0 United Nations Capital Development Fund Summary of Strategic Partnership Between UNDP and UNCDF Moving Closer Together in the Context of the UNDP Strategic Plan Executive Board Meeting January 2007

1 Executive Board Decisions. Steps Taken Since Executive Board Decisions. UNDP-UNCDF Strategic Partnership. The Partnership Framework. Recommendations of the High-Level Panel. UNCDF and the UNDP Strategic Plan. Next Steps. Key Challenges Associated with Strategic Partnership. Presentation Overview

2 Executive Board Decisions “the Administrator of UNDP and the Executive Secretary of UNCDF to work closely to finalize the strategic agreement between UNDP and UNCDF, setting forth the key elements of their strategic, operational and financial partnership, and to report their arrangements to the Board at its first regular session 2007.” “the Administrator of UNDP and the Executive Secretary of UNCDF to explore ways to cooperate on strategic planning, funding, programming arrangements and the results framework in the context of the preparation of the UNDP MYFF for the period ”  At the First Regular Session in 2006, Executive Board Decision 2006/04 requested: “the Administrator [of UNDP] and the Executive Secretary [of UNCDF] to work closely to finalize a memorandum of understanding between the two organizations setting forth the key elements of their strategic, operational and financial partnership, and report their arrangements to the Board at its annual session in June 2006.”  At the Annual Session in June 2006, the Executive Board Decision 2006/15 requested:

3 Steps Taken Since Executive Board Decisions  April 2006: UNCDF presented “Framework for Strategic Partnership” for discussion with UNDP. April – June 2006: “Framework” was considered within UNDP but not finalized due largely to factors related to UN Reform and initiation of High-Level Panel deliberations. September 2006: Based on Executive Board Decision 2006/15, UNCDF presented “Proposed Cooperation Framework for UNDP and UNCDF in the Context of UNDP’s MYFF for ” September – November 2006: “Proposed Cooperation Framework” considered within UNDP but decision to wait for Final Report of High-Level Panel before determining the way forward. November 2006: Based on High-Level Panel recommendations, UNDP and UNCDF agreed that basic elements of “Proposed Cooperation Framework” should be basis for integrating the work of UNCDF into UNDP’s Strategic Plan. September-December 2006: UNCDF actively participated in process for developing UNDP Strategic Plan and integrating UNCDF Practice Areas and results.

4 UNDP-UNCDF Strategic Partnership  Aim of the Strategic Partnership is to bring UNDP and UNCDF closer together strategically, operationally, and financially.  Outcomes expected: Greater coherence, simplicity, and harmonization within the UN system. Improved efficiency, effectiveness and coherence of both organizations. Enhanced developmental impact of both organizations in the Least Developed Countries (LDCs) and in other developing countries. More predictable, stable funding for UNCDF’s investment activities in the LDCs. More equitable burden sharing among Member States.  Strategic Partnership will build on: Unique investment mandate of UNCDF as complementary and supplementary to UNDP Poverty, Governance and Post-Conflict Focus Areas. UNCDF’s ability to provide effective and efficient service delivery in the LDCs.

5 Strategic Partnership  Strategic Objectives of the Partnership include: Achieving programmatic synergies based on the comparative advantages and added value of each organization. Achieving greater efficiency and effectiveness of Joint Programmes with UNDP and Joint Programming within the UN system. Sharing knowledge on good practices in Microfinance (which includes building inclusive financial sectors) and Local Development (which includes decentralization) for the benefit of programme countries, through UNDP and the UN Country Teams (including those outside of LDCs). Contributing to ongoing efforts to simplification and harmonization among UN agencies as part of UN Reform and follow-up to the Paris Declaration on Aid Effectiveness.  Operational Objectives of the Partnership include: Clarifying respective roles and functions to support the strategic objectives, especially at Regional and Country Office levels. Assuring management, operational and financial alignment with UNDP, including maximizing UNCDF participation in all appropriate UNDP planning and management frameworks and systems and the facilitation of effective resource mobilization. (continued)

6 Partnership Framework  Proposed Partnership Framework provides that UNDP and UNCDF should: Integrate their strategic planning and results frameworks through the UNDP Strategic Plan Establish Joint Programmes as the primary programming modality for working together at Country Level. Integrate their results frameworks, reporting and evaluation policies and methodologies. Rationalize their management and operations at Headquarters, Regional, and Country Levels. Jointly mobilize Core and Non-Core Resources at Headquarters and Country Levels.

