As Prepared for Delivery

Madame Vice President, Members of the Executive Board, Excellencies, Delegates, and friends.

It is an honor to join you all today for the 2024 annual session of the UNDP/UNFPA/UNOPS Executive Board.

My first address as the Executive Secretary of UNCDF coincides with an extraordinarily challenging time for development prospects, development finance, and multilateralism.

The UN Capital Development Fund was created in 1966 to assist developing countries, especially Least Developed Countries, in economic development by supplementing existing capital assistance.

Today—as all of us stand nearly 60 years removed from the inception of UNCDF, there is one fact that we must take into consideration—the transformational force of global development has bypassed developing countries in general, and LDCs in particular.

And to be clear, I am not referring merely to economic development. I am referring to human development.

This year’s UNDP Human Development Report couldn’t have stated it more clearly.

That while global Human Development Indicator levels were projected to reach record highs, this masks the fact that only half of LDCs are projected to recover their pre-2019 HDI values. This is compared to 100% of all OECD countries.

We are witnessing the “actual-leaving behind” of people, communities, enterprises, governments, countries, entire regions in real time.

And a critical reason for this stark divergence is the immense difficulty that developing countries and least developed countries experience in accessing the financing necessary to capitalize their own national development visions.

When we analyze the nature of these barriers to finance, the case for UNCDF—for an optimized UNCDF of the future—becomes that much more clearer. Three particular constraints stand out the most.

One barrier involves the uncertainty of these markets.

The total external debt of LDCs in 2022 exceeded half a trillion dollars, more than twice the level of official development assistance.

Another barrier involves the risk palette of capital providers.

Many financial institutions are not able or willing to deploy financing to the markets that UNCDF looks to serve.

At the same time, there is also a development finance gap. It exists in the space between the deployment of grants that are accessible but small in volume, and commercial capital that is larger in ticket size and almost completely inaccessible.

Finally, there is the barrier involving flows of blended finance.

Only 15% of private finance mobilized between 2018 and 2020 went to LDCs, mostly going to large-scale projects.

This highlights the unfilled need of SMEs and local institutions to access the private capital that only blended finance can mobilize.

And these are just the macro-challenges that must be addressed.

There is also an array of real-economy solutions that need to be deployed to support people, SMEs/MSMEs, and other local institutions to access finance as well as drive SDG achievement:

From short-term return requirements and integrated decision-making between central and sub-national government bodies;

To preparation of industry standard pipelines and overcoming the challenges of Basel regulations;

To moving from collateral based lending to cash flow-based lending.

UNCDF has the mandate, the capabilities, and the ethos to address these significant challenges—both the macro challenges and the real economy challenges in risky markets.

But I also acknowledge that addressing these challenges to support developing countries and LDCs with speed, agility and scale of impact requires an optimized UNCDF of the future.

There are three reasons for why I am incredibly optimistic that the UNCDF of the future will meet this standard.

First, there are the results of 2023.

More specifically, there are six examples that reflect the competencies we will build around to become a more optimized organization in the future.

Blended Finance: UNCDF pursued negotiations with the EU’s blended finance facility and advanced discussions on a Swedish SIDA guarantee facility on their behalf—both are examples of how UNCDF will be further enabled to crowd-in capital.

Partnerships with Key Market Players: UNCDF established special purpose vehicles with Meridiam and Bamboo Capital to crowd-in private investment—where we would provide pipeline and technical assistance capacity that have development focus.

Innovative Finance Instruments: UNCDF supported the creation of the Water Infrastructure Green Bond in Tanzania, raising over $20 million without additional external borrowing—while utilizing just $1 million in UNCDF resources.

Private Sector Engagement: UNCDF structured an investment vehicle for renewable energy in Zimbabwe, expecting to close at $50 million on the back of an $ 8 million loan courtesy of the Joint SDG Fund. This is a structure that will have us engage with market actors like Stanbic and Old Mutual Zimbabwe to deliver a vehicle that will crowd-finance in the form of private equity, while enhancing the confidence that will lead to future lending.

UN Interagency Collaboration: Our interagency engagement resulted in 24 agreements in 2023. UNCDF partnered with UNICEF and the World Food Programme on financing initiatives for nutrition and agricultural MSMEs. In both cases, our UN partners are leveraging UNCDF’s investment mandate to crowd-in finance for sectors that have had historic difficulty acquiring capital—namely, local food manufacturers as well as women and youth agri-entrepreneurs.

