Our Approach

Our Approach

Many developing countries are amongst the world's fastest growing economies whilst others remain mired in conflict. Globally there is steady progress towards the MDGs and many countries have met some of their targets. Yet, this overall picture hides significant disparities and risks. Over 2 billion people continue to live on less than a dollar a day and whilst absolute levels of poverty are falling, inequalities are increasing. Additionally, natural disasters, changing weather patterns and globalized economic relationships threaten the resilience of communities to external shocks.

UNCDF's work on local development finance aims at ensuring that people in all regions and locations benefit from development. This means dealing with the specific local challenges of, for example, peri-urban areas and remote rural locations. It means re-investing international and domestic resources back into local economies and local services through, for example, fiscal decentralization, climate finance and project finance. We focus our efforts towards strengthening public financial management and local revenue, improving the quality and sustainability of public and private investments and promoting accountability at the local level.

UNCDF invests its seed capital and technical assistance to promote increased capital flows to the local level, reducing inequalities, improving services and increasing opportunities for sustainable economic development – all contributing to sustainable and equitable local development. UNCDF does this through innovation and testing in new public and private financial systems that mobilize allocate and invest additional resources and promote transparency and accountability in their use.

UNCDF Core Approach to Local Development Finance

UNCDF seed capital is invested through four modalities: the Local Development Fund; Government to Person Payments; Local Finance Initiative and the Local Investment Tool.

UNCDF applies its local development finance core approach to support sustainable, inclusive and equitable development, and uses its investment tools in the areas of Decentralization and Citizen Empowerment; Climate Change and Food Security; Gender; Social Protection; Local Economic Development; Information and Communication Technology (ICT) for Local Development; and Cross Border and Post Conflict.

To learn more about UNCDF's approach in Local Development Finance and its investment instruments, please download our Local Development Finance Brochure.