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Created by the General Assembly in 1966 to promote economic development, UNCDF began focusing the world’s least developed countries in 1974.
For the next twenty years UNCDF financed stand-alone capital infrastructure -- roads, bridges, irrigation schemes -- mostly in Africa. It received about $40 million in core funding per year and operated out of UNDP country offices.
In the mid-1990s UNCDF began to focus to the role local governments could play in planning, financing and maintaining capital investments. Promoting effective infrastructure investment and service delivery via decentralized public financial management has been UNCDF’s mainstay ever since.
UNCDF’s other major area of expertise – microfinance – also dates to the mid-1990s, when many of its rural development project had credit components.
Today UNCDF operates in two broad areas:
- Public Finance for Local Development: decentralization and public financial management for local investment, service delivery and economic development; and
- Financial services for the Poor: the range of financial policies and products designed to empower poor families and small businesses, including savings, microcredit, micro-insurance and remittances.
UNCDF has also begun work on catalyzing domestic finance for public-private-partnerships geared to stimulating economic growth at the local level.
UNCDF’s resources remain modest compared to many multilateral organizations. But it has developed a considerable track record of going where others do not, and then “leveraging in” larger sources of public and private capital.
In the words of a 2008 assessment by the Government of Sweden, “UNCDF should be seen as a development actor that paves the way for others, rather than a financing mechanism.”
UNCDF’s traditional business model – centralized in New York, funded by a small number of core donors – has also evolved. Since 2005 UNCDF has:
- Moved 50 percent of its staff to the field;
- Doubled its number of donors;
- Doubled its annual income;
- Significantly expanded and diversified its programmes.
UNCDF today operates in 40 of the world’s 48 least developed countries. 70 percent of its portfolio is in Africa, 50 is in percent in post-crisis countries. Two of UNCDF’s largest donors are private foundations. Its annual budget is $60 million and growing.
In 2011 UNCDF received the highest score in the “SmartAid” index, a measure of over overall effectiveness in microfinance.
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