International Assistance

Annette Brooke
To ask the Secretary of State for International Development in what ways his Department will work with (a) other donor agencies and (b) international finance institutions to meet the two targets agreed at the recent Microcredit Campaign Summit in Halifax, Nova Scotia relating to (i) extending credit for self-employment and other financial services to the world’s poorest families and (ii) ensuring such families cross the $1 a day threshold by 2015.

Hilary Benn
DFID agrees that access to financial services for poor people will help to lift them out of poverty and to meet the millennium development goal of halving the proportion of people whose income is less than $1 a day.

The role of the financial sector in poverty reduction and growth is now well documented: financial sectors that reach more poor people have been shown not only to stimulate economic growth, but also to share the benefits of that growth more equitably and reduce poverty.

The UK’s 2006 White Paper on International Development commits DFID to tackling barriers to access to markets and financial services, and supporting access to finance initiatives in partnership with banks and regulators.

DFID is sympathetic to the goals of the Microcredit Summit Campaign and is extending its efforts to the wider agenda of expanding access to financial services for poor people. It is estimated that 2 billion people in developing countries do not have a bank account or access to formal financial services.

DFID will continue to work with other donors and international financial institutions (IFIs) at policy, technical, and operational levels all of which contribute to increasing the number of poor people benefiting from financial services, including credit.

For example, at the policy and technical level, DFID is funding CGAP, the Consultative Group to Assist the Poor, which is co-ordinating the activities of its 33 members, donors and IFIs.

At the operational level, DFID has nine financial sector programmes in sub-Saharan Africa and South Asia, most of them in partnership with other donors and IFIs.

With respect to ensuring that the poorest families cross the threshold of $1 a day, an integrated approach is needed to achieve this target, including providing resources for education, health and other services. DFID and international financial institutions will continue to spend significant resources on education, health and other programmes of direct relevance, to improving the lives of poor families, in addition to microfinance, .

For example, DFID is contributing £16.2 million to a programme with BRAC, a leading microfinance bank in Bangladesh, called “Challenging the Frontiers of Poverty Reduction”. It provides a number of services, in addition to microcredit, for more than 100,000 poor people.