Milestone Achieved Despite Challenging Year for International Development Funding, Impacting UNCDF as well as Larger Organizations

The UN Capital Development Fund (UNCDF)—the UN’s flagship catalytic financing entity for the world’s 46 least developed countries (LDCs)—achieved a record for contributions mobilized in a single year, according to initial projections, with agreements signed in 2022 for USD 191.4 million (unaudited).

This milestone was particularly significant given the acute challenges that placed significant downward pressure on the disbursement of official development assistance—delivering humanitarian relief in response to global conflict, curbing high levels of inflation and debt, and addressing the economic impact to the COVID-19 pandemic—challenges that UNCDF as well as agencies larger in size had to confront to achieve their development mandates and deliver for their constituencies. Final audited figures for the 2022 contributions mobilized will be determined later in the current year.

With the recent close of the 5th UN Conference on the Least Developed Countries, as well as the adoption of the Doha Programme of Action (DPoA), UNCDF's achievement of this record speaks to its unique capabilities to catalyze finance to realize the DPoA--notably as a hybrid development finance institution and development agency that is highly supported by its donors, as well as its capabilities defined by the organization’s innovative financial mechanisms designed to provide financial approaches and digital solutions to countries, at the national and local levels. The milestone also speaks to the compatibility of UNCDF’s financial capabilities and unique capital mandate as international development transitions from a model of direct development funding to catalyzing capital finance for the least developed countries at rates that favor their development ambitions.

The > USD 191.4 million in contributions mobilized will finance a wide array of sustainable development projects: assisting local governments to access financing for climate adaptation, developing market systems that promote digital economies that are inclusive, supporting the accessibility and affordability of remittances, unlocking finance for infrastructure projects in low-income and middle-income countries, and catalyzing investment capital to small and medium sized enterprises in developing and least developed countries.

“UNCDF is proud to be associated with such a historic feat. We trust that this reflects a deep and abiding trust that we enjoy from our donors,” said Xavier Michon, Deputy Executive Secretary for UNCDF. “As we look ahead to the Doha Programme of Action, we will use this achievement as a platform to deliver a clear message to existing and prospective partners: that UNCDF stands ready as the financing mechanism to unlock public and private finance for the implementation of the Doha Programme of Action.”

“We would like to congratulate UNCDF for being able to grow their overall resources significantly in a year defined by a substantial resource crunch. We believe that this growth is a testament to UNCDF’s unique mandate to support private sector and to complement other UN agencies in this regard,” Holger Tausch, Head of Unit UN & Multilateral Development Banks, Federal Department of Foreign Affairs FDFA.

“We were pleased to join into the donor community of UNCDF in 2022, particularly because of their focus on supporting climate adaptation in the world’s least developed countries”, said Karin Poulsen, Director of the Department for Green Diplomacy and Climate, the Ministry of Foreign Affairs of Denmark. “Locally-led climate adaptation is a critical driver of achieving the Paris Agreement in the LDCs. We are proud to support UNCDF’s leadership in this area by virtue of the organization’s Local Climate Adaptive Living Facility or LoCAL.”

The Multi-Partner Trust Fund Office represented UNCDF’s largest donor in 2022, followed by the Government of Sweden. A significant portion of Sweden's funding is earmarked for the Last Mile Finance Trust Fund (LMF-TF), a global fund that provides flexible financing for partners to support the LDCs in their pursuit for sustainable development.

2022 also saw UNCDF welcome the Government of Denmark as a donor for the first time since 2018. Funding from the Government of Denmark will be used to finance UNCDF’s Local Climate Adaptive Living Facility (LoCAL), a standard internationally recognized mechanism that helps local government authorities in developing and least developed countries access the climate finance, capacity building and technical support they need to respond and adapt to climate change.

> USD 176.7 million of the contributions mobilized will be earmarked or “non-core” funding, which will be used to finance specific development programmes. A portion of the mobilized funds will be unearmarked or “core” funding, which will support UNCDF in three clear ways: piloting and innovating financing solutions to support sustainable development in LDCs; capitalizing UNCDF’s capacities for oversight, including evaluation; and supporting the UN Resident Coordinator, the highest ranking UN official in country, wherever UNCDF is currently operating.

“We would like to reiterate that Switzerland strongly backs UNCDF and invites other donor countries to join us in providing core support to UNCDF so that the organization can further invest into the quality and grow its ability to deliver more impactful results on the ground and support the LDC,” said Tausch.