1. 0 United Nations Capital Development Fund Preliminary 2006 Results and Outlook for 2007 Executive Board Meeting January 2007

2. 1  Review of UNCDF 2006 Development Results.  2006 Programme Highlights.  Additional UNCDF Activities in 2006.  Organization and Management: 2006 Restructuring Results.  2006 Resource Mobilization Highlights.  2004-2006 Resources Mobilized.  Budget Results 2005-2007: Expenditures.  2006-2010 Growth Summary.  2007 Business Plan: Development Results.  2007 Business Plan: Management Results.  Key Challenges. Presentation Overview

3. 2 Number of LDCs33 Number of LDCs with investments23 Estimated number of direct beneficiaries4.5 Million Geographic distribution of investments 66% Africa 24% Asia 5% Latin America 5% Arab States Total UNCDF financing required for Current Investments Approx. $115m* Indicative key data for 2006 Number of local governments supported Number of investments made in infrastructure and access to social services Average amount per investment Average investment per capita 450 3,008 $3,520 $2.35 UNCDF Activities in Local Development in 2006 (Preliminary) Review of UNCDF 2006 Development Results *Includes projected investments from Development Partners through UNCDF.

4. 3 Local Development Investments by Sector in 2006 1 Review of UNCDF 2006 Development Results …continued (1) Reflects preliminary results based on 80% of country programmes reporting to date. 33% Education 18% Health 19% Water 13% Roads, Bridges, Culverts 2% Community Facilities 15% Markets & Agriculture

5. 4 Number of LDCs14 Number of LDCs with investments9 Geographic distribution of investments 89% Africa 11% Arab States Total UNCDF financing required for Current Investments Approx. $40 million* Indicative key data for 2006 Number of Inclusive Financial Sector Assessments: Number of Investment Committees: New MFI investments in 2006: Number of Post-Conflict Countries, including Pipeline: 4 countries 5 countries $2.2 million; 20 MFIs 13 countries UNCDF Activities in Microfinance in 2006 (Preliminary) Review of UNCDF 2006 Development Results …continued *Includes projected investments from Development Partners through UNCDF.

6. 5 Bangladesh  Government of Bangladesh approved $200 million+ “Local Government Support Programme (LGSP)” scaling up and replicating UNCDF/UNDP pilot to 4,500 Union Parishads.  World Bank, EU, DANIDA, SDC join LGSP.  UNCDF retains Technical Support Role, continues learning and innovation in 6 Union Parishads and begins technical management of Social Protection pilot. Yemen  National Decentralization for Local Development Strategy elaborated and adopted by the Local Authorities National Conference. Strategy scheduled for approval by Parliament in February 2007.  “Decentralization and Local Development Support Program” (DLDSP) coverage continued to expand and reached 48 districts (from the original 6 in 2003).  Donor support continued to grow: 9 donors have harmonized approach and total budget now exceeds $12 million. 2006 Programme Highlights

7. 6 Nicaragua  Nicaraguan Government adopted “National Strategy for Decentralization and Local Development” based on UNCDF Local Development model and technical support.  UN Resident Coordinator seeking technical assistance to align and harmonize UN and development partner support for decentralization reform that will use local authorities for cross-sectoral service delivery to reduce poverty and achieve the MDGs. Senegal  UNDP, UNCDF and CIDA approved $ 9 million to support national strategy for building inclusive financial sectors with focus on rural areas.  IFAD, KfW, AFD and EU approved specific funding to support national strategy. Donor funding reached 95% of Action Plan ($40 million) for implementation of national strategy. 2006 Programme Highlights

8. 7 Mozambique Government of Mozambique replicating UNCDF pilot and Local Development methodology with support of World Bank, DCI and GTZ. UNCDF, UNDP, World Bank and GTZ jointly evaluated prior Local Development collaboration and used results to jointly advise Government of new National Decentralized Planning and Finance Programme (NDPFP). Government decided “in principle” to establish NDPFP and resource-pooling or common-funding arrangement. UNCDF working with other Development Partners and Government to develop appropriate programming and financial arrangements. Benin  UNCDF pilot (begun in 2003) for Decentralization and Local Development pioneers Public Expenditure Management process using National Treasury for investment funding.  Government and Development Partners (EU and Belgium) agree to replicate and scale up UNCDF model to additional provinces. 2006 Programme Highlights

