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Although microfinance global outreach has increased tremendously over the past 30 years, an estimated 2.7 billion people around the world do not use formal financial services. About 56 percent of adults worldwide remain unbanked. Access to financial services underpins the ability of low-income people to achieve sustainable progress on their own terms.
How We Are Helping?
The “LDC Fund to Develop Savings-led Market Leaders for Inclusive Finance”, also known as MicroLead, began in 2009 when UNCDF, in partnership with the Bill & Melinda Gates Foundation, initiated a flagship global microfinance programme to provide loans and grants on a competitive basis to microfinance institutions, commercial banks and financial cooperatives based in developing countries and pursuing a savings-based approach to expand operations to underserved markets.
To date, MicroLead has awarded funding for 15 projects worth $22.5million to southern-based market leaders to enable their entrance into developing countries with savings-led methodologies. The programme’s goal is to reach 525,000 new clients by 2013, at least half of whom are women and at least half of them are rural dwellers. Based on awarded projects’ projections and results to date, 850,000 new clients are expected to be reached by 2013.
In September 2011, UNCDF and The MasterCard Foundation launched the expansion of the successful programme. The USD 23.5 million, six year expansion will increase access to microfinance, particularly savings services, to a minimum of 450,000 low income people in Sub-Saharan Africa. In this new phase, experienced institutions or networks from developed and developing countries have applied to either establish greenfields or provide technical assistance that results in significant impact, particularly in the number of small-balance savers reached. With a view to strengthening the field, a learning agenda has also been added to enable UNCDF to test if a savings-led approach creates stronger and more resilient financial service providers. The MicroLead expansion employed a proven competitive process and selected 12 projects to enable innovative and experienced microfinance leaders to scale up operations in underserved African countries.
In October 2012, UNCDF expanded MicroLead to Myanmar with a USD 7 million, 4.5 year grant from LIFT Myanmar, a multi-donor trust fund. An EOI/RFA process is underway to award funding to microfinance leaders to enable their expansion into Myanmar.
To increase access to financial services, particularly savings, by supporting the expansion of microfinance savings-led market leaders in underserved countries.
Offering grants and loans that incentivize leading providers to start up new, or strengthen existing financial institutions that target low-income people, especially with savings, in underserved areas, particularly countries struggling to recover from crisis and conflict;
Through a competitive process to select leading indigenous microfinance providers from developing countries to expand their reach by implementing a variety of approaches including greenfields, transformations of MFIs to formally regulated deposit-taking institutions, and providing technical assistance to in-country MFIs;
Supporting technical advisors who work to help those providers to develop the institutional capacity to extend their reach.