Welcome to the second of two blog posts that will be issued this week about recent global meetings. The first post was about the 17th November meeting on Local Fiscal Space and the recovery from COVID 19. This second post is a report of the recent Board meeting of the Local Finance Initiative that discussed and approved strategies for local transformation in its member states.
But first, some context. The blog posted on November 4th outlines some of the differences between transformation and growth which informed the discussion at the meeting. A further feature of the conversations was a sense of urgency.
The next ten years are the last decade of action for the attainment of the SDGs. They will also see the graduation of many countries from the “least developed country” category to the “middle income country” group. But what do these categories really mean? In individual and personal teams we measure our wealth in terms of health, happiness, security and prosperity. We can argue about which of the four is most important to us at any given time, yet at a personal level we all know true wealth when we see it. After all, the etymology of wealth is in the old English word “weal” which means “a sustained pattern of health and happiness”
On an aggregate level, how to measure national wealth? The criteria for graduation from the status of “least developed country” include a per capita GNI of above $1,030, and a high enoughe score on two indices of social and economic conditions – the Human Assets Index and the Economic Vulnerability Index. But does meeting these data points really mean that the health, happiness, security and prosperity of a countries population is secured? Clearly, graduation is a milestone in a journey rather than a destination. It is also clear that to continue this journey graduation must be driven by sustainable transformation in social and economic conditions. Otherwise the journey risks coming to a premature stop shortly after passing the milestone. Bhutan recognizes this. Its planning ministry is called the Gross National Happiness commission has developed indicators that reflect not only growth, but transformation as well.
In broad terms, these were the issues debated at the Local Finance Initiative (LFI) Global Board meeting, which saw a high level representation from government, UN agencies, development partners and donors whose deliberations identified the modalities and range of support from the LFI programme that will help achieve stronger, more inclusive, and more resilient economic growth, particularly in light of the impact of COVID-19 on those furthest behind in our societies.
In his opening remarks, Ben Kumumanya, the Permanent Secretary in the Ministry of Local Government – Uganda said it was time for LFI to rethink and realign its priorities in the area of training for local governments and SMEs noting its relevance in accelerating local economic development. He added,
‘At the policy level, LFI should support the amendment of legislations to encourage private sector participation in the economies and also identify new sources of capital.’
As an investment support capacity, the Local Finance Initiative helps countries deliver local economic development in collaboration with national institutions, local authorities and the private sector through a range of pioneering development capabilities and services which include but are not limited to: support to governments and the private sector with project preparation to meet the expectation and standards of financiers, Credit Guarantee Schemes (CGS) that help SMEs secure financing, and UNCDF financial instruments that catalyse access to additional funding for local economic development projects.
Speaking at the meeting H.E. Rosa Malango,UN Resident Coordinator, Uganda declared :
I would like to commend UNCDF for supporting the transformation of communities in developing economies, especially in Least Developed Countries (LDCs) like Uganda in Africa and Asia. UNCDF programmes such as the Local Finance Initiative (LFI) respond to emerging needs being identified by Member States as each one of them strives to leverage the 2030 Agenda Sustainable Development Goals, the Addis Ababa Action Agenda, the Paris Agreement, and the New Urban Agenda to achieve their development and growth aspirations.
She emphasized that she was pleased to learn that LFI is currently operational in eight countries including, Uganda, Tanzania, Benin, The Gambia, Bangladesh, Nepal, Lesotho and Guinea. She also said that it was important to acknowledge that LFI provides specific assistance to nine additional countries including Mali, Senegal, Kenya, Cambodia, Mozambique, Morocco, Ghana, Sao Tome and Principe, and Moldova.
She concluded saying that in Uganda UNCDF is a key member of the UN family and as such played a key role in the formulation of the new UN Sustainable Development Cooperation Framework 2021-2025, which was recently launched by H.E. President Yoweri Museveni.
She added that the Cooperation Framework is an inclusive partnership agreement which enables the United Nations to support the third National Development Plan and the national Vision 2040, by using the SDGs as shared targets for national prosperity for all.
Speaking at the meeting, the Chair of LDC Global Bureau, Ambassador Dr. Ligoya highlighted that financing is a cross-cutting issue in all areas of development from gender to private investment.
‘Financing does not reach the intended people – one study showed that only 20% of development funds reach the ultimate beneficiaries. Initiatives such as LFI will help governments’ development efforts to reach the ultimate beneficiaries,” he said.
This becomes more critical as countries move to middle income status, he asserted that, ‘Graduation to middle income should result in sustainable and resilient economies.’
Ambassador Ligoya also cautioned that rapid urbanization in LDCs is not matched with investments and welcomed initiatives such as the International Municipal Investment Fund that can co-invest with domestic banks in growing cities. LFI drives the technical assistance facility for this fund.
Explaining the role of LFI in supporting inclusive and sustainable development in local communities, David Jackson, the UNCDF Director of Local Development Finance said,
“Through LFI we have supported the building of local capacities in production and enhancement of local capital markets. For example, our work with governments to establish Credit Guarantee Schemes (CGS) helps SMEs who are the backbone of economies so countries can achieve the transformation at various layers and improve the lives of millions of people.”
The practical acceleration of local economic development and economic transformation solutions that reach the grassroots and solve development problems affecting communities require igniting sources of domestic finance especially as countries start to rebuild their economies from Covid 19. And as more LDCs move to middle-income status, interventions such as those championed by LFI will ensure they do so sustainably.
