
6. Maguta, a private small hydro power generation project in rural Kilolo District: TZS 214 million

Mr. Sagini, during his allocution, praised UNCDF’s innovative work in local development finance and strategic approach that minimizes risks in catalytic infrastructure projects that are critical in accelerating local economic development in Tanzania.  

“The LFI Programme was launched at a time when the Government of Tanzania had undergone a number of economic reforms, including changes in laws, policies and regulations aimed at supporting investments led by local authorities. In addition to technical support, seed capital and guarantees, the LFI Programme, for the last three years, has been instrumental in promoting the establishment of appropriate governance structures, and the separation of duties that make it easy for local government investment companies to access commercial capital from the private sector.”

He added that, “Through close collaboration with UNCDF, efforts are underway to scale up the adoption of the LFI approach in local governments to enhance capacities of local government to effectively plan, budget, identify, and implement similar projects with the private sector. These investments will result in an increased revenue for local governments and the creation of opportunities for quality service delivery, trade, entrepreneurship, jobs, empowerment of women and youth, and the improvement of people’s lives.”

The Kibaha Town Council Executive Director, Ms. Jenifa Omolo thanked the PO-RALG for their guidance and support as well as UNCDF for their technical expertise in project finance, governance structures and participation in key negotiations with the Tanzania Investment Bank to make possible that their projects reach a financial closure.   

“We have no market in our town just small stalls and we only have a small bus terminal which is not enough to meet the demand – this has been a major challenge for us for over ten years. Our town is growing and we now need modern facilities. Ms. Omolo continued to say that the Kibaha Town Council has a responsibility to provide quality service”, and added “that the new modern facilities will help to increase revenue for Kibaha.”

Mr. Malika commended the Government of Tanzania for its continued commitment and partnership with the UN system in Tanzania, “the UN through UNCDF will continue to work with the Government of Tanzania as we believe in poverty eradication through the LFI approach that fosters the transferring of investment capital to the local level to promote local development.”

Mr. Malika also stated that, “Despite significant inflows of public and private investment capital for infrastructure, very little is reaching the critical local infrastructure that forms the backbone of dynamic local economies. LFI was designed to address these challenges and it set out to show that local infrastructure projects that are prioritized by local governments and communities can attract funding if existing capital market failures are addressed. LFI was also designed to further promote economic transformation by unlocking primarily domestic capital to fund these projects, thus deepening capital market development and further economic integration and resilience.”

Since its launch in 2012, LFI-T has supported more than 30 local development projects in Tanzania as they advanced from the planning to the investment-ready stage, working closely with the PO-RALG and financial institutions. LFI-T supports projects in 18 regions, spread across several sectors ─ agro-processing, climate resilience and clean energy, community infrastructure, telecommunications, and manufacturing.  LFI-T will continue operating in Tanzania until 2019. To ensure sustainability of the programme, UNCDF, in close collaboration with the PO-RALG, is working on establishing a national platform to further replicate the LFI approach with local governments and the private sector.

In conclusion, the Permanent Secretary congratulated the developers that received seed capital investments from UNCDF and wished them well on their projects. “The Government of Tanzania welcomes the extension of the LFI-Tanzania programme for four more years and reiterates its commitment to support its implementation.”

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UNCDF’s work on local development finance aims at ensuring that people in all regions and locations benefit from economic growth. This means dealing with the specific local challenges of, for example, peri-urban areas and remote rural locations. It means investing domestic resources into local economies and services through, inter-alia, fiscal decentralization, climate finance and project finance. UNCDF focuses its efforts towards strengthening public financial management and local revenue, improving the quality of public and private investments at the local level.