The new planning cycle provides great potential to deepen this work through UNDP’s integrator approach and country platforms.
Executive Secretary, UNCDF
Distinguished Members of the Executive Board,
Thank you Ambassador Koonjul for chairing this session.
Thank you, Associate Administrator, for your introductory remarks. As you highlighted, the new UNDP Strategic Plan and UNCDF Strategic Framework recognise the clear benefits of building on our comparative advantages.
UNCDF and UNDP currently collaborate in all country settings where we operate, including through some 20 joint programmes. The new planning cycle provides great potential to deepen this work through UNDP’s integrator approach and country platforms. Together we can crowd-in and promote more investments in LDCs; support policies and regulations that deepen domestic financial markets and encourage entrepreneurship; build productive partnerships with domestic and international investors; and expand access to digital technologies that accelerate SDG progress.
Together we can also ensure that the deployment of finance solutions in Middle Income Countries contributes to cross-country learning, demonstrating how different financial instruments can tackle inequalities in different country contexts.
We would like to show a video presenting UNCDF’s approach to taking solutions from innovation to scale. Let’s start the video.
Vision for Strategic Framework
I would like to thank all of you who contributed with guidance and feedback over the last 12 months of intensive consultations on our new Strategic Framework.
The next few years provide us all an opportunity to get the finance piece of the SDGs right. In three or four years, if we still do not see a shift in the diversity and volume of new finance solutions that reach the local level in LDCs, then we will not have succeeded. Now is the time that interest is at a peak, that actors are ready to innovate, and that a new generation of instruments and partnerships will begin to take shape. So we believe that now is the time to ensure that this new generation of solutions works for inclusion, works for the poor, and works for the last mile. Without deliberate attention to the last mile, it will be all too easy to develop a next generation of solutions that exclude rather than include. So this Strategic Framework is about catching this wave as it is building strength, on the way up, and then riding that crest to successfully generate new ways of making finance work for the poor.
This Strategic Framework specifically targets the intersection of SDG 17 – the means of implementation – with SDG1, to tackle poverty, exclusions, and inequalities.
We will continue to focus where our demonstration effects can have the biggest impact: in the last mile, and where needs are greatest and resources most scarce.
Central to delivering results is our ability to function as a financing incubator. This means we are committed to taking smart risks and trying out new ideas where few others see viable markets or business propositions. We have a proven track record of working with national authorities to consolidate what works into policies and regulations, and to take successes to replication and scale.
Our plan commits us to continuing work in our established areas of expertise in financial inclusion and local development finance. And it recognizes our increasingly active role in de-risking investments in local economies through the application of loans, guarantees, and reimbursable grants, designed to crowd in public and private investors. The home for this third pillar of work is our LDC investment platform. While it currently focuses on providing guarantees and loans to projects supported by UNCDF, we know that, if funded and requested to do so, it could be expanded to provide due diligence, credit rating, and de-risking to pipelines coming from sister agencies as well.
Let me turn briefly to some exciting initiatives we have planned for the coming year.
On local development finance, we support local governments which are playing an increasingly important role in meeting the SDGs and taking climate action.
In line with the New Urban Agenda, we are working with municipalities to mobilize funding so they can better serve local populations and meet their infrastructure needs which cannot be covered by fiscal transfers alone. In Bangladesh, for instance, we have worked to secure credit ratings for 10 local governments, and are working with the regulatory authorities on a bond issuance that will let those local authorities raise from the capital markets the funding they need to pay for priority investments.
We are also helping to increase resource transfers to local governments while helping them generate their own revenue through taxes and fees. This work has demonstrated its value also in crisis-affected settings, such as Somalia.
Together with the United Cities and Local Governments and OECD, UNCDF is supporting the global observatory on municipal finance which will enable cross-country learning and innovation in financing models to help cities deal with the challenges of urbanization.
Thanks to productive discussions with the UN Office for south-south cooperation, we will henceforth be co-hosting the World Alliance of Cities Against Poverty with the City of Malaga in Spain. This will support local governments from the North and South to address the challenges associated with migration.
Second, we are expanding our work on local resilience finance. We will continue channelling performance-based, climate-resilient grants to local governments through intergovernmental fiscal transfers. We are expanding this work, from 13 countries to 20, in 2018. The demonstration effects help local governments access global climate finance, including from the Green Climate Fund. We are also working to increase domestic public and private investments in local food systems and in restoring the productivity of degraded land.
Third, through project finance, SME finance, and public-private partnership approaches, we are unlocking financing for pipelines of investable projects. This will include, together with UNDP and UN Women, supporting gender-sensitive infrastructure investments, as well as women-led projects.
In financial inclusion, we are helping to create enabling ecosystems to reach underserved populations and market segments, especially women, girls, young people, and SMEs. Our data-based diagnostic tools are providing a strong foundation for governments to articulate financial inclusion strategies. Supporting the implementation of these strategies includes a strong focus on helping financial institutions build new business models in risky markets which, when brought to scale, can change the patterns of financial inclusion and agency for poor populations, especially women.
Digital innovations are a core feature of our work. UNCDF and the Better Than Cash Alliance, which we proudly host, will continue to deploy first-rate advocacy, research, and technical expertise on digitizing payments and financial services more broadly to reach unbanked populations. We also facilitate South-South knowledge exchanges on digital finance, including with Middle Income Countries.
