UNCDF in partnership with The MasterCard Foundation today launched the expansion of the successful MicroLead programme at the 5th Annual African Microfinance Conference in Addis Ababa, Ethiopia.
The $23.5 million, six year project will increase access to microfinance, particularly savings services, to 450,000 low income people in Sub-Saharan Africa.
“By helping microfinance institutions to develop savings and other financial services that promote financial inclusion for the poor, the MicroLead programme is not only building capacity, but also increasing access to financial services to nearly half a million clients in Africa,” said Reeta Roy, President and CEO of The MasterCard Foundation.
Recent studies indicate that poor people are active savers and that the demand for savings is significantly higher than the demand for credit. Data show that savings accounts are being opened at rates up to 12:1 compared to loans even when both services are offered by the same institution. Savings accounts help poor people with critical needs smooth volatile income streams and accumulate sufficient funds to address basic needs, protect against shocks such as illness, and enhance productivity by investing small amounts in their businesses.
David Morrison, UNCDF Executive Secretary, said that the creation of MicroLead presents a significant boost for building inclusive financial sectors in developing countries. “We believe that the fight against extreme poverty through building Inclusive Financial sectors needs innovative approaches and strong parternships” he said. “Since its original creation in 2009 in partnership with the Bill & Melinda Gates Foundation, MicroLead has proven to be a key instrument in shortening the time that poor men and women and small firms in developing countries wait to gain access to savings and a broad range of other financial services. We are excited about the potential of this new phase of MicroLead to bring financial services to more underserved markets and proud that this new partnership between The MasterCard Foundation and UNCDF presents another boost for reducing poverty and accelerating progress towards the Millennium Development Goals.”
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. All of the selected partners are committed to pursuing a savings-based approach, and are working towards the goal of becoming market leaders. To date, the Bill and Melinda Gates Foundation/UNCDF-funded MicroLead programme has awarded funding for 13 projects worth $20.1 million to southern-based market leaders to enable their entrance into developing countries with savings-led methodologies. The Bill & Melinda Gates Foundation/UNCDF programes’s goal is to reach 525,000 new clients by 2013; based on awarded projects’ projections and results to date, 850,000 new clients are expected to be reached by 2013.
In this new phase, experienced institutions or networks from developed and developing countries may apply 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 uses a proven competitive process to select a minimum of eight institutions to enable innovative and experienced microfinance leaders to establish new operations in underserved African countries.
UNCDF is the UN’s capital investment agency for the world’s 48 least developed countries. It creates new opportunities for poor people and their communities by increasing access to microfinance and investment capital. UNCDF focuses on Africa and the poorest countries of Asia, with a special commitment to countries emerging from conflict or crisis. It provides seed capital – grants and loans – and technical support to help microfinance institutions reach more poor households and small businesses, and local governments finance the capital investments – water systems, feeder roads, schools, irrigation schemes – that will improve poor peoples’ lives. UNCDF programmes help to empower women, and are designed to catalyze larger capital flows from the private sector, national governments and development partners, for maximum impact toward the Millennium Development Goals.
About The MasterCard Foundation
The MasterCard Foundation advances microfinance and youth learning to promote financial inclusion and prosperity. Through collaboration with committed partners in 48 countries, The MasterCard Foundation is helping people living in poverty to access opportunities to learn and prosper. An independent, private foundation based in Toronto, Canada, The MasterCard Foundation was established through the generosity of MasterCard Worldwide at the time of the company’s initial public offering in 2006. For more information, please visit http://www.mastercardfdn.org