Funding Will Be Used to Mobilize Private Capital to Support Climate Adaptation, Remittances and Sustainable Development in Least Developed Countries

The Swedish International Development Cooperation Agency (Sida) recently announced its financial commitment for 2023 to the United Nations Capital Development Fund (UNCDF) programs amounting to SEK 413.35 million (USD 40 Million). In making this contribution, Sida is continuing its commitment to be a global leader in advancing sustainable development in the world’s 46 least developed countries (LDCs).

In partnering with the UN Capital Development Fund—the UN’s flagship catalytic financing entity for the world’s least developed countries—Sida will continue to leverage UNCDF’s unique capital mandate—complementing traditional grant-making and technical assistance with mainstreamed use of financing capabilities and instruments—and primary focus on the 46 least developed countries (LDCs).

Sida’s 413,350,000 Kroner will finance three key initiatives for UNCDF:

• SEK 138,000,000 to The Last Mile Finance Trust Fund (LMF-TF)—The LMF-TF is a global fund that provides a flexible vehicle for partners to support the LDCs in their pursuit for sustainable development through innovative finance. As a vehicle that pools development funding from multiple donors towards shared priorities, the LMF-TF finances projects through six thematic windows: financial innovation; local transformative finance; inclusive digital economies; women’s economic empowerment; climate, clean energy, biodiversity finance; sustainable food systems finance. These windows are aligned with the strategic framework 2022-25 of UNCDF and supports all the results associated with it.
• SEK 79,350,000 to the Migration and Remittances Programme in (Sub-Saharan Africa)—A pillar of UNCDF’s Inclusive Digital Economies practice that aims to support sustainable development by making remittances more accessible and affordable while building resilience for migrants and their families. Sida funding will support Phase II of a three-year project on Remittances for Development in Africa, specifically to craft harmonized policy frameworks and cross-border payment infrastructure.
• SEK 196,000,000 to the Local Climate Adaptive Living Facility: LoCAL (Mozambique)—A standard internationally recognized mechanism that helps local government authorities in developing and least developed countries access the climate finance, capacity building and technical support they need to respond and adapt to climate change. Sida funding will finance LoCAL’s climate adaptation initiatives in Mozambique, where Sida funds have already contributed to 36 investments under the programme.

A few examples of successful results of UNCDF’s work financed by Sida :

• Over 3 million micro-merchants supported with digital solutions through the LMF-TF
• 400,000 clean energy products sold in Uganda and Ethiopia alone through the LMF-TF
• US$ 142 million in foreign currency deposits mobilized
• Over 70 Central Banks consulted, in service of strengthening remittance statistics in Africa, to establish best practices to monitor and capture formal and informal remittances flows
• In Mozambique, Sida funds contributed to the delivery of 98 adaptation projects benefitting over 2.5 million people to date
• In 2021 alone, Sida funds contributed to 36 investments across 20 districts of Mozambique focusing on social infrastructure, such as rehabilitating and climate-proofing of schools and hospitals.

“Sida is proud to have collaborated with UNCDF in setting up the Last Mile Finance Trust Fund in 2016. Since then Sida has contributed SEK 397 Million. This trust fund provides UNCDF the flexibility to do what it is best known for – innovation and scaling up private sector interventions,” said True Schedvin, Head of unit for Globally Sustainable Economic Development at Sida. “We believe that providing flexible financing linked to the five thematic windows of the strategic framework and aligned with UNCDF’s Integrated Results and Resources Matrix will allow the organization to stay focused and deliver on its objectives, which are approved by the Executive Board while operating in the most challenging geographies.”

“In an environment of reduced regular resources, we are thankful to Sida for having started and continued to support flexible funding through the Last Mile Finance Trust Fund (LMF-TF) which allows UNCDF to try different innovative approaches and attract new donors,” said Xavier Michon, Deputy Executive Secretary at UNCDF. “Two examples of projects that demonstrate this approach is LoCAL that has gone onto become one of UNCDF’s flagship program and the ‘BRIDGE’ facility, UNCDF’s loans and guarantee pool which has attracted 5 donors through LMF-TF and was seeded by Sida.”

Mr. Amil Aneja, Programme Lead for Migration and Remittances at UNCDF, articulated, “Thanks to Sida’s support, UNCDF can further align its financing and technical assistance with those of the member states toward the regional economic integration and harmonization that enables a seamless flow of cross-border payments through affordable channels to (and within) the region, strengthening access to gender-responsive financial products and services for migrants and their families’ financial health outcomes.” He further acknowledged, “Sida’s support has been pivotal in scaling UNCDF efforts in close cooperation with global, regional, and multilateral stakeholders across the public and private sectors.”

“Sweden is committed to working with countries on the frontline of the climate crisis in their actions to adapt and build resilience to climate change,” said Maria van Berlekom, Head of Unit for Global Cooperation for Environment at Sida. "The Local Climate Adaptive Living Facility, designed by UNCDF, enables us to meet this commitment as it is a proven mechanism for channeling climate finance where it is needed – the most vulnerable nations."

“UNCDF and our partners understand that countries on the frontline of the climate crisis need access to climate finance at the local level and they need it now,” said David Jackson, Director of Local Transformative Finance. “These funds will be dispersed through grants, not loans. And they will be delivered through the Local Climate Adaptive Living Facility, a mechanism for channeling finance to the local level where the devastating consequences of climate change are experienced.”