The original UNCDF mandate from the UN General Assembly (UNGA) is to “assist developing countries in the development of their economies by supplementing existing sources of capital assistance by means of grants and loans” (General Assembly Resolution 2186, 13 December 1966). The mandate was modified in 1973 to serve first and foremost but not exclusively the LDCs.
UNCDF has a unique financial mandate within the UN system. It provides investment capital and technical support to both the public and the private sector. The ability to provide capital financing -- in the forms of grants, soft loans and credit enhancement – and the technical expertise in preparing portfolios of sustainable and resilient capacity building and infrastructure projects, makes its mandate a very useful complement to the mandates of other UN agencies. It also positions UNCDF as an early stage investor to de-risk opportunities that can later be scaled up by institutional financial partners and increasingly by philanthropic foundations and private sector investors.
UNCDF has proven its ability to deliver true leverage on smaller and more risky investments and interventions within its core areas of expertise: Inclusive Finance and Local Development Finance. The concept- proven pilot projects and programmes are replicated and brought to scale with the help and the add-on financing of other development partners with different and complementary mandates.
UNCDF has also a proven track record in developing local public finance capacities, which were brought to a national scale by larger development partners (i.e. World Bank). It is also one of the development agencies most involved in promoting financial inclusion through a market development approach. From an early support to national microfinance strategies in the 1990s, UNCDF has recently profoundly updated its market development approach through the development of a new diagnostic tool and programmatic framework to support the development of national financial inclusion strategies. MAP provides governments with detailed data of demand and financial access, with analysis on the new drivers of financial inclusion on the supply side (i.e. role of technology and mobile banking, emergence of new distribution channels, digitalization of social transfers), and with broader policy framework analysis.
It is also important to remember that UNCDF is the only UN agency mandated to focus primarily on the least developed countries (LDCs), currently supporting 31 out of the 48 LDCs, with country level programmes, as well as regional and global programmes. UNCDF is also working in 6 Southern non- LDCs.
- UNCDF’s work on inclusive finance seeks to develop inclusive financial systems and ensure that a range of financial products is available to all segments of society, at a reasonable cost, and on a sustainable basis. UNCDF supports a wide range of providers (e.g. microfinance institutions, banks, cooperatives, money transfer companies) and a variety of financial products and services (e.g. savings, credit, insurance, payments, and remittances). UNCDF also supports newer delivery channels (e.g. mobile phone networks) that offer tremendous potential for scale.
- UNCDF’s work on local development finance aims at ensuring that people in all regions and locations benefit from growth. This means dealing with the specific local challenges of, for example peri-urban areas and remote rural locations. It means re-investing domestic resources back into local economies and services through inter-alia, fiscal decentralization, climate finance and project finance. We focus our efforts towards strengthening public financial management and local revenue, improving the quality of public and private investments and promoting innovations at the local level.
UNCDF’s original mandate – to promote economic development in the least developed countries – remains highly relevant today. Economic growth is necessary to enhance living standards, reduce poverty and cope with the world’s growing population. And it must be socially and environmentally sustainable to deliver maximum benefits for current and future generations.