UNDP expands investment, jobs push for developing countries as aid funds shrink

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UNDP expands jobs, investment support

Highlights

UNDP is expanding partnerships with the World Bank, EBRD, EIB, and private investors to mobilize investment and job creation in developing countries amid shrinking aid flows.
About 1.2 billion young people will enter the workforce in the next decade, but only 400 million jobs currently exist, prompting UNDP initiatives targeting investment policy reforms and labor market matching.
UNDP's World Bank partnership has launched pilot programs in Nepal, Yemen, Haiti, Lebanon, and Ghana, while insurance expansion is critical as only $5 billion of Asia’s $65 billion in 2025 natural catastrophe losses were insured.

New financing partnerships and reform agenda

As reported by Reuters, the United Nations Development Programme says it is deepening cooperation with the World Bank and building new ties with the European Bank for Reconstruction and Development, the European Investment Bank, other financial institutions and private investors to advance investment and jobs in developing countries.

UNDP Administrator Alexander De Croo says developing countries still need reforms to strengthen governance, reinforce the rule of law and raise domestic revenues, but progress has slowed since the COVID pandemic because of repeated external shocks. Speaking on the sidelines of the IMF and World Bank annual meetings in Bangkok, he says the way development is being financed is changing and countries need room to carry out those reforms.

De Croo says it is too early to discuss debt relief, arguing that immediate liquidity pressures should be addressed first by domestic central banks and regional institutions. He says countries facing high energy costs, rising interest rates and the strongest El Niño weather impact since 1950 need short-term support before broader solvency issues can be tackled.

Job creation and risk management take priority

UNDP says the new initiatives arrive as developing countries confront a widening employment gap, with about 1.2 billion young people expected to enter the workforce over the next decade but only 400 million jobs currently in sight. One initiative focuses on improving investment policies and regulations, building project pipelines and moving projects into implementation, while the other targets sectors with strong job-creation potential and aims to match skills with employer demand.

De Croo says many governments have been shielding households from the energy price shock linked to the war in the Middle East through fuel subsidies and similar measures, but at a high fiscal cost. He warns that if the conflict continues for several more months, countries could face deeper trouble as fiscal buffers weaken and aid support from Gulf countries and others may also come under pressure.

UNDP says pilot programmes are already underway in Nepal, Yemen, Haiti, Lebanon and Ghana under its partnership with the World Bank, and that it is also working with Italy's Generali to expand insurance coverage in developing countries. De Croo says insurance is becoming more important as countries try to manage risk and remain investable, pointing to $65 billion in economic losses from natural catastrophes in Asia in 2025, of which only $5 billion was insured.

Our earlier coverage of the G24’s warning on the growing debt burden in developing countries highlighted how heavier debt loads and higher borrowing costs are squeezing public finances and limiting resources for investment and job creation. The G24 also urged the IMF and World Bank to widen access to affordable concessional financing as supply shocks, food-price pressures, and tighter financial conditions intensify fiscal strain.

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