The UN Capital Development Fund (UNCDF) works in least developed countries (LDCs), where it implements programmes along two dimensions of poverty reduction: Financial Inclusion, which expands the opportunities for individuals, households and small businesses to participate in the local economy and manage their financial lives; and Local Development Finance (LDF), which uses fiscal decentralization, innovative municipal finance and structured project finance to mobilize public and private funding for local economic development.

The Local Finance Initiative (LFI) is one of several programmes under the LDF umbrella. The overarching goal of LFI is poverty reduction and the achievement of the Millennium Development Goals, specifically Goal 1: Eradicate extreme poverty and hunger, and to contribute to Goal 3: Promote gender equality and empowerment and Goal 7: Ensure environmental sustainability.

The overall outcome sought by LFI is to “increase the effectiveness of financial resources for local economic development (LED) through mobilisation of primarily domestic private capital and financial markets in developing countries, to enable and promote inclusive and sustainable local development.” The financing raised is invested in public, private or public-private partnership projects in specific sectors: food security, agro-processing, local services, clean energy and climate resilience.