Meeting Reaffirmed UNCDF’s Commitment to be the Lead Partner for Inclusion, Opportunity and Sustainability for the LDCs

Ahead of the COP26 Climate Change Conference in Glasgow, the UN Capital Development Fund (UNCDF) completed its strategic dialogue with the Government of Sweden. As the UN’s flagship catalytic financing agency for the world’s 46 least developed countries (LDCs), UNCDF and our lead Swedish partners—The Ministry of Foreign Affairs and the Swedish International Development Cooperation Agency (Sida)—met before the COP26 Conference to strategize around their shared commitment to combating the worst impacts of climate change in the last mile countries and geographies that will experience many of the severe impacts.

The Strategic Dialogue was an opportunity for UNCDF and its Swedish partners to align on a set of thematic areas to drive their collective work to address climate change. More specifically, this includes programmes and interventions that focus on three prioritized areas: climate adaptation, clean energy, and biodiversity; relying on an array of innovative finance tools and instruments to deliver critical flows of capital that will support climate supportive projects.

In the process, UNCDF looked to express to its Swedish partners the critical role that it plays in the development finance sphere. UNCDF is ideally and singularly positioned to finance projects that can clearly and evidently deliver on sustainable development and return on investments in the world’s least developed countries, or frontier markets. This fills the “development finance gap” where other development finance institutions find it difficult to take on smaller-ticket or riskier projects in these r markets. UNCDF also fills the gap where other UN member agencies lack the mandate to make investments through loans and guarantees, which is a unique authority and a competency of UNCDF.

Additionally, the dialogue was intended to deliver a powerful message to the actors in the global financial architecture ahead of COP26: that UNCDF is fully committed to serving as the lead UN partner to support and advocate for the greater financial inclusion, opportunity and sustainability of the LDCs.

“We are pleased with UNCDF’s strategic dialogue with Sweden. In today’s environment of constrained ODA, UNCDF’s uniqueness to leverage ODA in the most catalytic fashion makes it an important and valuable partner for Sweden in the UN system. Sweden supports their ambition to fill the gap in the development financing architecture, particularly with respect to the world’s most challenging markets, while working to provide their own financial instruments and vehicles to the rest of the UN system. UNCDF’s focus on advancing climate financing—through its Local Climate Adaptive Living Facility (LoCAL), IDE Energy programs and now within the Global Fund for Coral Reef—by building bridges between public and private finance is ever more necessary for us to deliver on the Paris Targets, including in frontier markets,” said Mr. Carl Skau, Deputy Director General at the Swedish MFA.

“Sida is enjoying the strategic partnership with UNCDF that we have had over the past several years and we believe that UNCDF’s ability to use array of innovative finance tools and instruments is aligned with Sida’s approach to leveraging catalytic financing to mobilize government and private sector funding,” said Ms. Cecilia Scharp, Sida Assistant Director General. “Our support to UNCDF spreads across the areas of climate, energy, biodiversity, digital technologies as well as working at the local level. We are extremely pleased with UNCDF’s Local Climate Adaptive Living Facility (LoCAL). It is scaled up since we provided the initial support to help local government authorities access the funding from the Green Climate Fund. Similarly, IDE Energy (formerly CleanStart) has been able to make a significant mark on building companies that support the creation of energy access systems that are critical for the development of LDCs. The new strategic framework for UNCDF presented by Ms. Sinha is spot on with our priorities and we will stay engaged with the organization as it implements its strategy in the service of LDCs and the UN development system. We would also like to use the opportunity to invite other development agencies to partner with UNCDF to deliver the greatest possible impact of official development assistance in the places where it is needed the most.”

“It is an honor for us to be here in Stockholm just before COP to meet our most trusted and important partner Sweden. UNCDF is the flagship catalytic financing agency for the LDCs and the support from Sweden is critical for us to deliver on this mandate.” said Preeti Sinha, Executive Secretary of UNCDF. “I had the opportunity to share the ambition and vision of our new strategic framework with our colleagues and it was received very well. In the new strategic framework, UNCDF aims to help in the UN Development System reform process by engaging with other UN agencies, while offering our financing tools to help the system move from funding to financing with impact. We believe that this would also help create a robust pipeline of transactions for development finance institutions and multilateral development banks in the riskiest markets. In our new strategic framework, UNCDF is sharpening its programmatic focus on climate, energy and biodiversity as well as advocating for their intrinsic connection to each other to support greater sustainability. Finally, the Strategic Dialogue provided us with an opportunity to extend our appreciation to our Swedish partners for supporting the creation of our LDC Investment Platform team, which provides the UN system with an in-house impact investment team to support the organization’s development goals,” said Ms. Preeti Sinha, Executive Secretary of UNCDF.

