Box VIII.3: DFIs’ Investment in Microfinance: An Increasing Focus on Africa

Box VIII. 3: DFIs’ Investment in Microfinance: An Increasing Focus on Africa

Over the last years, DFIs have launched several important initiatives in the microfinance sector in Africa. Just to mention a few recent examples: • In 2011, the EIB jointly with the AfDB and other institutions launched the European

Solidarity Financing Fund for Africa (FEFISOL, EUR 15 million) to provide microfinance funds to poor households in rural areas across Africa. • In 2011, the AfDB jointly with the Spanish Agency for International Development

Cooperation (AECID) and the Spanish Ministry of Economy and Finance launched the

Microfinance Capacity Building Fund for Africa to help strengthen capacity building efforts in the financial sector that benefit poor and low-income populations in the

African continent, particularly women and those living in rural areas. • In 2012, the IFC invested a record USD 4 billion in Sub-Saharan Africa (which represented an annual increase of 44%) including a USD 37.4 million partnership with the MasterCard Foundation to help MFIs increase access to financial services for an estimated 5.3 million people in Sub-Saharan Africa. • In 2012, CDC, which has decided to invest exclusively in Africa (and South Asia) from 2011 onwards, announced that USD 10 million are to be invested in the

Progression Eastern African Microfinance Equity Fund (PEAMEF) which aims to support microfinance institutions in Kenya, Tanzania, Rwanda, Zambia and Uganda.

These investments have the potential to reach half million clients.

Sources: EIB (2011), AfDB (2011), IFC (2012b) and CDC (2012).

of total DFIs’ investment in microfinance. Sub-Saharan Africa and the Middle East and North Africa attracted only USD 55 million (1.9% of the total) and USD 11 million (0.4% of the total) respectively in the same year. Nevertheless, it is worth to highlight that DFIs’ attention is now increasingly switching to Africa (see Box VIII.3).

2.2. DFIs Support to Financial Infrastructure

DFIs contribute to promote financial inclusion by supporting the development of financial infrastructure (i.e., accounting, credit reporting, and payment systems that underlie the functioning of financial markets and intermediaries). In developing countries, for example, households’ and SMEs’ access to finance is severely constrained by opacity and information asymmetry problems due, for example, to the absence or underdevelopment of credit information systems and collateral registries. Indeed, the lack of information on borrowers’