The range of pioneering development capabilities and services provided by LFI is varied.
Investment readiness (preparation of projects to be investment ready): This is a dynamic project development support provided to governments and the private sector to ensure completeness and to meet the quality standards expected by financiers including local commercial banks, impact investors and the capital markets.
Business development services or technical assistance is required to enhance business performance; optimize the development impact of project; decrease the risk of defaults and ensure sustainability of the businesses in the long term. Businesses and project owners often lack the experience, skills and resources to appraise investment opportunities and at the same time navigate the difficult markets they operate in, and hence the need for a great deal of technical assistance. LFI BDS work sometimes involve supporting projects to access other forms of business support and facilities, performance-based grants, and challenge funds, etc.;
Project Structuring – we focus on the essential aspects of the project/transaction such as business case, financial structure, owners and governance structure, risk (identification, analysis, evaluation, allocation, and mitigation) strategies etc. and support developers to structure transactions in a way that reflect the reality and expectations of financiers.
Transaction facilitation – we are facilitators that guide the identification of appropriate sources of finance for projects both internally at UNCDF and externally with local banks/investors, thereby maximizing the mobilization of local domestic capital in financing development projects. Getting the right balance require navigation of the financial eco system to get transactions to reach financial close and to be implemented. This facilitation role of LFI between project owners and financiers increases the chance of the investment to be successfully financed.
The combination of the UNCDF financial Instruments and the use of LFI development capabilities has helped to catalyze access to additional finance from public and private sources to invest in sustainable development, deepening capital markets, support private sector development, and creation of multiplier effects in local economies.
Fund management –As in Lesotho and Tanzania, our niche is in the designing and the implementation of the solutions that jump-start local markets and mainstreaming of the impacts e.g. for resilience projects such as clean cooking energy, biodiversity, solar mini grids etc. by providing start-up seed capital to meet financier’s capital financial requirements. In addition, the design minimizes investment risk on the part of financiers by allocating and demonstrating acceptable levels of risk.
Investment types – This technical and business capacity includes: the development and financing of last mile SME small and medium infrastructure projects and local government projects; structuring of municipal bonds in various forms such as corporate, municipal, and pooled bonds for municipal infrastructure projects; structured project finance for industrial projects; PPP, and blended finance.
South-South Technical Collaboration & building national capacities through learn by doing, training and workshops, and involving project stakeholders and managers, government and its agencies, private sector, financial institutions, development partners, UN agencies and intermediary technical service providers. Introduction of Credit Guarantee Schemes to support local economies to accommodate private sector investment and development. LFI’s work and impact has directly and indirectly influenced business environment and policy changes in the localities we work.