We are linking our digital work to the real economy and SME development. A prime example is our work with energy service companies to use ‘pay-as-you-go’ models to expand access to cook-stoves and solar home systems. We will likewise use digital financial services to support smallholder farmers to integrate into agriculture value chains, and leverage fintech solutions to promote new business models.
Second, we are incentivizing financial services providers to reach underserved populations, especially women and youth. As through UNCDF’s innovation labs in Uganda and the Pacific, we are creating safe spaces for piloting smart delivery channels and new products, like micro-insurance.
Third, we are expanding our strategy to enhance women’s and girls’ access to, usage of, and benefits derived from financial services. We are growing our work to connect financial inclusion to youth empowerment and employment.
And we are helping governments and financial service providers to formalize remittance channels, leveraging digital and fintech solutions to lower costs and link remittances to a wider range of financial services.
Finally, building on our successful experience with UNDP on digital payments in the Ebola response and in Nepal post-earthquake, we will expand our financial inclusion support in crisis contexts. In partnership with UNHCR, we will support the provision of appropriate financial services to refugees and forcibly displaced persons, initially targeting nine African countries. This can help bridge the gap between humanitarian aid and economic development.
Women’s economic empowerment is specifically articulated across all our work, in terms of objectives, approaches, targets, and indicators.
Within the UN, we will continue to collaborate with other agencies where the combination of our capital tools and financing innovations and their sector or thematic knowledge can help tackle last-mile exclusions.
Our cooperation with the private sector - as innovators, implementing partners, and funders - remains instrumental to our work. This includes investing or partnering with financial service providers; mobile network operators; domestic banks; pension funds; SMEs; and impact and other investors to make finance work for the poor.
We have begun a formal dialogue process to explore how investment managers could help mobilize additional capital from innovations being tested by UNCDF.
We have an exciting new partnership is with 17 Asset Management (so-named for the 17 SDGs). Through this partnership, 17 Asset Management will offer investors new products to support the SDGs while committing to finance UNCDF’s work in LDCs. For LDCs, this partnership will provide additional financing for their efforts to build infrastructure and support business development in the poorest and most remote regions of their countries. I hope you will all join us this evening at our reception to hear more about this collaboration.
As exciting as such partnerships are, the role of the private sector is ultimately not to fund UNCDF, and private resources alone will not enable us to deliver on the full ambition of our Strategic Framework. That is where we look to our Member States for core resources.
We have presented to you results-to-resources scenarios, in response to your request. Our “ideal” scenario requires annually $25 million in core, $75 million in non-core, and a $50 million LDC Investment Fund. This will give us a robust presence in 40 LDCs, and allow us to be a more catalytic and strategic partner to partner countries; to UNDP and its integrator approach; and to the wider UN development system.
The “strategic” and “ideal” scenarios we present will support this more robust positioning. The “baseline” scenario limits our presence to fewer LDCs and restricts our engagement in countries to project or earmarked funding. Continuing along this path will make it difficult for the UNDS and the LDC to truly leverage UNCDF’s expertise and de-risking capability.
We thank all our Member State donors who contribute to our core resources, as well those Member States, foundations, and businesses which contribute to our non-core resources. We recently welcomed Bhutan and Vietnam as core donors, and are grateful for their support alongside that of our established funders. We continue to explore new opportunities to expand our resource base, including from LDCs themselves.
To deliver value-for-money and credible results, we are enhancing our management systems as well as staff capacities, knowledge management, and thought leadership.
We will continue to promote accountability for results at all levels and heightened transparency. This includes ensuring timely implementation of internal and external audit recommendations, and continued investment in a strong and objective evaluation function that generates valuable recommendations and lessons for learning and action.
The Integrated Results and Resources Matrix has been streamlined and strengthened to allow better monitoring of results. It reflects the evolution of our programmatic approach and use of diversified financial instruments, focusing on capturing leverage, demonstration effects, and results-to-resources linkages. We are setting up a new online monitoring system to better collect, analyze and share our results data, internally and externally. That will further strengthen our results-based management and budgeting systems and capacities.
We continue to invest in our staff, our most important asset. And in line with the QCPR, we also continue working to achieve gender and geographic balance in appointments at all levels. UNCDF Management has actively worked to ensure gender parity and diversity at all levels of the organization. Female staff currently constitute 46 percent of the workforce; while this is positive, we must still do more to reach parity in the P-4 and higher categories, and in our national officer category, and we have adjusted our outreach strategies accordingly.
We will invest in knowledge management to ensure that pilots inform policy, replication, and scale potential. We will also invest in a more robust thought leadership role. This will include researching and convening partners around examples of blended finance models that can work for inclusion at the local level.
Finally, we will emphasize rigorous monitoring and evaluation to share and improve how we move from innovation to scale, and how we make finance work for the poor. We will also work with partners on impact and thematic evaluation approaches that consider the long-term effects of access to finance on the lives and livelihoods of women and girls.
With your support, we can help poor families, underserved communities, local governments, and small businesses access the finance they need to build a better future.
Thank you for your attention.