The new United Nations Capital Development Fund’s Executive Secretary, Judith Karl, is on her first official visit in Tanzania from 13 -16 September 2014.
On September 16, 2014, Ms. Karl accompanied by Mr. David Jackson, Director of UNCDF's Local Development Finance Practice Area and Mr. Peter Malika, Chief Technical Advisor of the Local Finance Initiative (LFI) in Tanzania, met senior government officials from the Prime Minister’s Office – Ministry of Regional Administration and Local Governments (PMO-RALG), the implementing partner of the LFI programme. At this meeting, Ms. Karl spoke with media to highlight UNCDF's work in Tanzania and announced the establishment of the Global Local Finance Initiative Programme (2014-2017), a new UNCDF initiative based on the lessons learned from the implementation of the LFI Tanzania pilot programme (2012-2015). LFI aims to unlock the flow of domestic capital to finance local projects needed to promote inclusive local economic development and is supported by the Partnerships Framework on Inclusive Growth and Sustainable Development (PFIS), a framework agreement with the Swedish International Development Cooperation Agency (Sida).
To date, the LFI pilot programme in Tanzania has supported 25 infrastructure projects implemented by public and private developers that are at different stages of their development. The projects are spread across various sectors including agro-processing, energy, community infrastructure service delivery, telecommunications, and industrial-manufacturing; covering 10 regions across the country. The 5 most advanced projects are expected to reach financial closure in the next six to nine months and access 26 million dollars domestic capital in the form of debt and 3 million dollars in grants. The LFI support to projects comes under the form of technical expertise, guarantees, grants and other forms of credit enhancements that are critical for small and medium infrastructure projects to attract investments.
The overall outcome of LFI is to increase the effectiveness of financial resources for local economic development through mobilization of primarily domestic private capital and financial markets to enable and promote inclusive and sustainable local development.
UNCDF appreciates the excellent cooperation of the government of Tanzania through PMO-RALG, particularly its role as implementing partner of the LFI programme and its support in identifying and developing commercially viable infrastructure projects sponsored by local government authorities.
UNCDF's Executive Secretary is also holding bilateral meetings with senior government authorities, development partners, project developers and community organizations. Key issues to be discussed include the expansion of UNDCF's support to Tanzania. This support includes introduction of innovative products that increase access to financial services and test methods of unlocking the flow of domestic capital to invest in local economic development projects, all of which constitute core elements of UNCDF’s focus of providing investment capital and technical expertise to both public and private sector. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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, loans and credit enhancement and the technical expertise in preparing portfolios of sustainable and resilient capacity building and infrastructure projects, makes its mandate complementary 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 yet 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).
UNCDF’s work on local development finance aims at ensuring that people in all regions and locations benefit from economic growth. This means dealing with the specific local challenges of, for example, peri-urban areas and remote rural locations. It means investing domestic resources into local economies and services through, inter-alia, fiscal decentralization, climate finance and project finance. UNCDF focuses its efforts towards strengthening public financial management and local revenue, improving the quality of public and private investments at the local level.
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 relevant potential for scale.
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.