Financial Inclusion: In the Pacific, UNCDF supported digital finance and climate risk insurance solutions, benefiting over 1 million people—building on our financial inclusion and market development work in the Pacific that spans roughly 15 years.

The second reason for optimism is our future relationship with UNDP.

To be clear, much of UNCDF’s future success will be determined by the success we support for the UNDS. However, a critical partner in this case will be UNDP.

For UNCDF, being part of UNDP is a strategic advantage, connecting financial expertise with global reach.

We are strengthening this relationship through a comprehensive administrative agreement, strengthening integration of UNDP’s financial rules, and engaging in deliberate programming discussions.

Third, and finally, there is our commitment to enhancing organizational performance and transparency, notably through our engagement in two important audits.

I am absolutely pleased to report that as of yesterday, UNCDF closed on a full 100% of its audit recommendations from the UN Board of Auditors—and I will add that this was completed almost a month ahead of schedule.

I will also add that 80% of the audit recommendations for the OAI audit have been closed. And we are working hard to achieve full closure by the end of this summer.

Now, to further our development impact, UNCDF presented for the first time an integrated budget for the second half of the strategic framework 2022-2025.

However, roughly 5% out of the total funding of over $300 million for 2022-2023 comprised core resources. To address this challenge, we are developing a comprehensive resource mobilization strategy.

And as we move beyond the MTR of the current strategic framework period, I hope to commence consultations with Member States to solicit ideas and demands of UNCDF for the next SF period.

In this vein, and as already enshrined in the GA resolutions that established UNCDF, we will work to deliver on UNCDF's vision—to support Member States, especially LDCs, in confronting their last mile public and private capital needs for their most pressing development challenges, including the reduction of poverty, and to do so with speed, agility, and at scale of impact to achieve equitable prosperity.

Moving forward, UNCDF will work much more deliberately as a Flagship Catalytic Blended Financing platform of the UN.

UNCDF will achieve this by recovering its core identity—as a fund.

And we will do so through a business model that truly optimizes UNCDF’s investment mandate and financing expertise to blend and deploy a suite of financial instruments for blended finance solutions in high-risk markets.

Our lack of a credit rating, our lack of liabilities to investors, our ability to offer low interest rates and guarantee fees, and our ability to onboard risks represents our unique advantage. A service offering to DFIs and IFIs who simply cannot go where UNCDF is prepared to go and designed to go.

Excellencies, my intention today is to provide you, in full transparency, with a clear sense of direction for the fund, the appropriate visibility as it relates to the challenges, and the deliberate and concrete steps already taken to build partners’ trust and to establish robust foundations for the future.

My key question for the Executive Board is therefore: Why wait?

Why wait to invest in a UN organization with a unique investment mandate—when we all agree that mobilizing investment capital, particularly to many parts of the world that are left out of capital markets, is necessary for the achievement of the SDGs?

Why wait to invest in a UN organization that in 2023 provided sustainable financing support to 41 of the 45 LDCs—when we all recognize that the lion’s share of sustainable investment continues to avoid precisely these markets.

Why wait to invest in an in-house financing entity of the UN—when the UNDS and the entire UN interagency have expressed only eagerness to collaborate with the private sector?

What we need now is bold, ambitious and, if you permit me, audacious action.

What we need now is to drive investment precisely to the geographies where it is most needed, specifically to a pipeline of sustainable development projects.

What we need now is a financing institution that will work within the constraints in financial markets to crowd-in finance with speed, agility and scale of impact.

I couldn’t be more confident in my belief that UNCDF can help meet these needs. And I say this because I have been listening to the needs articulated by UNDP Executive Board this past week: engagement with the private sector, blended finance for development, combining impact with investment—these needs mirror the very capabilities and the very ethos of UNCDF, particularly the UNCDF of the future.

In fact, listening to the world leaders from Antigua last week, if UNCDF did not exist today, I would posit that the current capability would be created as a disruptor to the conventional architecture of finance for development.

There is simply no time to waste. So, I ask again: why wait to invest in the UNCDF of the future, at precisely the point in time when an optimized UNCDF is needed the most?

In thanking you for the opportunity afforded to me today, I should not forget to express two notes of profound gratitude.

The first is for my team at UNCDF for their unreserved motivation and profound commitment to the organization, its mandate and to the people we serve.

And second is a special note of gratitude to my predecessor, Mourad Wahba, who responded to the UNDP Administrator’s request to provide critical leadership and effective management during a critical transition in the organization.

Thank you.