7 Partnership Framework Subject and SourceLevel of Cooperation UNDPUNCDF Legal Mandates (GA)Separate Complementary Broad Development Agenda. Global Presence. Coordinating UN System. Capacity Building Focus. Grants and Loans (“Investments”) for General Development Assistance. Focus on LDCs. Focus Areas (EB)Aligned Complementary Poverty Reduction and Sustainable Development. Democratic Governance. Crisis Prevention and Recovery. Energy and Environment. Microfinance / Inclusive Financial Sectors. Decentralization and Local Development. Development Outcomes (EB) AlignedTBD Increased sustainable access of low income households and small enterprises to a broad range of financial products and services. Increased sustainable access to pro-poor infrastructure, social services and local economic development by working through Local Authorities. (continued)

8 Partnership Framework with UNDP (continued) Subject and SourceLevel of CooperationUNDPUNCDF Multi-year Planning Framework (EB) (M) JointStrategic Plan Regional and Country- level Programming Framework (EB) (M) JointUNDAF CPAP Joint Programmes Measuring and Reporting Results (EB) (M) JointStrategic Plan Report Evaluation (EB)Common Evaluation Policy. Separate Evaluation Units. Joint Evaluations of Joint Programmes Focus on Strategic and Country Office Evaluations Focus on Programmatic Evaluations UNCDF Administrative Funding (EB) JointUNDP BSB UNCDF Core Funding (EB) (M) Joint Core Funding Targets. Established by Mutual Agreement. Joint Core Resource Mobilization Programmatic Arrangements Through Strategic Plan UNCDF Non-Core Funding (EB) (M) Joint Non-Core Funding Targets Based on Programme Requirements. Joint Non-Core Resource Mobilization Programming Arrangements Based on Programme Requirements

9  Principal recommendation of the High-Level Panel was that the UN should “deliver as one” and establish “one UN at country level, with one leader, one programme, one budget, and, where appropriate, one office.” [1]  “One UN” is to be based on “a consolidation of the UN’s programme activities at the country level…” [2]  UNDP-UNCDF Partnership Framework would integrate UNCDF activities into UNDP programming and management at Country Level. UNCDF management, operational and financial arrangements at Country Level would be part of “One UN” arrangements. UNCDF Local Development and Microfinance programmes would be part of the UNDAFs and CPAPs at Country Level.  Thus, UNCDF will participate eagerly and fully in the “One UN Programme.”  UNCDF’s unique programmatic contributions to UNDP’s Strategic Plan will make clear that UNCDF is not providing “duplicative functions” and that its work is “complementary” to the activities of UNDP and other UN organizations. [1] Report of the High-Level Panel, p. 2. [2] Ibid. Recommendations of the High-Level Panel

10  UNCDF actively, productively participating in development of Strategic Plan: Working closely with Associate Administrator and OSG. Working closely with Regional Bureaus, BDP Poverty and Governance Practice Leaders, and BCPR.  Most recent version of UNDP Strategic Plan provides for “integration of the contributions from…UNCDF.”  UNDP Poverty Reduction and Sustainable Development Focus Area will “highlight UNDP’s partnership with and the contributions of UNCDF (inclusive financial services)…”  UNDP Democracy and Good Governance Focus Area will “take into consideration the contributions of UNCDF (Local Governance).”  Considerable progress expected in finalizing UNCDF integration into Strategic Plan during next few months.  Detailed joint presentation to Executive Board expected at June 2007 session. UNCDF and the UNDP Strategic Plan

11  UNCDF will work closely with the Associate Administrator, OSG, and other UNDP colleagues in the next few months to address the following issues in more detail: Developing a mechanism for ensuring more management coherence, coordination and synergy between UNDP and UNCDF with regard to programming, planning, reporting, and evaluation functions; Developing an appropriate structure and process for conducting joint resource mobilization between UNDP and UNCDF; Developing appropriate and mutually agreed funding arrangements for UNCDF within the context of the Strategic Plan; and Developing a method and process for UNCDF to more fully engage in sharing knowledge within UNDP and the UN system. Next Steps

12  UNCDF will participate actively with UNDP colleagues in the process for finalizing the Strategic Plan. UNDP target completion date: Q  UNDP and UNCDF will jointly report progress to the Executive Board at the June 2007 Regular Session and seek the Board’s guidance and advice.  UNCDF will explore with UNDP any additional steps that might be required to finalize the Strategic Partnership and will develop with UNDP an implementation plan once the Strategic Plan and the Strategic Partnership are finalized. Target completion date: Q Next Steps (continued)

13 Key Challenges Associated with Strategic Partnership  Assuring UNCDF programmatic focus and technical excellence in Local Development and Microfinance.  Assuring UNCDF continued geographic and investment focus on LDCs.  Assuring UNCDF ability to “pilot,” take programmatic and financial risks, and make rapid management and investment decisions.  Assuring clarity and consistency of reporting and management structures for UNCDF personnel integrated in UNDP Regional Centres and Country Offices.  Assuring that UNCDF programmes are adequately supported through stable, multi- year funding arrangements in the context of the Strategic Plan.  Assuring that Strategic Partnership structure attracts new Donors and Development Partners and accomplishes burden sharing objectives.

14 United Nations Capital Development Fund Summary of Strategic Partnership Between UNDP and UNCDF Moving Closer Together in the Context of the UNDP Strategic Plan Executive Board Meeting January 2007