UNCDF in Zambia

How UNCDF guarantees unlocked finance for underserved entrepreneurs

From November 2022 to November 2025, UNCDF partnered with Finca Zambia Limited, a deposit-taking financial institution, to expand access to finance for microenterprises owned by women, youth, and persons living with disabilities. Through this partnership, UNCDF deployed a portfolio guarantee facility designed to share the lending risk and enable FINCA to extend credit to borrowers who are typically excluded from formal finance.

UNCDF provided two guarantee facilities totalling USD 360,000 with coverage of 60 percent for each loan disbursed, to support FINCA’s lending to microenterprises with insufficient collateral. By absorbing part of the credit risk, the guarantee enabled FINCA to confidently increase lending to excluded groups, including women‑owned businesses and women engaged in small‑scale cross‑border trade.

By the time the guarantees expired in November 2025, the first guarantee facility had unlocked USD 2.7 million in cumulative loan disbursements to 427 microenterprises, achieving an overall leverage ratio of 16x. The majority of beneficiaries were women‑owned businesses, reflecting the programme’s strong focus on inclusive economic participation. The second facility (USD 200,000) targeted women engaged in cross‑border trade, enabling continued access to finance for this high‑risk but economically important segment.

By strengthening FINCA Zambia’s ability to lend to underserved entrepreneurs, the partnership helped microenterprises grow, stabilise incomes, and sustain livelihoods, while demonstrating how targeted guarantees can crowd in capital and expand inclusive finance markets in Zambia.

UNCDF has worked closely with emerging fintechs to support their regulatory navigation process, enabling faster routes to market, improved compliance, and enhanced investor readiness. Building on this engagement, UNCDF has supported regulators in developing instruments, including regulatory sandboxes in both the financial and capital markets, allowing controlled prototype testing while safeguarding consumers and investors

Through its input to the National Financial Inclusion Strategy, UNCDF has driven a more targeted policy approach towards SME and rural/agricultural financing, in partnership with the Bank of Zambia and the Ministry of Finance.

Policy advisory on open finance and payment systems regulatory reforms for investment climate

UNCDF’s Policy Accelerator engagement has supported regulators to identify and prioritize market‑enabling reforms that foster competition, protect consumers and investors, and incorporate gender considerations. This work has also laid the foundation for stronger capital mobilization through cross‑sector innovation frameworks and scalable digital public infrastructure.

In this context, the UNCDF Policy Accelerator team co‑developed and agreed with the Bank of Zambia on an Implementation Action Plan focused on three priority areas: (i) Open Finance; (ii) subsidiary regulations for the National Payment System; and (iii) market development support for new entrants, including women‑ and youth‑led enterprises. These priorities are closely aligned with UNCDF’s investment mandate to catalyze capital flows to underserved populations and MSMEs.

As part of the engagement, the UNCDF Policy Accelerator team conducted a technical review of, and provided substantive inputs to, the Bank of Zambia’s Policy Paper on Open Finance, contributing directly to the country’s emerging implementation framework.

Between March and April 2026, UNCDF delivered three of five planned technical sessions on Open Finance and Digital Public Infrastructure, engaging both senior leadership and technical teams at the Bank of Zambia. These sessions strengthened institutional understanding of open finance principles, international models, and key regulatory considerations, including liability, dispute resolution, pricing, and monetization. By targeting both strategic and technical stakeholders, the sessions are contributing to more informed decision-making and coordinated development of open finance frameworks, with implications for market innovation, consumer protection, and effective supervisory oversight.

The next phase of activities under the Implementation Action Plan will include technical advisory on operationalization of the revised National Payment Systems law (once it is enacted), on licensing and supervision aspects. This will also involve capacity building initiatives to the Bank of Zambia. On the Open Finance front, UNCDF will provide technical advisory and capacity building in the development of implementation framework, standards, and needed regulatory reforms.