Microfinance

International Development written question – answered on 28th February 2011.

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Photo of Robert Syms Robert Syms Chair, Regulatory Reform Committee

To ask the Secretary of State for International Development what criteria his Department uses to determine which microfinance organisations receive funding from his Department.

Photo of Stephen O'Brien Stephen O'Brien The Parliamentary Under-Secretary of State for International Development

The Department for International Development (DFID) rarely provides direct funding support to microfinance organisations. Our work on microfinance is incorporated into broader financial sector development programmes, which have a range of interventions including policy and regulatory reform, capacity building, product innovation and research. Programmes are often implemented by intermediaries, such as non-governmental organisations, central banks, government agencies or in partnership with other donors.

All organisations must demonstrate how funding provided by DFID will be used to reduce poverty. Economic, social and institutional appraisals are conducted to assess the sustainability of the organisation and the potential development impact of their programme. For example, DFID is funding CHF, an international NGO, to provide access to finance to micro and small enterprises in Basra province, Southern Iraq. CHF was selected based on its track record of delivering small business finance, existing portfolio performance, robust lending practices and experience of building local capacity to manage microfinance programmes. Loans have been provided to more than 1,000 clients since May 2009, with one-third disbursed to women.

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