H.E. Ambassador Rabab Fatima, Permanent Representative of Bangladesh to the UN stated her appreciation that UNCDF with an array of innovating financing tools including LFI have been providing critical support to SMEs in many LDC.
In my own country, its partnership with the Central Bank lead to a much needed credit guarantee scheme for the SMEs to fight back against the pandemic.
Morever she explained that Bangladesh is subscribing to the recommendation of the LFI report for an enhanced focus on productive capacity building in LDC for value creation and diversification of their economics.
LDC need enhanced assistance for equitable financing equitable access to financing advanced technologies and no house productive capacity building.We are keen to working with our partners to make this issue a central theme in the upcoming LDC five conference in Doha.
For climate vulnerable LDC’s like Bangladesh, the pandemic has forced multi-faceted challenges, like floods cyclones and other natural calamities, she declared that the country happy to partner with UNCDF to scale up preparatory activities such as assessments, survey of different municipalities and districts to identify the vulnerabilities to tackle such risks.
Speaking at the meeting Mr Rolland Mollerus Secretary of the Committee for Development Policy, Chief of Development Policy Branch, UN Department of Economic and Social Affairs, declared that the new Doha PoA for the LDC will need to reflect the lessons from the unfolding global health and economic crisis and the implications for the LDC’s vision of improving the lives of millions of people in the most disadvantaged countries.
He stated that , ultimately, the success of this new programme of action will depend on the actions taken by the LDC and their development partners.
He stressed that it is equally important and an essential precondition for the success of the program of action is the choice of the framework used to organize the new programme of action.
The committee for development policy recommends that LDC5 adopts the theme expanding productive capacity for sustainable development as a framework for organizing the next programme of action.
The framework was developed by the committee based on analytical studies which built on the work UNCTAD and other organizations such as UNCDF
This analysis identified the limited development of productive capacities as the root cause of LDC persistent challenges, including insufficient progress in resilience building ,the failure to create decent and productive jobs and limited technological upgrading
Enhancing the role of inclusive financing vehicles such as the UNCDF’s LFI and integrating them into the financial sector are critical policy interventions for most of the LDC
If implemented successfully this and other key measures towards the expansion of productive capacity will contribute to the implementation of the 2030 agenda for sustainable development thereby by ensuring that no country is left behind.
Mr. Ola Sahlen, Program Manager, Swedish International Development Cooperation Agency (Sida) said that Sida is funding LFI through the Last Mile Finance Trust Fund mechanism and that it is part of the Swedish Governments support to UNCDF’s work. Ola recalled his field visit to LFI investments in Tanzania and the lessons learnt there.
The LFI BOARD Decision is currently being finalized and will be communicated once it has received official approval from the LFI member states.
Agenda of the LFI Board:
|8:00am – 8:30am (New York time)3||Opening|
|Virtual Welcome :|
Mr. Ben Kumumanya, Permanent Secretary, Ministry of Local Government, Uganda and co-chair of the LFI Board
Ms. Rosa Malango, Resident Coordinator, UN Uganda
H.E. Ambassador Dr. Perks Master Ligoya, Chair of LDC Global Coordination Bureau, Permanent Representative of the Republic of Malawi to the UN and former Governor of the Reserve Bank of Malawi
|H.E. Ambassador Rabab Fatima, |
Permanent Representative of Bangladesh to the UN
Mr. Roland Mollerus, Secretary of the Committee for Development Policy, Chief of Development Policy Branch, UN Department of Economic and Social Affairs
Mr. Ola Sahlen, Program Manager, Swedish International Development Cooperation Agency (Sida)
Moderator: Mr. David Jackson, Co-Chair of LFI Board, Director of Local Development Finance, UNCDF
|8:30am – 9:20am||Session 1: Presentation of LFI 2017-2019 Global Report and 2021 Draft Workplan|
|Presentation Mr. Peter Malika, Global LFI Manager, UNCDF Discussion session Board Members and observers Moderator: Mr. David Jackson, Co-Chair of LFI Board, Director of Local Development Finance, UNCDF|
|9:20am – 9:30am||Break|
|9:30am – 10:20am||Session 2: The Way Forwards|
|Presentation of Country Examples:|
The role of local economic development finance in accelerating the recovery from COVID-19
(Ms. Christel Alvergne and Ms. Sirra Foon)
Building productive capacity for structural transformation of local economies
(Mr. Dmitry Pozhidaev and Mr. Imanuel Muro)
Financing sustainable urban growth in developing countries (Mr. Jaffer Machano and Mr. Iqbal Abdullah Harun)
Breakout Discussion on the three topics above Group 1: with French interpretation (Moderator: Ms. Christel Alvergne)
Group 2: without French interpretation (Moderator: Mr. Dmitry Pozhidaev)
Each group will focus on the practical lessons learnt by LFI and the practical implications for LFI in 2021. Guidance will be provided to support 2021 activities.
Recommendations from breakout discussions
Representatives from each breakout group
Moderator: Mr. David Jackson, Co-Chair of LFI Board, Director of Local Development Finance, UNCDF
|10:20am – 10:30am||Break|
|10:30am – 11:00am||Session 3: Discussion and endorsement of the LFI Board Decision|
|Closing Remarks: Mr. David Jackson, Co-Chair of LFI Board, Director of Local Development Finance, UNCDF|
|11:00am||End of event|