Local Government Finance is Development Finance - UNCDF

The recently approved UNCDF Strategic Framework 2022–2025 continues this tradition by emphasizing UNCDF’s hybrid nature as a development finance institution on the one hand and a United Nations development agency on the other. During the discussions leading up to the 2022–2025 Strategic Framework’s approval, Member States and development partners encouraged UNCDF to strengthen its alignment with the priorities of the LDCs as expressed in the Doha Programme of Action (2022), which highlights building productive capacity. LDC concerns are also embodied in their collective requests to the Rio conventions on climate, biodiversity and desertification for financial mechanisms that address the existential risks of the environment and climate emergency. And throughout 2021, there was a wider appreciation of the urgency of greater capital flows towards sustainable infrastructure, including local infrastructure, particularly given the rapid growth rate of cities in developing countries. The United Nations Economic and Social Council, with Pakistan in the chair, promoted a focus on sustainable infrastructure finance; and the European Union, together with UN-Habitat, published a landmark report on Financing Sustainable Urban Development. This publication provides a substantive consideration of one of the questions raised in these debates: Given the scale of the capital flows required, is the architecture of the global financial ecosystem fit for purpose? Much more remains to be done to fully implement the comprehensive framework envisaged in the 2015 Addis Ababa Action Agenda to promote long-term-oriented and transformative investment into the Sustainable Development Goals that is inclusive and sustainable.