When UNCDF launched the Last Mile Finance Trust Fund (LMF-TF) in June 2016, the world looked very different. In September 2015, the United Nations adopted the first global development agenda, aiming to help every country reach the Sustainable Development Goals by 2030. The international financial system, eight years after the financial crisis, continued to stockpile liquidity in developed markets and overlook emerging markets, where the development needs are greatest. And the international development finance landscape continued to evolve, with consistent declines in financing of core resources to most UN aid agencies and increasing demands to justify official development assistance from even the most generous donors.

In response to those conditions, UNCDF created the LMF-TF as a flexible funding vehicle to pool lightly earmarked resources from various donors towards thematic priorities. The Fund was also intended to serve as a platform to test new models, innovate solutions, de-risk investments, and catalyze follow-on financing to help achieve the SDGs in the world’s Least Developed Countries, the LDCs.

The government of Sweden, through the Swedish International Development Cooperation Agency (Sida), was UNCDF’s partner in creating the LMF-TF, providing an anchor donation of just over US$ 2.2 million.

As the LMF-TF celebrates its fifth anniversary, the donor pool has grown to eight donors: the Government of Andorra, the Norwegian Agency for Develop- ment Cooperation (NORAD), the Swiss Agency for Development and Cooperation (SDC), the Kingdom of the Netherlands, the Korea International Cooperation Agency (KOICA), the Nederlandse Financiering- maatschppij Voor Ontwikkelingslanden N.V. (FMO), and the Principality of Liechtenstein. Sida’s initial donation would catalyze follow-on donations of just over US$ 53 million, fulfilling the promise of a pooled financing mechanism.

In 2020, the COVID-19 pandemic hit LDCs hard. Investors pulled $83 billion out of developing countries, the largest outflow ever recorded1. UNCTAD estimates that LDCs will see drops of 30% to 40% in foreign direct investment between 2020 and 2021.2 The lockdowns, quarantines, health impacts and economic impacts of the pandemic caused tremendous disruption to the lives of LDC citizens, and posed severe challenges to UNCDF’s work in the field.