United Nations Capital Development Fund (UNCDF)



Development Cooperation, Financial Services, Gender Equality and Empowerment of Women, Infrastructure, Private Sector Development, Sustainability and Environment


United States of America


01 - No Poverty, 10 - Reduced Inequalities, 11 - Sustainable Cities and Communities, 13 - Climate Action, 17 - Partnerships for the Goals

Organization Type

Multilateral Organization





The United Nations Capital Development Fund (UNCDF) is the capital investment agency of the United Nations for the Least Developed Countries. It provides access to microfinance and investment capital. UNCDF programmes help to empower women, and are designed to catalyze larger capital flows from the private sector, national Governments and development partners, for maximum impact towards the internationally agreed developments goals. It makes public and private finance work for the poor in the world's 47 least developed countries (LDCs).

What We Do:

1. Financial Inclusion

Two billion adults - more than half of the world’s working adults - are still excluded from formal financial services. This is most acute among low-income populations in emerging and developing economies. Including people in the formal economy is a critical contribution to poverty reduction, tackling inequality, and fostering inclusive growth. Financial inclusion means that individuals and enterprises can access and use a range of appropriate and responsibly provided financial services offered in a well-regulated environment. There is a growing evidence that increased levels of financial inclusion – through the extension of savings, credit, insurance, and payment services – contributes significantly to sustainable economic growth.

UNCDF provides capital and technical support through Inclusive Finance programmes to ensure that more households and small businesses gain access to financial services that expand opportunities and reduce vulnerabilities. UNCDF's ability to provide risk capital directly to the private sector is helping bring new financial products to under-served and hard to reach markets and spurring innovations. Through flexible grant and loan instruments UNCDF supports a wide range of financial services providers (e.g. banks, cooperatives, microfinance institutions, money transfer operators, and mobile networks operators) and financial products and services (e.g. savings, credit, insurance, payment services, remittances).

UNCDF also supports data driven financial inclusion diagnostics, including through generating and gathering data that is being used to help develop national financial inclusion roadmaps and strategies as well as sector-specific or market segment strategies. This enables governments and stakeholders to make evidence-based decisions and investments focused on the priorities and opportunities for financial inclusion at country level. All collected data is a public good.

Inclusive finance must be achieved in a responsible manner, and UNCDF joined the Responsible Finance Forum, GPFI of the G20, and others in advancing a three-pillared approach.

  • The first is consumer protection regulation and supervision by financial authorities who set and enforce rules relating to the provision of services, especially regarding transparency, recourse and other aspects of market conduct.

  • The second is industry action—taken either individually or collectively—and shaped by principles, standards, codes of conduct, and guidelines, such as the Smart Campaign Client Protection Principles.

  • The third is enhanced financial capability of consumers to make sound financial decisions and protect themselves from harm.

To learn more about UNCDF’s approach in Inclusive Finance and its investment instruments, please download our Inclusive Finance Brochure

2. Local Development Finance

Over half of the population in the world’s 47 least developed countries (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.

The Local Development Finance team at UNCDF addresses three problems that prevent the benefits of growth from reaching all sections of the population and all parts of the territory:

  1. 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;

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

  3. 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.;

Mission: To 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.

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.

Approach: We adopt a transformative impact financing approach to promote service delivery, infrastructure investment and local economic development that retains value within the local territory. This builds local fiscal space and local fixed capital formation. Working with local governments, domestic banks and local businesses, we design, pilot and test out financing mechanisms and business models in both public and private sectors that support locally designed public investments and revenue generating capital investment projects. The investment financing toolboxes include Fiscal Decentralization, Local Development Funds for public capital investment programming, Structured Project Finance, Municipal Finance, SME Finance, and Public-Private Partnerships. Learn more about our Theory of Change.

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, which contributes to local economic growth, peacebuilding and more importantly, improvement in people’s quality of life at the grassroots level. For example, we bring Green Climate Fund resources to LDC local governments; we support private investment that reduces land degradation and boosts food security; we support peacebuilding by strengthening the relationship between the citizens and the state at the local level through responsive local government investments.


  • Local governments and national governments

  • Financing agencies (the World Bank, domestic commercial banks and investment institutions)

  • International partners: UCLG, ICLEI, CLGF, FMDV, Cities Alliance, The Hague Academy for Local Governance, IIED, KEI, WRI, DeLoG, OECD

  • UN partners: UNDP, UNDESA, UN-Habitat, FAO

  • Development partners : Sida, BTC, EU, SDC, Global Affairs Canada

To learn more about UNCDF's approach in Local Development Finance and its investment instruments, please download our Local Development Finance Brochure.

3. Least Developed Countries Investment Platform

UNCDF is playing an increasingly active role in mobilizing investments in local economies through the application of catalytic loans and guarantees that mitigate risks for public and private investors. The enabling mechanism for these activities is the LDC Investment Platform (the “Platform”), which is creating new opportunities for UNCDF to expand its support for local infrastructure and businesses in the last mile. In addition, if the funding and demand are there, the platform could eventually be expanded to consider last-mile finance pipelines from UNDP and the wider United Nations Development System.

Through the LDC Investment Platform, in 2017 UNCDF provided a new generation, concessional subordinated loan of $250,000 to an agribusiness company in the United Republic of Tanzania. The loan, together with UNCDF technical assistance and a guarantee scheme from the Private Agricultural Sector Support Trust, mitigated risks of the project and unlocked $765,000 in loans from a local private bank. This will enable the project developer to enhance productivity and build a regional value chain that will benefit some 7,500 smallholder farmers working with the company. This demonstrates how UNCDF can unlock local private sector capital for sustainable development in markets perceived as too risky by some investors.

The LDC Investment Platform is helping UNCDF programmes to structure, produce credit ratings and mitigate risks in investment opportunities they have sourced, both from the private and public sectors. UNCDF has put in place new loan and guarantee policies, strengthened its due diligence requirements and transaction documentation, launched a credit scoring model and enhanced the process to support the selection and approval of relevant loan and guarantee transactions.

The Platform also strengthened its legal framework based on support from the UNDP Office of Legal Affairs as well as pro bono support received from two top international law firms in New York. The Platform introduced support tools to field investment staff and has increased human capacities to manage and oversee the loan and guarantee operations, while ensuring robust due diligence, credit scoring and risk assessment.

To ensure development and financial additionality, the LDC Investment Platform looks to invest in niche market opportunities, where finance is not yet flowing predictably because of real and perceived risks; where the recipient can make productive use of the capital and ensure repayment; where UNCDF has the potential to mobilize additional capital flows; and where there is scope to achieve significant development results.

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