9. 8 UN Conference on Inclusive Financial Sectors in Africa  A forum for multiple stakeholders to discuss the challenges, constraints, and opportunities for building inclusive financial sectors in Africa.  More than 300 participants from Governments, Central Banks, Development Agencies, Microfinance Institutions (MFIs) and Financial Service Providers (FSPs), private sector financial institutions, academia, civil society, donors and investors, UN Agencies and Bretton Woods Institutions.  About 80% of participants from Africa.  The Dakar Declaration on Building Inclusive Financial Sectors in Africa issued and Steering Committee formed to ensure follow-up. First Steering Committee meeting to be held in Madagascar in February 2007. Steering Committee members include representatives from Governments, Central Banks, IFIs, MFIs, FSPs and Development Partners. UNCDF hosting Steering Committee. Additional UNCDF Activities 2006

10. 9 UN Advisors Group on Inclusive Financial Sectors  Established in June 2006 for a term of 2 years: To increase global access of poor and low income households and micro and small enterprises to a broad range of financial products and services on a sustainable basis. To raise global public awareness regarding financial inclusion and to place inclusive finance on the global development agenda.  Consists of 25 individuals representing the UN, Governments, IFIs, Central Banks, MFIs, FSPs, private sector financial institutions and academia.  Four Working Groups: Regulation and Supervision, Engaging the Private Sector, Research and Public Policy, and Advocacy.  Two meetings in 2006: June and November.  Secretariat formed at UNCDF consisting of Senior Policy Advisor, Programme Manager, and Programme Associate.  Key Events in 2007: Global Conference on Regulation & Supervision; Conference for Institutional Investors sponsored by Goldman Sachs; Regional Meetings in Asia, Latin America and Eastern Europe; Advisors Group meetings in Amsterdam, Nairobi, and Asia-Pacific region.

11. 10  Streamlined HQ to focus exclusively on strategic functions and management: 41% reduction in HQ posts. Addition of Business Development and Operations Advisors in 2006.  Expansion of presence at Regional and Country levels. Organization and Management: 2006 Restructuring Results Consistent with UN Reform initiatives, UNCDF has restructured to achieve greater decentralization and improved operating efficiency and effectiveness: HQRegional Country Offices JPOs 2005 2006 2007 (P) 37 24 9 5 10 42 53 5419 16 5 Totals 93 98 107

12. 11  Principal benefits of restructuring: More field presence closer to LDCs and supported by programme funds. Closer alignment with UNDP resulting in more cost-effective structure for delivering services. Reduced HQ overhead costs. Enhanced capability to mobilize resources and manage operations efficiently.  HQ and Regional restructuring completed in 2006.  2007 restructuring activities: Revise roles and responsibilities in Country Offices to strengthen project management and collaboration with UNDP. Review Change Management process to identify lessons learned and assess need for adjustments. …continued Organization and Management: 2006 Restructuring Results

13. 12  18% increase in Core Contributions from $10.7 million in 2005 to $12.7 million in 2006.  22% increase in Non-Core Contributions from $10.8 million in 2005 to $13.1 million in 2006.  20% increase in Total Contributions from $21.5 million in 2005 to $25.8 million in 2006. Total Contributions in 2006 exceeded 2004 Contributions by $2 million.  45% increase in number of Donor Countries from 11 in 2005 to 16 in 2006. New Core Donors include Andorra, Ireland, Liechtenstein and USA.  Approximately $2 million mobilized for UN Advisors Group over two years.  It is not expected that UNCDF will draw upon its reserves in a significant way in 2006. 2006 Resource Mobilization Highlights

14. 13 2004-2006 Resources Mobilized Number of Contributing Member States 1 UNCDF Contributions: 2004-2006 200420052006 $23.8 $21.5 $25.8 2 200420052006 13 11 16 Core (1) Includes OECD/DAC countries only. -15% +45% -10% +20% (2) Includes (i) certain pledges for 2006 not received as of 31/12/2006 but expected in early 2007 and (ii) an amount for support of certain UNCDF activities held in a Trust Fund in BDP. Non- Core

15. 14 Budget Results 2005-2007: Expenditures Investments Country Investment Support Admin (UNDP since 2006) Regional Investment Support Actual Preliminary Projected $38 million $23 million $19.5 million $26 million $31m $47m $27.8m $41 million $21.1 million $5 million $5 million $6.7 million + 23 % - 25 %

16. 15 2006-2010 Growth Summary 2006 (preliminary) 2007 (projected) 2010 (projected) Total annual programme expenditures 1 $26m$41m$60m Local Development$22m$32m$40m Microfinance$4m$9m$20m Total number of LDCs283745 Local Development233342 Microfinance91625 UNCDF Personnel98107112 (1) Includes projected investments from Development Partners through UNCDF.

