Luxembourg's development cooperation - Annual report 2013

2.5 billion people – over half the world’s adult population, i.e. 77% of people in developing countries – have no access to financial products or to a bank. This is particularly alarming when one bears in mind that it is the private sector that creates nine jobs in ten, and that the vast majority of these are created by small and medium-sized enterprises (SMEs). It is these SMEs that find access to finance is the greatest obstacle to their growth. SMEs have enormous potential and it is only recently that we have begun to understand the capacities of pro-poor growth and the potential of these economies to pull  people out of poverty. 

For nearly 20 years, Luxembourg’s development cooperation has been working to actively support the development of microfinance and inclusive finance, recognising that these tools constitute important mechanisms for poverty reduction. Since the start of the 1990s, the Directorate for Development Cooperation has been working together with civil society operators that specialise in microfinance and, since this time, Luxembourg’s development cooperation has become a major player in the microfinance sector. Since 2013, efforts have been made to channel financial support with the aim of deploying them better in specific sectors and in our priority countries. Thus, during 2013 the Ministry reformulated its multi-annual commitments with its various partners, such as the Table Ronde Luxembourgeoise de la microfinance, the European Microfinance Platform, the NGO ADA, and SOS Faim, Microinsurance Network and the Consultative Group to Assist the Poor (CGAP).

The first microfinance conference for the African continent was held in Tanzania in 2013. It was titled ‘African Microfinance Week’ and was supported by Luxembourg development cooperation and organised by ADA, with the main African regional microfinance networks.

2013 was also a major year for the Table Ronde Luxembourgeoise de la microfinance, because under its new rotating presidency its 14 members decided to set up an association with legal personality in order to create more synergies with private sector operators and the financial world. The Ministry is one of the founding members of this association.

The Ministry also continued to support LuxFlag, the Luxembourg Fund Labeling Agency, which issues quality labels to investment funds dedicated to microfinance and the environment.

The Ministry also supported the Luxembourg Microfinance Development Fund, a microfinance investment fund registered in Luxembourg, whose activities consist of giving targeted support to small and medium-sized microfinance institutions active in developing countries.

In 2013, the Ministry continued to support Luxembourg development cooperation’s first major bilateral programme (from 2008 to 2014) in the microfinance sector. The programme, entitled ‘Promotion of inclusive financial sectors in the WAEMU zone’, provides support to the Central Bank of West African States (CBWAS) to consolidate the microfinance sector, and to control risks for the promotion of microfinance activities in the WAEMU zone.

Finally, the Ministry has supported various IFAD and UNCDF programmes designed to develop new tools in the sphere of microfinance, inclusive finance and the transfer of migrants’ funds.

Finally, during November 2013, the Ministry contributed to the organisation of European Microfinance Week.