As Prepared for Delivery

The UN Capital Development Fund is a specialized UN entity that makes public and private finance work for poor people at the household, small enterprise, and local infrastructure levels We are the only UN entity mandated to focus primarily on the Least Developed Countries and we also have a unique capital mandate, which allows us to use financial instruments such as loans and guarantees for small enterprises and small investment projects. This is the focus and expertise UNCDF will bring to our engagement with the Global Fund for Coral Reefs.

As we have already heard today, to address the urgent coral reefs crisis will require that more private resources to be mobilized and invested in sustainable blue economy activities like sustainable tourism and sustainable fisheries.

Innovative bended finance vehicles can play a key role to help fill this financing gap, and the GFCR aims to become one such critical public-private financing mechanism. The Fund will seek to pool resources to establish a portfolio of marine conservation business models that demonstrate solutions that are both financially viable and achieve conservation and broader sustainable development results.

Adopting a portfolio approach will shore up credibility and spread risks, which will help attract investors to the Fund.

However, although blended finance in many instances has been able to catalyze significant private investments for sustainable development, there are still few examples of its application for coral reef and marine conservation.

Some of the key reasons for this are that there is still limited understanding of what viable blue economy business models look like, and commercial investors lack local knowledge and boots on the ground and therefore perceive investment risks to be too high .

This is where UNCDF comes in. Our overall role in the GFCR is to help identify and de-risk potential investments, and we will do this in a number of ways:

First, together with Alethelia, the Fund manager and part of Mirova Natural Capital, UNCDF will support the identification and development of a pipeline of investment-ready projects and businesses that The Fund will invest in. This will include screening, financial structuring, credit assessment and business advisory to ensure viable business approaches.

Second, we will use our financial instruments, notably catalytic loans and guarantees, to further help de-risk investments and demonstrate readiness for receiving commercial financing from the Fund.

Finally, through our presence and networks on the ground, we will also provide post-investment technical assistance to select companies and projects as needed, to ensure that they achieve financial viability and the required development and conservation results.

UNCDF’s role in partnering with the Fund is thus to provide catalytic public investment capital and support to reduce risks and demonstrate investability, in order to allow private investments to come in.

Over the past three years we have expanded the deployment of UNCDF’s capital instruments to do just this through our LDC Investment Platform. Today, we have a solid portfolio of projects in the last mile in LDCs, which demonstrate that higher risk, smaller ticket size investments in the most challenging environments can be financially viable and achieve significant development impacts.

The types of small catalytic investments we make are not provided by other public and private financial institutions and therefore fill an important gap in the development finance architecture.

In addition to our investments, we have also developed a deep understanding of how blended finance works in LDCs through our global research and advocacy together with OECD. We have released two groundbreaking reports on this topic and we are currently preparing a third report, which will include a focus on the role of blended finance in responding to COVID-19 and provide recommendations for more systemic approaches to blended finance in LDCs.

Through our research, which shows that only 6% of all private capital mobilized through blended finance approaches reaches LDCs, we know about the challenges of mobilizing private sector finance to reach the last mile, including for coral and marine conservation.

At UNCDF, we are excited to engage with the GFCR and its partners to provide our financing expertise and experience to help address this urgent global challenge.

We now call on all of you in the public and private sectors to help capitalize the Global Fund for Coral Reefs to allow much needed investment capital to flow towards coral reef conservation.

Thank you.