Mobilizing capital for local development funds: A longitudinal case study in leveraging millions to billions tells the story of how UNCDF’s signature product – the local development fund (LDF) – was able to generate billions of dollars for local social and economic development in the world’s underserved and underinvested regions. The publication consists of a synthesis overview and 10 country cases (Bangladesh, Benin, Bhutan, Guinea, Lesotho, Mali, Nepal, Solomon Islands, Tanzania and Uganda).
UNCDF has been at the forefront of developing and piloting innovative approaches to financing local service delivery over the past decades. In many least developed countries (LDCs), UNCDF has continued to develop new approaches to local government finance, for example, in the areas of climate adaptation, local economic development and municipal finance. The signature product designed by UNCDF since the 1990s – the Local Development Fund (LDF) – was able to generate billions of dollars for local social and economic development in the LDCs through piloting and national scale-up. The LDFs leveraged UNCDF’s initial investment of millions to generate billions in sustainable and institutionalised flows of funds to the local level through national fiscal transfer systems and follow-on financing from the World Bank and others. These Funds significantly contributed to fiscal decentralization and the expansion of local fiscal space and local fixed capital formation – two prerequisites for economic transformation.
In response to the need for credible longitudinal studies that account for the sustainable leverage and impact of development finance, UNCDF in partnership with Dege Consult ApS conducted a study as a first attempt to provide a comprehensive analysis and better understanding of the leverage of UNCDF-supported LDFs on the intergovernmental fiscal transfer systems and related reforms following the initial pilots in a range of countries. The findings are consolidated in the publication named “Mobilizing capital for local development funds: a longitudinal case study in leveraging millions to billions”. It documents the leverage of UNCDF initiatives on the total size of and modalities for intergovernmental fiscal transfers to local governments and analyses the contributing factors in the model’s success.