Investing in long-lasting peace means creating pathways to opportunity—through access to finance, land, decent jobs, and dignity. At UNCDF, we believe inclusive finance is a cornerstone of sustainable peace, especially when it is locally-led and designed to reach those often left behind by formal systems. By empowering communities economically, we help build the foundations for resilience, trust, and lasting stability. Take Uganda, where we partnered with a Microfinance institution (UGAFODE) to create a loan product specifically for displaced women entrepreneurs. UNCDF provided a first-loss guarantee to the MFI, together with some technical assistance, this microfinance institution piloted this product for clients who typically lack collateral or formal identification. Early results show high repayment rates—contradicting the idea that displaced people cannot be bankable clients.

“UNCDF's guarantee facility helped UGAFODE unlock our ability to lend to small and micro businesses in challenging contexts. It empowered us to innovate and test new lending models, especially for refugees and informal MSMEs. The flexibility to pilot (Village Savings and Loan Association) VSLA-based group loans in such contexts allowed us to learn, refine our approach, and design inclusive financial solutions. We're proud to be bringing previously excluded communities into the formal financial system." Shafi Nambobi, Managing Director, UGAFODE Microfinance Limited.

Unlocking finance for the forcibly displaced

In the northern Ugandan cities of Gulu, Arua and Koboko, UNCDF, together with the Ministry of Local Government and the Swiss Agency for Development and Cooperation, launched the Tondeka Facility, a name meaning “don’t leave me behind” in Luganda. The initiative supports forcibly displaced people (FDPs), youth, and host communities with access to economic opportunities and jobs. Implemented by Pride Bank Limited, and enabled by blended finance, the Facility offers concessional loans, credit guarantees, and business development services to reduce barriers to finance and strengthen the capacity of FDP entrepreneurs.

Since its inception in 2023 with $200,000 in seed capital from UNCDF, Tondeka has grown into a revolving facility valued at over $574,000, fueled by repayments, interest earnings, and contributions from Pride Bank and local savings. As of April 2025, over 1,500 woman and men have received loans totaling UGX 1.29 billion ($346,303), with an average loan size of $250. 54% of recipients were Forcibly Displaced Persons (FDPs), and 46% from host communities—the existing populations within the area where the displaced people seek refuge—reflecting a deliberate approach to social cohesion.

"Tondeka facility has not only helped me expand my textile business shop, I have now opened a new store in Arua City and also meet all my family basic and development needs. Tondeka has helped prove that refugees are credit worthy and investable. Because of our success in implementing the Tondeka with Pride Bank, many financial institutions now are ready to work with us, and they are reaching out to us unlike before"
- Data John-Chairman South Sudanese Urban Refugees Business Association

Tondeka’s group lending model has proven inclusive and effective: 80% of enterprises financed are women-led, and among the 1,110 jobs created, 936 went to women. Beyond employment, 35% of clients of the group lending initiative reported their businesses had been revived, 30% gained the ability to pay school fees, and 25% could now meet household needs like rent. Some even reported acquiring productive assets like land or motorcycles. The portfolio at risk (90 days) remains below industry benchmarks at 12%, indicating both capacity and discipline among borrowers.

Crucially, the facility also fosters a savings culture, through mechanisms such as a loan insurance fund, voluntary deposits, and fixed savings, which have together accumulated UGX 161 million ($43,040) as of April 2025—building resilience for the future.

And demand is growing. In areas like Bweyale in Kiryandongo District, the appetite for this model is outpacing supply, especially among refugees facing numerous barriers to finance. With the right support, the Tondeka Facility could be expanded to reach thousands more.

When capital becomes a force for peace

And Uganda is not an isolated case. Through our Investing for Peace (I4P) Initiative, developed jointly with the German Federal Foreign Office and the UN Peacebuilding Support Office (PBSO), we are pushing the boundaries of how public and private finance can work together in fragile contexts.

At the heart of I4P is a bold premise: that capital, when deployed intentionally, can be a powerful force for peace. By using catalytic donor contributions to de-risk development finance institutions’ investment capital, I4P enables financing for smaller, high-risk investments that are aligned with locally defined peacebuilding goals but often fall outside the reach of traditional investment mandates. The platform prioritizes investments that are peace-positive, commercially viable, and additional—targeting conflict-affected populations and enterprises that DFIs typically cannot pursue—either because they are too small or fall outside their standard mandates.