§ Mr. BoswellTo ask the Secretary of State for International Development what action her Department is taking to encourage access to micro-finance institutions in developing countries. [156598]
§ Clare ShortGaining access to simple, low cost savings and insurance services helps poor families in developing countries to reduce their vulnerability to economic shocks. Small-scale loans from micro-finance institutions (MFIs) also play a very important role in encouraging entrepreneurs to invest in their business, where they are unable to obtain a loan from a conventional commercial bank.
Despite the success of many MFIs in extending savings and credit sustainability to the poor these services still reach only a tiny proportion of those that need them. Recognising the importance of MFIs in reducing poverty, DFID provides technical and financial support to raise standards in micro-finance, to improve commercial viability, and to extend outreach to millions more poor families. This support is provided in a number of ways.
298WDFID is a founding member of the Consultative Group to Assist the Poorest (CGAP). CGAP is an international coalition of donors and practitioners working to improve the quality and scale of micro-finance services worldwide, through the development and dissemination of best practice.
DFID supports a large number of MFIs directly, including BRAC and PROSHIKA in Bangladesh, FINCA in Tanzania and KASHF in Pakistan.
DFID also encourages innovation in the provision of financial services to the poor. It supports a micro-leasing company in Uganda, and the replication of indigenous savings methodologies through MFIs in east and southern Africa under the "MicroSave" initiative.
Finally, DFID strengthens links between MFIs and mainstream capital markets—whether commercial banks or equity investors—so as to mainstream micro-finance in the financial markets of developing countries.