Executive Secretary Sinha met with an array of leaders representing the Swedish Ministry of Foreign Affairs as well as the Swedish International Development Cooperation Agency (Sida). Among them: Carl Skau, Head of Department for UN Policy, Conflict and Humanitarian Affairs with the Ministry of Foreign Affairs; Dag Sjögren, Deputy Director, Global Agenda Department with the Ministry of Foreign Affairs; Maria Håkansson, CEO and Managing Director of Swedfund; Cecilia Scharp, Sida Assistant Director General; Alan AtKisson, Sida Director of the Department of Partnership and Innovation and Sida Assistant Director General; Maria Van Berlekom, Sida Head of Unit for Global Cooperation on Environment; True Schevdin, Sida Head of Unit for Global Sustainable Economic Development; Karin Andersson, Sida Head of Unit for the Africa Department; and Erik Korsgren, Sida Head of Unit for Guarantees and Catalytic Financing for Development.

As UNCDF’s largest donor of non-earmarked (core) and earmarked (non-core) funds, Sweden’s support for UNCDF reflects the full suite of the organization’s expertise, innovations and financing. They also reflect a wide array of development themes:

Local Transformative Finance

• 536 local governments supported in 42 countries, completing 674 localized strategic investments in 2020.

• As of December 2020, 106 projects reached financial closure, representing formal approval for financing—advancing local economic development, women’s empowerment, food security, climate resilience and adaptation, renewable energy and municipal finance.

• Recognized by the SME Finance Forum of the International Finance Corporation (IFC) in 2021 for product innovation of the year for the Dual Key system, which enables UNCDF to determine whether a prospective project will receive financial support from UNCDF with the goal of unlocking further finance.

Inclusive Digital Economies

• Over 6 million registered customers with new or improved digital services supported by UNCDF spanning 2020 and 2021.

• Over 2 million customers with improved skills and capabilities as a result of UNCDF support.

• 141 digital services and business models piloted and 55 digital services and business models scaled through a UNCDF partnership.

• Nearly US$5 million in commitments to advance global remittances and over 1 million inbound transactions through digital channels supported by our programme.

Local Climate Adaptive Living Facility (LoCAL)

• 11.5 million people reached through the LoCAL programme, executing nearly 1,600+ localized investments through its performance based climate resilience grants.

• As of 2021, 14 countries implementing the LoCAL programme across Africa and the Asia-Pacific region, with expansion underway in another 13.

• 4 successful accreditations to the Green Climate Fund, proving LoCAL’s capability as a pathway to international climate financing for local government authorities.

Inclusive Digital Economies Clean Energy

• 7 million women, men and children accessing and benefiting from clean energy due to products sold through our programme.

• 1.2 million tonnes of an estimated CO2 offset as well as an estimated 420,000 tonnes of firewood saved.

• US$14 million leveraged to finance over 70 energy service companies to finance the clean energy “missing middle” in last mile markets.

Women’s Economic Empowerment

• Since 2018, UNCDF has initiated 25 localized investments on women’s empowerment unlocking an additional $3.5 million from local partners and directly benefiting over 32,000 women in the targeted countries

• UNCDF in 2020 was chosen as global leader of the Generation Equality Action Coalition on Women’s Economic Justice and Rights. UNCDF and the Government of Sweden were specifically chosen to lead the Coalition because of our track record of advancing women’s economic empowerment through local finance and digital finance approaches.

UNCDF’s Investment Continuum

• UNCDF’s LDC investment Platform has launched an on-balance sheet financing facility (the BRIDGE Facility) and an off-balance sheet impact investment fund (the BUILD Fund), which drive UNCDF’s investment continuum.

• BRIDGE and BUILD are intended to finance projects that fall into the development finance gap, where the capital needs for projects are too large for micro-finance institutions and too small for commercial investors and development finance institutions.

• BRIDGE and BUILD are both designed to finance small businesses, local infrastructure projects and financial service in last mile markets.