Local Finance Initiative (LFI)

Local Finance Initiative (LFI)

The Challenge

Public-private partnerships have become a mainstay of growth and development for rich and poor countries alike. With the growing awareness that inclusiveness in public goods and services is a fundamental condition for private economic stability and sustainability, an era of social enterprise and cooperation has taken hold.

The emergence of new partners from rising economies, eager to apply the best practices of development cooperation close to home, has prompted a re-imagining of what can be achieved in developing countries using private resources to finance public projects at local and district levels.

How We Are Helping?

UNCDF explores this concept through its Local Finance Initiative (LFI) programme, a programme that aims to unlock domestic financial sectors and improve business-enabling environments in Least Developed Countries (LDCs).

The LFI programme is designed to promote sustainable, inclusive and equitable growth in the LDCs by promoting transformative local investments that change local economies and by seeking to finance these investments through domestic capital markets and domestic banks.

The UNCDF LFI technical team, based in Tanzania, supports developers of small and medium-sized infrastructure projects, applies risk mitigation strategies, targets finance and credit enhancements to enable jumpstarting the process of project identification, development and financing structuring, and implements capacity-building activities for local project sponsors and lenders. It prepares both public and private projects to be investment ready and more attractive to private sector capital providers.  Projects are chosen based on their potential for commercial viability and also their development impact to the community once implemented.

The LFI project development and financing approach creates a virtual cycle of local development and inclusive growth: local (private) seed investment takes root in local (public) soil, thereby enriching the enabling environment for itself and other domestic projects and investors to flourish.

To learn more about the Local Finance Initiative, please download the LFI brochure

In Detail

Project

Local Finance Initiative (LFI)

GoalTo unlock flow of domestic capital to finance local projects needed to promote inclusive local economic development.
How

The programme is executed through four main programmatic components: 

  • Project development activities that enable the identification and development of projects and to create financing models that facilitate access to the domestic financial sector for investments in strategic, smaller scale infrastructure projects.
  • Finance and credit enhancement facilities to enable jumpstarting the process of project identification, development and transaction/financing structuring;
  • Capacity-building activities that provide for the training of public and private stakeholders and increased government capacity to facilitate finance, project development, and business-enabling environments; 
  • Monitoring and Evaluation and impact verification. One important outcome of the LFI project will be its contribution to the measurement of investment impact.
PeriodOngoing (2014-2017)
Active InTanzania, Uganda.
PartnersUNCDF, Government of Tanzania PMO-RALG, SIDA
Total project cost and UNCDF contribution$33,250,645
$5,150,000

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