What we do
UNCDF plays a distinct role in the United Nations development system by addressing a persistent gap in the development finance landscape.
In Least Developed Countries, Small Island Developing States and fragile settings, jobs and economic growth are driven by micro, small and medium-sized enterprises, entrepreneurs, and local economies operating in market segments underserved by existing sources of finance.
UNCDF is designed to operate in this space. As an early-stage provider of catalytic concessional first-loss capital, UNCDF derisks investments in high-risk and underserved markets. Its non-credit-rated status and off-balance-sheet capital mandate allow it to absorb early risk, change market risk profiles, and mobilize domestic and international capital over time.
UNCDF delivers derisking through market systems development and financial sector deepening, combining structuring advisory with catalytic capital deployed through concessional loans, guarantees, performance-based grants, and blended finance solutions, including local-currency structures.
Through this approach, UNCDF builds investable markets, supports job creation, and enables scale by development finance institutions, multilateral development banks, and private investors.
De-risking investment in frontier markets
Established by the United Nations General Assembly in 1966, the United Nations Capital Development Fund (UNCDF) was created with a singular purpose - to advance development where it is most needed - in the world’s most underserved markets.
As a UN entity with a capital mandate, UNCDF occupies a unique position in the development finance ecosystem. We are non-credit rated by design, enabling us to operate in high-risk environments that others avoid. This gives us the flexibility to absorb more risk than multilateral development banks (MDBs), while serving as an off-balance sheet de-risking partner for governments and major development finance institutions (DFIs).
We work where traditional finance does not flow: in Least Developed Countries, Small Island Developing States, and fragile contexts, where barriers to both public and private investment are highest, and the need for finance is most urgent.
UNCDF deploys a suite of catalytic instruments, including grant-funded guarantees, concessional loans, and performance-based payments, to unlock domestic capital and attract private investment. But we go beyond transactions. We catalyse local market development, strengthen public financial management systems, and build the financial ecosystems that enable long-term, sustainable investment aligned with the Sustainable Development Goals.
In doing so, we amplify the impact of the United Nations System and our multilateral partners, not by duplicating their work, but by laying the groundwork for others to scale.
Case studies