UNCDF in Timor Leste

UNCDF in Timor Leste

The Challenge

Timor-Leste faces a range development challenges, including extremely low human development and a population that is 76 percent rural. Despite these constraints, Timor-Leste has made progress in recent years, thanks in part to an abundance of natural resources. The petroleum revenue boom has allowed the government to increase spending on public transfers and infrastructure – an essential step toward social and institutional stability. Timor Leste’s Human Development Index value for 2012 positioned the country at 134 out of 187 countries.

How We Are Helping?

UNCDF is helping Timor-Leste to meet its development challenges by supporting decentralization and improved service delivery capacity at the local level, as well as the establishment of an inclusive finance sector. The joint UNCDF/UNDP Local Government Support Programme phase 1 has built on recent decentralization and local governance reforms, offering direct technical support to develop a legal and policy framework to the Ministry of State Administration and Territorial Management and other line ministries involved with the decentralization process. Robust capacities at both the national and local levels are an imperative as the Government has decided to transfer a substantial portion of future resource revenues to the local level. The continuation of LGSP I, The LGSP II is– with the objective to contribute towards poverty reduction in Timor-Leste by supporting the establishment of a decentralized, accountable and effective local government. LGSP II provides technical support in two areas:

1) Improved capacity for local service delivery (ISD) by sub-national bodies with increased citizen participation.

2) Improved institutional, legal, and regulatory framework established in support of effective local governance.

The LGSP currently has been focusing on supporting the Ministry of State Administration (MSA) in the implementation of an Integrated District Development Planning (PDID) for harmonizing local development system and procedures.

Another joint UNCDF/UNDP project,Inclusive Finance for the Underserved Economy, seeks to increase sustainable access to financial services for poor and low-income people using a sectoral approach. The project is part of an effort to re-establish the microfinance industry that suffered a setback during the conflict period in Timor-Leste.

Moreover, the Least Developed Countries Fund for savings-led market leaders for inclusive finance (MicroLead), aims to increase access to financial services, particularly savings, by supporting the expansion of microfinance savings-led market leaders in underserved countries.

In Detail


Local Governance Support Programme

Goal To establish an effective local government system.
  • Offering technical support to relevant ministries in developing a legal and regulatory framework.
Period 2007 – 2013
Partners UNCDF, UNDP, Government, Irish Aid, Norway.
Total project cost and UNCDF contribution USD 4,374,181
USD 693,970

Inclusive Finance for the Underserved Economy.

Goal To broaden access to financial services for poor and low-income people.
  • Using a sectoral approach to restore the microfinance industry post-conflict.
Period 2008-2014
Partners UNCDF, UNDP, Government of Timor-Leste, AusAID
Total project cost and UNCDF contribution USD 5,433,383
USD 1,050,000


Goal To increase access to financial services, particularly savings, by supporting the expansion of microfinance savings-led market leaders in underserved countries.
  • Offering grants and loans that incentivize leading providers to start up new, or strengthen existing financial institutions that target low-income people, especially with savings, in underserved areas, particularly countries struggling to recover from crisis and conflict;
  • Through a competitive process to select leading indigenous microfinance providers from developing countries to expand their reach by implementing a variety of approaches including greenfields, transformations of MFIs to formally regulated deposit-taking institutions, and providing technical assistance to in-country MFIs;
  • Supporting technical advisors who work to help those providers to develop the institutional capacity to extend their reach.
Period 2008-2017
Partners UNCDF, Bill & Melinda Gates Foundation, The Mastercard Foundation, LIFT Myanmar.
Total project cost and UNCDF contribution USD 58,562,939
USD 7,871,850

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