Contribution Will Be Used to Finance UNCDF’s BRIDGE Facility—the Finance Facility Dedicated to the World’s 46 Least Developed Countries (LDCs)

The Grand Duchy of Luxembourg became the ninth contributor to the United Nations Capital Development Fund’s (UNCDF) Last-Mile Finance Trust Fund (LMF-TF) – a multilateral trust fund that pools investments to support the achievement of the Sustainable Development Goals in the world’s least developed countries (LDCs). Luxembourg will contribute EUR 2 million into the LMF-TF.

The Last Mile Finance Trust Fund is a flexible-funding vehicle that enables contributors to pool resources in order to channel them towards shared strategic priorities impacting LDCs in the “last mile.” The fund was conceived as a vehicle designed for development funding that is lightly earmarked or tied to thematic priorities.

UNCDF and the Swedish International Development Cooperation Agency (Sida) officially launched the LMF-TF in June of 2016, with an anchor donation of just over $2.2 million. In the six years since, the donor pool would expand to nine donors and a funding pool now exceeding $60 million. Over this time, the LMF-TF has pooled funding from its donors to finance projects involving six thematic windows, including: Green Economy, Food Security, Economic Empowerment of Women and Youth, Infrastructure and Services, and Financial Inclusion and Innovation.

Luxembourg will deploy its contribution to the LMF-TF to capitalize UNCDF’s BRIDGE Facility—a financing facility dedicated to supporting SDG-positive projects with commercial and development potential in LDC markets. The BRIDGE Facility is UNCDF’s on-balance sheet investment vehicle that leverages UNCDF’s financial capacity through the issuance of catalytic loans and guarantees, to enterprises and project developers that meet UNCDF’s rigorous standards for development impact and financial viability. By providing catalytic finance to support local SME entrepreneurs, local infrastructure projects and financial service providers, UNCDF aims to prove that investing in local entrepreneurs operating in last mile markets can be viable.

"Luxembourg is very pleased to be the inaugural investor into the BRIDGE Facility, just as we were pleased to provide the inaugural investment into the BUILD Fund two years ago," said Franz Fayot, Minister for Development Cooperation and Humanitarian Affairs. "We are proud of our co-operation with UNCDF over the years and we are very happy with the progress that the organization has made in filling the gap in the development finance architecture in LDCs. And as the ninth donor in the LMF-TF, we are looking forward to the opportunity to collaborate with our Trust Fund partners in accelerating SDG achievement where the needs are greatest."

The BRIDGE pipeline currently comprises 28 total transactions, including 25 loans and three guarantees, with a total portfolio value of $5.5 million. Projects financed by the BRIDGE Facility advance a variety of development themes, including financial inclusion, food security and green economy.

“We have seen significant progress in the LMF-TF over the past 5 years, and the Trust Fund has become UNCDF’s tool of choice to pilot new models and approaches, as well as financing existing approaches to scale in the LDCs,” said Preeti Sinha, Executive Secretary of UNCDF. “Luxembourg has been a tremendous supporter of UNCDF’s work, through its core and non-core funding, and across the entirety of our organization’s work. They are a natural fit as a partner for the LMF-TF and UNCDF looks forward to working with them to demonstrate the power of flexible non-core funding towards accelerating SDG achievement in last mile markets.”

Luxembourg has been a consistently valuable partner to UNCDF’s mission of serving as the UN’s flagship catalytic financing agency for the world’s 46 least developed countries. The government committed EUR 2 million towards the BUILD Fund—a blended finance impact investment vehicle managed by the investment firm, Bamboo Capital Partners, in partnership with UNCDF. Luxembourg has directly supported UNCDF’s work in the area of supporting inclusive digital economies, specifically in Burkina Faso, to finance renewable energy projects and financial inclusion efforts for women and girls. As one of UNCDF’s donors of core (unearmarked) funding as well as thematic funding, Luxembourg’s contributions are distributed across all of UNCDF’s workstreams, including the organization’s efforts at transformative local finance; as well as capitalizing small-and-medium sized enterprises (SMEs), financial service providers and local infrastructure projects in the LDCs.