United Nations Capital Development Fund

Statement by Mr. Richard Weingarten
Executive Secretary

At the occasion of the Asia/Pacific Regional Preparatory Meeting
for the Comprehensive Mid-term Review of the Brussels Programme of Action

Bangkok, Thailand
14 March 2006

UNCDF Executive Secretary Mr. Richard Weingarten

Excellencies, Distinguished Participants, Ladies and Gentlemen,

It is a pleasure to join all of you here at the Asia/Pacific Regional Preparatory Meeting for the Comprehensive Mid-term Review of the Brussels Programme of Action, jointly organized by the Economic and Social Commission for Asia and the Pacific and the Office of the High Representative for Least Developed Countries, the Landlocked Developing Countries and the Small Island Developing States. I would like to take this opportunity to extend my appreciation to Mr. Kim Hak-Su for hosting, and to both him and to Ambassador Chowdhury, for organizing this very important and timely regional meeting.

As Ambassador Chowdhury pointed out in his statement to the African meeting of this process in Addis Ababa last month, since the start of the Brussels Programme in 2001, LDCs have been averaging more than 6 per cent per annum growth in GDP - the fastest average rate of growth they have had for decades. The UNDP Human Development Report has reported that on average, people in developing countries are healthier, better educated and less impoverished. In the past 15 years, life expectancy in developing countries has increased by two years. There are three million fewer child deaths annually and 30 million fewer children out of school. More than 130 million people have escaped extreme poverty.

This is indeed encouraging news. Yet it is also true that much remains to be done - so much so that the task is almost overwhelming. UNDP's analysis of key indicators such as life expectancy and income has found that 18 of the world's poorest countries - with a population of 460 million - are doing much worse in most areas than they were in 1990.

As you all know, the Brussels Programme of Action is the only international agenda devoted to the specific needs of the LDCs. And, while all the international development agencies place greater or lesser priority on supporting these countries, the organization which I represent - the United Nations Capital Development Fund - is the only multi-lateral agency which is mandated to focus exclusively on the LDCs. Let me then say a few words on what we at UNCDF are doing to contribute to the Brussels Programme of Action.

UNCDF invests to directly support four specific Commitments of the Brussels Programme: to develop people-centred policy frameworks, to promote good governance, and to build both institutional and productive capacities. We do all of this with a very local focus and in the poorer, usually rural, areas of LDCs, where the poverty challenges and the MDG deficits are greatest. In essence, everything we do is fully aligned and directly related to the Brussels Programme.

UNCDF currently invests in 28 LDCs, of which 7 are in this region: Nepal, Bangladesh, Bhutan, Laos, Cambodia, Timor-Leste, and Solomon Islands. This corresponds to some 22% of our delivery. We plan to expand this investment portfolio in the coming years to attain complete LDC coverage and so, in this region, to cover all 13 LDCs.

This portfolio builds around two practice areas in which UNCDF has acquired an acknowledged niche and expertise over the past decade: Local Development and Microfinance.

• Our Local Development practice aims at the capacity building of local governments - not in a diffuse, general sense, but to promote more effective, accountable and pro-poor public infrastructure and service delivery, and improved local governance. These programmes therefore provide support for greater local participation and better local budgeting and budget management, for more public information, for reform of local government funding, etc.. They involve operations in local - usually poor, rural - areas, and also national policy support.
• Our Microfinance practice aims to enhance access of the poor to financial services. One facet of this lies in investment in specific, promising microfinance institutions and the introduction of best practice - here, the MicroStart and MicroSave programmes are two successful and well-known examples. Another part of the strategy lies in our support to promoting joint review and analysis - with other partners - of the overall financial sector to identify and remove constraints to access of services by the poor.

In both practice areas our ability to invest through small-scale grants allows much greater flexibility, and a much greater degree of risk-taking and innovation than the larger investment agencies and development banks. This, in turn, allows us a creative and successful approach to the sorts of capacity-building and policy reform which the Brussels Programme calls for. Let me give two examples from two very different LDCs.

