UNCDF has been present in Tanzania since 1982, promoting local economic development and financial inclusion, and enhancing local government alternative sources of funds to finance local infrastructure. Our work aligns with the United Nations Strategic Development Cooperation Fund (UNSDCF) and is designed to support the Government of Tanzania to realize its Five-Year Development Plan III 2021-2026 and contribute to the Sustainable Development Goals (SDGs).
Local Finance Initiative (LFI)
The Local Finance Initiative (LFI) is an investment mechanism under UNCDF’s flagship Local Transformative Finance programme that mobilizes private sector capital for the development of financeable and bankable projects. LFI combines UNCDF’s catalytic capital, technical assistance, and risk mitigation strategies to structure transactions in priority sectors such as water, clean energy and clean cooking solutions, agriculture, industries and trade, small-scale local infrastructure, and climate adaptation. LFI works with business enterprises, sub-national entities, and local authorities to develop investment projects that have a transformative impact, with a focus on women, youth, and people with disabilities.
Our work with national governments, local authorities, central banks, and domestic and regional capital market authorities is to advocate for and advance the use of alternative financing mechanisms such as sub-national bond issuance. We provide policy advice and thought leadership in support of policy and regulatory reforms necessary for alternative project finance, deepening capital markets, public finance, and own source revenue generation.
Our approach has proven that local development investments can draw additional funds from domestic capital markets, in line with the Addis Ababa Action Agenda's call to action and SDG 17's goal of mobilizing resources from multiple sources in support of people, planet, and prosperity.
In-house technical capability based in Tanzania
- Catalytic Financing: We employ concessional finance instruments such as grants, loans, and guarantees to mobilize private capital for sustainable local development.
- Demand-Driven and Community-Focused: We are responsive to market needs and develop structures that are inclusive (PPCPs)
- Designed for Scale: Our interventions are designed to be replicable and adaptable for widespread adoption in other communities, regions, or countries.
- Sustainable and Structurally Transformative: Our interventions are designed to be sustainable and effect structural transformation at the local level using key mechanisms such as SPVs.
- Strategic and Collaborative: We collaborate closely with department partners, national governments, local authorities, sub-national entities, and private institutions to create an impact in the agricultural sector
- Empowerment of Youth and Women: We focus on empowering youth and women in rural areas to advance their economic prospects.
LFI is a ‘body of knowledge’ representing UNCDF’s model of innovation, learning, replication, and successful implementation of solutions at scale, and in line with UN country development plans. LFI has been implemented across eight LDCs including Bangladesh, Benin, the Gambia, Guinea, Tanzania, and Uganda. Its lessons have been consolidated and repackaged to help LDCs embed these innovations within their national policies, institutions, investment policies and transformational systems.
Inclusive Digital Economies
Under UNCDF’s global strategy of “Leaving No One Behind in the Digital Era,” UNCDF is supporting Tanzania’s transition to an inclusive digital economy through interventions that enhance the country’s enabling environment and digital infrastructure, promote inclusive innovation, and build digital skills so that all people, especially the most vulnerable, lead more productive, healthy, and resilient lives.
UNCDF’s country-level market development approach addresses key constraints of the Tanzanian economy through four complementary workstreams that reflect the core elements of all digital economies: 1) policy and regulation, 2) open digital payment ecosystem (digital infrastructure), 3) inclusive innovation, and 4) empowered customers (skills). We employ five strategic instruments across each of these workstreams and place the empowerment of women, youth, smallholder farmers, and micro-, small-, and medium-sized enterprise (MSME)-owners at the heart of all interventions.
The enabling policy and regulation workstream is foundational in that it lays the groundwork for an inclusive digital economy. Key objectives include working with the government to develop a national digital economy strategy, advocating for and supporting the implementation of regulatory sandboxes, supporting the development of data-driven policies to advance financial and digital inclusion, and building public sector capacity for data management and analytics. These will incentivize innovation and engender trust in financial and digital systems, while also giving people greater choices in the digital solutions offered on the market.
Digital infrastructure interventions focus on digital payments and interoperability, supporting the digitalization of microfinance institutions and savings and credit co-operatives and their integration into the national switch.
The inclusive innovation workstream is improving the quality of support offered to start-ups and the innovation ecosystem, while building the pipeline of investment-ready firms and mobilizing catalytic financing—through grants, TA, and concessional impact finance—to the sector. UNCDF’s Pesatech accelerator and partnership with the UNDP Funguo Innovation Programme are examples of current work in this area.
Finally, building digital skills is critical to consumers’ ability to embrace digital services in a demand-driven digital economy. Building on UNCDF's experience and insights on financial inclusion, UNCDF is developing digital capability, particularly among rural populations, and collaborating with a wide range of stakeholders to define, build, and scale the skills required for entry into and success in the technology sector.