The UNCDF Political and Organizational Evolution Over the Past Ten Years:

1. The UNCDF Political and Organizational Evolution Over the Past Ten Years: What are the organizational perspectives for LDCs ?

2. Historical Perspective • UNCDF was created in 1966 by the UN General Assembly as an autonomous system aimed at increasing developing countries’ financial aid through subsidies and fovorable conditions. • The funds were placed under the management of the UNDP in 1973. • The UNDP limited its first activities with LDCs. • From 1980 until 1990 the rates of the fund reached 42,8 million US$ a year. • In 1991, donors’ rates decreased (31,3 millions in 1994 and this showed a decline of 25 %) whilst questioning the validity of the fund.

3. Genesis of UNCDF’s Mission • In 1973 its mission was to allow the LDCs to strengthen their economic and social infrastructures with regards to integrated rural development and in smaller industries • In 1980, this mission convened following the application of the new action program adopted in 1981 UN Conference on Least Developed Countries (LDCs) • The fund took charge of smaller projects; those more susceptible in drawing the attention of national and international financial institutions (IFIs) especially at the rural level of the poorest countries. At this level the fund was dedicated to the economic, productive and social infrastructures of the rural zones • Despite the encouraging results, donor contribution began to decreases considerably. From 1991attaining 31,3 million to 1994 shows a decline of 25 %. In contrast to the 1980s this decrease reflected not only a general decrease in donor aid, but also was accompanied with a pervading question in regards to the fund as a whole, its institutional place and its reason for existing.

4. REORIENTATION OF FUND POLICIES In 1996: ELEMENTAL PERSPECTIVES • Before pervading donor questions, the UNCDF tried to revise its mission by concentrating it in a more concrete way on poverty reduction with: • Implementing 25 years of experience • A better analysis on the policies of decentralized aid. • Base Interventions in regards to local governance and participative approaches and their affect on development. • The FUND decided to make " increased local capacities » the focus of its action.

5. The New Approach the UNCDF has as policy in 1995: Poverty Reduction, Participation and Local Governance. • The 1995 directive was a major realization which defined a new strategic orientation for the UNCDF • Three important axes were defined in this new document : • Decentralization is the transfer of the powers from a central authority to a local authority. • Governance integrates all methods that are both proper or not that societies use to distribute power, manage resources, and public problems (UNCDF and UNDP focus on healthy and good governance) • Participation during the last years became a major development concept. This is the broad concept that defines participation as the process of decision making in the follow-up and in the revision of current projects within evaluation.

6. Types of Projects after 1991 and their internal evolution • In 1991 UNCDF experimented with projects concerned with "éco-participative development. » This concept is characterized by approaches inspired by current reflections on the application of the policies of participative development in the problems put forth by the local management of natural resources. It is the process that which allows individuals to become active citizens, with rights in the respect for their mutual environment. • It understood that in its current revisions there existed many problems which were based on the theoretical plan that constituted practical obstacles and looked like base traditional local management resources. • The basic idea which outlined this new type of eco-development, and its methodology used to attain the objectives was: - To supply direct support for communal programs in reducing poverty in zones where there is little access to reources. - To pilot profitable approaches susceptible to reproduction, - To provide responsibilities to communal groups in order to strengthen local governance were imperfect

7. THE LDF OF UNCDF • The LDFs of the UNCDF had at its availabilties national decentralization policies. • UNCDF / UNDP are aligned and allies with national governments on the clear definition of LDF project relations and national policies, with regards to the subject : • Fiscal transfers from central governments to local governments for developmental services • Procedures of participative economic planning with respect to local governments; • The delivery and distribution of infrastructures and durable services in decentralized local authorities.

8. THE GUIDING PRINCIPLES OF LDFs . • The LDF encourages dialogue between various partners in local development • Tools and processes are set up within the framework of the LDF to enhance popular participation • Practical systems and procedures must be financially viable • The economic planning of the local development is driven within the budgetary framework understood by rural advisors • The size of the LDF has to satisfy at least two conditions : • Annual adequate resource transfer to the LC • Short term state refinancing • The principle allowance which is a formula of transparent distribution that must be finalized, from a fixed subsidy per capita, and from an additional granted subsidy following the criteria of performance. • The LDF directs the financing increase local authoritative capacities, further the improvement of basic infrastructures • L’application de la démarche FDL doit être reproductible • Une méthodologie de suivi évaluation doit être appliquée pour permettre de capitaliser sur les enseignements dégagés de l’expérience pilote.

9. MICROFINANCE • In past, UNCDF micro-financing policies offered re-financing and guaranteed opportunities. • For many years there was evolution which consists of strengthening the institutional capacity of institutions of micro-financing that were carefully selected • At this level one of the comparative advantages the UNCDF had was the flexibility with which it support the IMF in a way that suited their needs • The funds financed technical assistance, covered the start-up costs, and the management charges and supply of IMF ready capital. • To facilitate the coordination of the various operations of micro-finance, a unit was created by UNCDF and the UNDP finance in 1997 and was called the Special Micro-finance Unit. • In order to have an impact on poverty reduction, since 2003 UNCDF actions have been concentrated three principles which are : • To develop financial systems that include micro-computing finance so that the poor with low income have a guaranteed access to financial services. • To gather those that are suppliers of financial services, central banks, and governments to develop a financial sector that includes the poor. • Insist in the creation of financial products and systems of distribution that are adapted to the needs of consumers and women of low incoms.

10. CONCLUSION • The UNCDF continues to preserve the same niche in understanding the political orientations outlined in 1995 namely: - The Local Governance - the Micro-computing Finances (at the product level) The innovation consists of being inclusive and in strengthening the support for countries, and for the implementation of harmonization. • There are more integration with economically centered development programmes (Senegal and Mali are examples) today • The integration of NTICS within governance • Lastly, the approach of the UNCDF in poverty reduction is inspired by the current international dialogue on poverty.