In Bangladesh, by far the largest LDC in the region, UNCDF has been working since 2000 with UNDP to support a local development programme - in partnership with Government - which aimed to serve as a sustainable and scaleable model for improved local infrastructure and service delivery. The programme included a more inclusive and pro-poor local planning and budgeting process, measures to building local government capacity and accountability and, twinned with this, a more transparent and performance-based block grant funding mechanism. While there was initial skepticism, this programme has been hugely successful. It greatly improved the delivery of basic pro-poor public goods in a very poor rural area, and resulted in a marked improvement in the capacities and openness of local government bodies. But - perhaps more importantly - it has allowed the piloting of a prospective policy reform in a credible manner, in real-time and at low risk. It also strengthened the hand of the champions of greater decentralization. The Government is now in a position to begin a national rollout of this more decentralised and participatory delivery model and is able to mobilize much larger-scale development funding behind it.

In Timor-Leste, the newest of the LDCs, there is a constitutional and political commitment both to establish elected local government and to decentralize public expenditure outside of Dili. National authorities have sought assistance on how best to do this. We have thus been working with UNDP and in partnership with Government to formally test possible modus operandi for future local elected assemblies, and their planning and financing arrangements. The lessons from this pilot are informing government thinking on local government policy, and the financing arrangements are being officially adopted as a framework for decentralizing national budgetary resources.

In Timor-Leste we are also set to complement this programme with one focusing on the promotion of an inclusive financial sector. Generally, indeed, our two practice areas are part and parcel of a larger vision that sees local development as a continuum between the local public and private spheres. Where we have built up the basics of improved local democratic governance and access to social services and infrastructure, we next look for opportunities to complement this with support for local economic enterprise and improved access to financial services To date, the bulk of these latter programmes focus on the LDCs in Africa but we plan to expand our delivery in this important practice area in Asia and the Pacific in the years ahead.

While the major focus of UNCDF is on the direct investment portfolio in LDCs - as I have just outlined - we also aim to leverage the broader policy lessons deriving from our LDC portfolio, to help implement the Brussels commitments more globally. Let me mention one example from each practice area:

• UNCDF, together with UNDESA, recently published the results of its year-long study of inclusive finance. The "Blue Book", formally titled, Building Inclusive Financial Sectors for Development, addresses the issue of why so many people and firms in Least Developed Countries are excluded from full participation in the financial sector. It lays out a framework for policy makers, central bankers and the private sector to significantly increase outreach to unserved and underserved enterprises and households, in order to accomplish the goals set forth in the Brussels Programme of Action. As outlined in the Blue Book, each LDC country should - supported by a sound policy, legal and regulatory framework - have a continuum of financial institutions that, together, offer appropriate products and services to all segments of the population. The Blue Book also provides concrete steps on how policy makers and governments can move forward in implementing such a strategy for inclusive finance.
• UNCDF recently published its Practice Guide on supporting the planning, financing and delivery of socio-economic infrastructure aimed at reducing poverty in Least Developed Countries. This report, titled Delivering the Goods: Building Local Government Capacity to Achieve the Millennium Development Goals provides both a documentation of best practices and lessons learned and a guide for other organizations who may want to implement similar programmes.

UNCDF is pleased to participate in this important meeting. Copies of the Executive Summary of the Blue Book on Building Inclusive Financial Sectors and of Delivering the Goods are available here. The complete text of the Blue Book is available on the UNCDF website - www.uncdf.org - and will be in print in May or June; Delivering the Goods is already posted there. Roger Shotton, our Regional Adviser for Local Development and lead author of Delivering the Goods, is joining me today. He resides here in the UNDP Bangkok Regional Centre and is a valuable resource available to everyone in the region.

We look forward to participating in this Mid-term Review and working with all of you to implement the Brussels Programme of Action in Asia.

Thank you.