What We Do

Local Transformative Finance

Our Mission

Promote and support transformative investment through local governments and domestic banks in LDCs by piloting and scaling up innovative financing mechanisms and policies in the public and private sectors

The Local Transformative Finance team helps countries deal with the triple challenge of improving the health of people, the health of the planet, and the growth of cities. This challenge requires the economic structural transformation and environmental sustainability The holistic nature of which means that it is most effectively achieved through local government finance—that expands fiscal space and capital availability.

A Subnational Financing Hub at the United Nations

The Local Transformative Finance team at UNCDF helps countries tackle the triple challenge of improving human well-being, maintaining environmental sustainability, and accommodating rapid urbanisation.

They do this by acting as the UN Subnational Financing Hub and a hybrid development finance institution (DFI) that works with UN Agencies to address the sustainable development financing gaps faced by cities and local governments.

Over 50% of the population in the world’s 46 LDCs live on less than $1.25 per day and billions of people still do not have the services and employment necessary for the enjoyment of a decent quality of life

Yet many LDCs have made significant progress in economic development as measured by national statistics and indicators. Without changing the current system it will not be possible to transform our economies and meet the triple challenge of human wellbeing, planetary health, and urban growth. The building blocks of the ecosystem for local finance needs to be assembled to meet the needs of the Green, Urban and Productive transition.

Building blocks for a financial ecosystem thats works for Cities

Building on the policy agenda put forwards by the Malaga Coalition under the impulsion of UNCDF , UCLG and FMDV and further fleshed out in the UNCDF 2022 publication “Local Government Finance is Development Finance”, the Local Transformative Finance team at UNCDF works on the building blocks of a financial ecosystem for local infrastructure finance.

Expansion of
Local Government Finance

Repurposing of local government finance is a vehicle to accelerate environmentally sustainable and inclusive development.

Development of
Local Capital Markets

Unlocking financing from domestic and international financial institutions to strengthen local infrastructure and expand local economies.

Strengthening of
Local Climate Finance Mechanisms

Strengthening climate change–resilience in communities and economies by increasing financing for, and investment in, climate change adaptation.

Expansion of
Local Fiscal Space

Rebuild local fiscal space, accelerate national economic recovery and restore trust in public institutions, all of which are core responsibilities of both central and local governments.

Implementation of
the Rio Conventions and the New Urban Agenda

Support of multi-level development finance for the full implementation of the Rio Conventions and the New Urban Agenda.

Local Government Finance is Development Finance

Transformative Finance
at the Local Level

Through its Local Transformative team, UNCDF addresses three obstacles that prevent some sectors of the population and certain regions of the countries in which we work from enjoying the same benefits as others from the economic growth.

Investing Locally

Fiscal resources and domestic capital markets are not investing in local governments and local economies in a way that promotes sustainable and equitable growth, which is holding back structural transformation and economic resilience.

Attract Development Finance

Local governments and local economies are not able to attract development finance and therefore the benefits of growth are bypassing many populations.

Catalytic Infrastructure

Finance is not available for local catalytic infrastructure projects with high impact in critical themes such as women’s economic empowerment, climate change, clean energy and food security.

Our Vision

LDCs will have robust policy environment, strong institutional capacity and effective financing vehicles that contribute to diverse, inclusive and resilient local economies and societies by 2030

Graduation from LDC status to middle income country status will benefit all sections of the population.


UNCDF adopts a transformative impact financing approach to promote service delivery, infrastructure investment and local economic development that retains value within the local territory.

Transformative Impact Finance

UNCDF implements a transformational impact finance
strategy to support service delivery, infrastructure investment,
and local economic growth that preserves value
within the local territory in order to increase local fiscal space
and local fixed capital formation.

Public and Private Sector Partnerships

UNCDF partners with local governments, domestic banks, and local businesses to design, prototype, and test financing methods and business models in both the public and private sectors to support locally conceived public investments and revenue-generating capital investment projects.

Investment Financing Toolboxes

Investment finance toolkits incorporate a wide variety of novel or innovative approaches to securing financial support for transformative infrastructure initiatives.

Fiscal Decentralization

Local Development Funds

Structured Project Finance

Municipal Finance

SME Finance

Public-Private Partnerships

Theory of Change

Resolving the interconnected problems of urbanisation, environmental degradation,
and human well-being based on evidence.

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Understanding Our Development Impact

Promote and support transformative investment through local governments and domestic banks in LDCs by piloting and scaling up innovative financing mechanisms and policies in the public and private sectors.

Measurable Impact

During the past two decades, our work has delivered measurable impact in areas such as job creation, women’s economic empowerment, clean energy, resilience to climate change and strengthened food security.

Local Level

UNCDF contributes to local economic growth, peacebuilding and more importantly, improvement in people’s quality of life at the grassroots level.

Our Partners

Accelerating our work in the area of subnational finance to support a global financial ecosystem that provides access to finance for cities and local governments with the support of our partners.

Local governments
and national governments

UNCDF has a track record of working with local and national governments to set up successful development projects.

Regional and International
Financial Institutions

UNCDF established mutually-beneficial partnerships with IFIs to enhance support for national governments and local communities and improve the sustainability of development efforts.

International partners

UNCDF partners with UCLG, ICLEI, CLGF, FMDV, Cities Alliance, The Hague Academy for Local Governance, IIED, KEI, WRI, DeLoG, OECD.

UN System

UNCDF also collaborates with the wider group of UN development agencies, including ILO, IFAD, UN Women, UNHCR, UNCCD, UNSIF, UNOPS or WFP.

Development partners

UNCDF shares common interests with development partners (e.g. Sida, BTC, EU, SDC, Global Affairs Canada) that lay the groundwork for extensive collaboration in programmes cutting across Africa, Asia, the Caribbean, and the Pacific.

UNCDF leverages its unique financing capability and investment track record to support local governments in the LDCs

Our Programmes

UNCDF programmes promote and support transformative investments through local governments and national banks in LDCs by piloting and scaling up innovative financing mechanisms and policies in the public and private sectors.

Local Climate Adaptive Living Facility

Municipal Investment Finance

Inclusive and Equitable Local Development

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