17. 16 2007 Business Plan: Development Results Decentralization and Local Development  Complete next stage of scale-up and replication: Bangladesh, Nepal, Mozambique, Timor Leste, Yemen, Ethiopia, Benin and Senegal.  Initiate Local Economic Development programmes: Benin, Senegal, Tanzania, Uganda and Malawi.  Establish methodology and documentation with UNDP and Development Partners for Decentralization and Local Development Sector-wide Approach (SWAP).  Work closely with UN colleagues to establish UN approach to Local Development through Local Authorities and localizing the MDGs.  Complete Joint Programme with UNIFEM on Gender-Sensitive Budgeting at Local Level. Number of Programme Countries: Local Governments Supported: New Programme Countries: Total Programme Investments: 33 600 10 $32 million

18. 17 2007 Business Plan: Development Results Inclusive Financial Sectors and Microfinance  Investment Committees operational in 12 Countries.  Total investments in MFIs and FSPs: 44 investments amounting to $7.5 million.  Increase in clients obtaining loans: 670,000, including at least 50% women.  Establish methodology and documentation with UNDP and donors for Inclusive Financial Sector SWAP.  Organize and manage Steering Committee for follow-up to Dakar Conference on Building Inclusive Financial Sectors in Africa.  Support operations of the Secretariat of UN Advisors Group on Inclusive Financial Sectors.  New Microfinance Director assumes leadership and management role. Number of Programme Countries: New Programme Countries: Total Programme Investments: 16 7 $9 million

19. 18 2007 Business Plan: Management Results Cooperation Framework with UNDP  Conclude Cooperation Framework with UNDP and establish UNCDF participation in UNDP Strategic Plan 2008-2011.  Participate actively in development of “One UN” at Country Level.  Develop Joint Programme methodology, documentation, and management processes for working with UNDP and Development Partners at Country Level.  Develop Joint Resource Mobilization Strategy with UNDP.  Conclude funding arrangements with UNDP for period of Strategic Plan.

20. 19 2007 Business Plan: Management Results Human Resources Complete and implement revised roles and responsibilities for Progamme Officers and Programme Assistants in Country Offices. Fill remaining vacant posts. Complete and implement Talent Management Plan for retiring UNCDF Staff. Develop and implement Learning and Career Development Programme for all Staff. Management Systems Complete definition and implementation of UNCDF Management Tools: Monthly Management Dashboard, Quarterly Project Management and Financial Reports. Complete Management Information System and integration of programme and financial information into ATLAS. Assure availability, comparability and high quality of project data for measuring Development Results and implement Results Based Management system. Complete upgrade of ATLAS and prepare for 2008 implementation of International Public Sector Accounting Standards (IPSAS).

21. 20 2007 Business Plan: Management Results Knowledge Sharing and Knowledge Management Collect, publish and disseminate Best Practices and Case Studies from UNCDF Practice Areas. Establish broader knowledge-sharing and utilization of UNCDF technical expertise and experience with UNDP and the UN system. Enhance UNCDF Web Site for broader public access and dissemination of information. Communications Conclude and implement Marketing and Communications Plan to increase awareness of UNCDF activities within UNDP and the UN system. Coordinate Marketing and Communications Plan with UNDP and address “branding” issue on all communications material. Complete 2006 Annual Report and disseminate broadly to key target audiences.

22. 21  Increase Core and Non-Core Resource Mobilization by 40% to $36 million.  Increase contributions from Member States who made initial contributions in 2006 and from contributing Member States with increasing ODA allocations.  Further diversify donor base of Member States, including Emerging Donor Countries, based on discussions initiated in 2006.  Provide professional Resource Mobilization support to Country and Regional Offices, focusing on Country-Level Joint Programmes.  Pursue Strategic Partnerships with foundations, private sector and multilateral and bilateral development partners. 2007 Business Plan: Management Results Resource Mobilization and Strategic Partnerships  Complete Phase I of mandatory Project Evaluations using outsourcing model.  Complete remaining mandatory Project Evaluations.  Assure adherence to new UNDP Evaluation Policy.  Implement and monitor recommendations of External Evaluations. Evaluation

23. 22  Completing Cooperation Framework with UNDP.  Integrating UNCDF contributions into UNDP Strategic Plan 2008-2011.  Developing funding mechanism for UNCDF within context of UNDP Strategic Plan.  Mobilizing resources: HQ, Regional and Country Level.  Finalizing revised roles and responsibilities for UNCDF personnel in Country Offices within the context of “One UN” and UNDP Strategic Plan.  Managing growth and expansion plan. Key Challenges

24. 23 United Nations Capital Development Fund Investing in the Least Developed Countries Executive Board Meeting January 2007