First EFSD+ guarantee agreement between the European Union and a UN fund will help mobilize public and private financing for sustainable urban and subnational investments.

European Commissioner for International Partnerships Jozef Síkela (middle), UNCDF Managing Director Alexander De Croo (right), and UNCDF Executive Secretary Pradeep Kurukulasuriya (left) at the ceremonial signing of the EFSD+ Sustainable Cities Guarantee Facility during UNGA81 in New York. Photo credit: UNDP.

The European Union and the United Nations Capital Development Fund (UNCDF) today marked a major milestone in their partnership during the high-level week of the 81st session of the United Nations General Assembly (UNGA81), with a ceremonial signing of the European Fund for Sustainable Development Plus (EFSD+) Sustainable Cities Guarantee Facility.

Under the agreement, the European Union is providing UNCDF with an EFSD+ guarantee of up to EUR 50 million, enabling UNCDF to use guarantees to help mobilize additional public and private financing for sustainable urban and subnational investments in developing countries with a focus on Least Developed Countries, Small Island Developing States and fragile settings.

The agreement represents the first EFSD+ guarantee agreement between the European Union and a UN fund. It also provides UNCDF with an important new instrument to operationalize its capital deployment mandate and scale its work on subnational finance. By converting the EU’s risk-sharing commitment into guarantees for financial institutions, UNCDF will help capital reach viable investments in markets where perceived and actual risks continue to constrain financing.

“Billions of people around the world live in cities that are increasingly exposed to the severe consequences of climate change. Investing in sustainable urban infrastructure means investing in resilience and in better lives for the people who call these cities home” said Jozef Síkela, European Commissioner for International Partnerships. “To mobilise the scale of investment needed to meet this challenge, we must use public funds more effectively. With this €50 million EFSD+ guarantee, we are doing exactly that.”

EU EFSD+ risk-sharing will enable UNCDF to deploy guarantees to help unlock more affordable finance for sustainable, climate-resilient urban infrastructure in Sub-Saharan Africa, Asia, the Pacific and the Middle East.

"With the backing of the European Union, UNCDF can help unlock financing for sustainable urban infrastructure projects such as affordable housing, renewable energy, and water and utilities. This is how we put our capital deployment mandate to work: we use public resources strategically to bring larger flows of public and private capital into markets and communities that conventional finance still struggles to reach,” said Alexander De Croo, Managing Director of UNCDF.

The facility will support eligible investments in essential local infrastructure and services, including renewable energy, transport, water and utilities, waste management, agricultural value chains, digital connectivity, sustainable tourism, local markets, affordable housing, public lighting, industrial development, education and healthcare.

The ceremonial signing during UNGA81 brought together Commissioner Síkela and De Croo, alongside Pradeep Kurukulasuriya, Executive Secretary of UNCDF, to mark the significance of the partnership and the multi-year engagement that led to the agreement.