To achieve the SDGs and structural transformation, both the Addis Ababa Action Agenda and Agenda 2030 recognize the need for new financing and business models that mobilize resources from the public and private sector. What we see, however, is that investments do not flow predictably and sufficiently to the “last mile” areas of LDCs, where resources are scarcest and the development challenges for underserved populations the greatest.
At the UNCDF side event with the Executive Board on 2 September 2015, Member States requested UNCDF to share practical experiences and lessons on its finance models and programmes that are overcoming such challenges and - through following a path from innovation to consolidation and scale - are helping to get resources flowing to this last mile.
UNCDF’s Local Finance Initiative is a flagship programme which offers such a practical example and platform for knowledge exchange. LDCs suffer from chronic infrastructure deficits which are even more pronounced in places like secondary towns and rural areas. The Local Finance Initiative set out to show that local infrastructure projects that are prioritized by local governments and communities can attract domestic funding if existing market failures are addressed. By directing strategically placed ODA to provide advisory support and seed capital to de-risk and structure priority local infrastructure projects, the first phase of the Local Finance Initiative demonstrated that domestic and international finance can be leveraged at a rate of at least 1:10 in support of economically transformational investments. Having demonstrated proof of concept, the programme is now emerging as a national platform for investable projects across Tanzania.