On February 19, the United Nations Development Programme (UNDP) in Ukraine, in partnership with the Ministry of Finance of Ukraine and the National Development Institution (NDI), presented the Local Development Finance Facility (LDFF), a platform for financing the recovery of Ukrainian communities.
The platform is aimed at mobilizing financing for the recovery of Ukrainian communities and developing investment-attractive local projects.
“Ukraine’s recovery and long-term resilience require financing on an unprecedented scale. Reconstruction needs far exceed what the state budget and donor funding can sustainably provide, given that Ukraine allocates 27.2% of its GDP to security and defense, while social expenditures are covered with the support of international partners. Public financing remains the foundation of recovery, but it must be used strategically and complemented by additional resources. Our main challenge is to transform recovery priorities into funded investments, especially at the local level, where recovery is implemented and its impact is felt most strongly. The stronger the competencies, autonomy, and experience of communities, the more resilient the recovery of the entire country,” emphasized Olha Zykova.
The Deputy Minister of Finance also stressed that for Ukraine, LDFF is a scalable platform that can be integrated with donor programs and initiatives of international financial institutions. The Ministry of Finance views LDFF as part of Ukraine’s transition from a recovery model largely financed by international aid to one increasingly focused on investment.
Ukraine’s recovery needs through 2035 are estimated at over half a trillion US dollars, while available public financial resources are insufficient to address challenges of this magnitude. LDFF is designed to help bridge this gap by eliminating bottlenecks in the use of loan and grant resources, strengthening local capacities, and mobilizing financing for priority sectors, including energy, the environment, small and medium-sized enterprises, and municipal infrastructure.
Through risk mitigation instruments and blended finance mechanisms, LDFF will help transform priority reconstruction projects into viable investment opportunities. This will enable the attraction of funding from Ukrainian banks, international organizations, and foreign businesses.
A defining feature of LDFF is its community-centered approach. Communities will not only receive funding — they will define their own investment priorities and participate in project preparation and implementation. This will enhance the quality and sustainability of recovery investments. The new mechanism is expected to mobilize private and institutional capital, starting at the community level and supporting national recovery efforts.
The launch of LDFF also coincides with the updated mandate of the National Development Institution, previously known as the Entrepreneurship Development Fund. Following legislative changes, the institution will operate as a development finance institution, attract international capital, and support Ukraine’s path toward EU membership.
Chair of the Management Board of the National Development Institution Andrii Hapon highlighted the mechanism’s role in strengthening communities: “For the National Development Institution, LDFF is both a practical tool to support communities and a strategic step in strengthening our role in development finance. By combining technical assistance with financial risk mitigation, the mechanism helps turn priority regional projects into investment-ready opportunities, attract capital, and align public priorities with financial market opportunities.”
LDFF will build on UNDP’s broad national presence and existing technical assistance programs, ensuring a bottom-up approach to recovery. This guarantees that local self-government bodies remain at the center of decision-making while maintaining high standards of transparency and accountability.
The mechanism will engage UNDP’s regional teams and ongoing technical assistance programs to ensure that recovery decisions are made at the community level. This means communities will directly participate in decision-making in line with principles of transparency and accountability.
UNDP Resident Representative in Ukraine Auke Lootsma emphasized the long-term impact of the mechanism on Ukraine’s resilience:
“The Local Development Finance Facility transforms Ukraine’s reconstruction model from one primarily based on aid to investment-driven solutions. By reducing investment risks and strengthening community capacity, we are creating transparent conditions under which international capital can flow directly into Ukrainian communities. This will accelerate recovery and support Ukraine’s path toward EU membership.”
In 2026–2027, LDFF will become one of UNDP’s key areas of work in Ukraine and help translate ongoing reform and recovery efforts into tangible development results across the country, contributing to the achievement of the UN Sustainable Development Goals.
The event was organized by UNDP jointly with the National Development Institution, with the participation of representatives of the Ministry of Finance, the Ministry of Economy, the embassies of Italy, Spain, Denmark, Austria, and the Netherlands, as well as local government representatives.
