The purpose of  FMO's LDC Infrastructure Fund (the Fund) is to contribute towards the construction and improvement of social and economic infrastructure in Least Developed Countries by providing financing through loans, equity, grants and credit guarantees which meet Official Development Aid (ODA) criteria.  Financing is intended to facilitate commercially managed, private-public infrastructure investments which are both sustainable and socially responsible. Investments should serve as a catalyst to other sources of financing.

          Amount:
Total Fund capital €208 million.

         Starting principles:
• The focus is on infrastructure investments:
- Energy production and distribution
- Telecommunications
- Water supply and distribution
- Fixed infrastructure (ports, airports, railways, roads)
- Mobile infrastructure (ships, trucks, wharfs)
- Environmental infrastructure (waste processing, water purification, dumpsites)
- Social infrastructure (health care and education)
• The Fund is only applicable to LDC’s published annually in the OECD’s DAC-I list;
• Investments must fit in with the infrastructure policy plans of the countries concerned;
• Investments must contribute positively to combating poverty (employment opportunities, development and involvement of local business community);
• Investments can be either equity, subordinated/senior loans, grants, guarantees and combinations of these;
• The risk/return profile of the financial instrument must be on market terms;
• Grants may be used to finance non-commercial aspects which have significant development relevance in projects which are otherwise profitable (post-grant);
• The Fund can invest in profitable international/multilateral funds which promote infrastructure financing in the targeted sector(s), in the target markets relevant to the Fund;

          Minimum conditions for LDC Fund financing:

Equity Participations:
• Maximum €21 million per transaction (10% of Fund capital) in the case of project finance.
• Maximum €10 million per transaction (5% of Fund capital) in the case of companies.
• All equity participations must incorporate exit agreements.

Subordinated and Senior loans:
• Maximum €21 million per transaction (10% of Fund capital).
• Term up to 20 years, repayment-free (grace) period possible up to 10 years.
• Currency USD, EUR or local currency.

Grants:
• Intended for non-commercial elements of infrastructure investments.

UNCDF's total annual programme expenditure for 2007 was US$ 29 million and is projected to reach US$ 38 million in 2008, covering assistance to a total of 40 LDCs. The target expenditure for 2011 is projected at US$ 50 million for 45 LDCs.

UNCDF initiated a regional project in the Pacific for achieving financial inclusion (covering the period 2007-2011). The project includes Samoa which will graduate from the list of LDCs in 2010. It also includes Vanuatu, Kiribati and Tuvalu, wich were identified for graduation for the first time in 2006. In March 2009 the Committee will again review the list of LDCs and establish whether or not to identify these Pacific islands for a second time. Countries identified for graduation in two consecutive rieviews will graduate from the list three years after the second finding (i.e. 2012 for any of the Pacific islands were identified for a second time in 2009).

Cape Verde graduated from the LDC list in December 2007 and is no longer eligible for funding from UNCDF.