Developing Countries: Microfinance

Department for International Development written question – answered on 4th March 2020.

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Photo of Preet Kaur Gill Preet Kaur Gill Shadow Minister (International Development)

To ask the Secretary of State for International Development, what assessment her Department has made of the implications for its policies of the finding from the World Bank Group report entitled Profiting from Parity that Microcredit has only limited effects on business outcomes for women.

Photo of James Duddridge James Duddridge Parliamentary Under-Secretary (Foreign and Commonwealth Office) (Joint with the Department for International Development)

DFID continually reviews emerging evidence in order to ensure that its programmes maximise value for money for UK taxpayers. The “Profiting from Parity” report indicates that early studies on the impact of microcredit have found mixed results on income growth and consumption levels, including for women entrepreneurs. However, other research provides strong evidence that under particular circumstances, when products are suitably tailored for the specific needs of the borrower, microcredit can have a positive impact on development by enabling individuals to help themselves out of poverty. Responsible microfinance can help people build personal resilience against economic shocks, smooth their incomes over time, and explore business growth opportunities, as well as facilitating broader developmental outcomes, such as access to affordable and reliable water, electricity, healthcare and education. This is especially true for women, who typically access more microfinance than men. The UK is committed to supporting financial inclusion as a key enabler to achieving the SDGs, and particularly on tackling the persistent gender gap in access to finance which is crucial for building women’s economic empowerment.

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