Financial sector development – financial services for all

An African woman sits at a table on which several mobile phones are lying and transfers numbers into a table.
Digital technologies play a central role in the development of the financial sector in developing countries. © John O’Bryan, USAID

A stable and efficient financial system is central to a well-functioning national economy.  Providing poor households, smallholder farmers and small enterprises with improved access to financial services can boost their involvement in economic life and reduce their vulnerability.

The SDC’s focus

The SDC has been active in financial sector development since the 1970s as an important strategy in poverty reduction. It focuses its efforts on promoting access to a range of client-centric, responsible and sustainable financial services for low-income households, smallholder farmers and small enterprises. The SDC also works to improve the financial inclusion of poorer households, i.e. their integration into the country's existing financial sector.

The SDC has long considered the promotion of savings to be a key first step in the financial integration of people with low incomes. It is therefore increasingly focusing on developing markets for agricultural insurance and disaster insurance schemes together with global reinsurance companies in order to break through this final barrier in financial integration.

To this end, the SDC prioritises the following:

  • For the clients: training courses for SDC target groups in general financial education with the aim of ensuring savings, insurance and credits and, thereby, also making access to institutional financial services easier.
  • For the service providers: support for financial institutions that have the capacity and willingness to build up their range of services for SDC target groups over the long term and in a cost-effective manner.
  • In terms of bolstering the financial sector, the SDC supports what are known as financial market infrastructures – a network of financial institutions or training centres, for example.
  • If certain conditions are restricting the positive development of a country's financial sector, the SDC relies on the support of and works together with legislative, regulatory and supervisory institutions.
  • The SDC plays an active role in international centres of expertise and networks such as the Consultative Group to Assist the Poor (CGAP) and the Social Performance Task Force (SPTF). Such organisations also help promote innovations and integrate relatively new topics such as digital technologies. The aims are to improve international coordination and harmonisation, exchange knowledge and experience, and support global and regional networks.

Background

A well-functioning financial sector is central to a country's economic development.  It offers the opportunity to mobilise savings to make productive investments. Providing private households and farmers as well as businesses with secure investment opportunities, access to payment transaction systems, credit and insurance services is essential in order to reduce income risks, achieve a more effective cushion against economic and market fluctuations and save for investments. Such investments can provide the basic foundation for an independent existence or for children's education. Crop and disaster risk insurance help smallholder farmers reduce their risks, which in turn increases their food security. An efficient financial sector accessible to all segments of the population has the effect of reducing poverty, both at the private household level and from the standpoint of the national economy. It also stimulates economic growth at all levels.

Current challenges

At present, poor people in many developing countries are largely excluded from the traditional financial system. They cannot open a savings account at a bank or apply for a small loan, for example. This is particularly true of rural regions, where the majority of the population have no access to such formal financial services.  Typical reasons for this deficiency are a lack of sales and service offices, high costs, insufficient infrastructure, services that are not geared to specific needs, and inadequate legal and regulatory frameworks.

As a result, poorer members of the population often have to resort to relatives, friends and other informal money lenders.  That is why the SDC works in financial sector development – to create enduring financial services for broad sections of the population who have so far had only limited, if any, access to such services.

The SDC also invests in new partnerships with the aim of attracting socially responsible commercial investors and works with other partners such as (local) commercial banks, insurance companies, leasing agencies and venture capital providers.

Microfinance

Financial services for poor sections of the population and microenterprises who have no regular access to the services offered by formal financial institutions.

Small enterprise finance

Small enterprises are of major importance in achieving broad-based development and employment. Yet often such enterprises have no access to services tailored to their needs.

Rural finance

Despite the major role they play in economic development, rural regions suffer from a massive deficit of financial services.

Micro-insurance

People in developing and transition countries tend to be exposed to a wide range of risks, such as disease, harvest failure, loss of income and theft, yet they have virtually no formal insurance protection.

Current projects

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Building Damage Assessment in Albania

01.04.2024 - 31.12.2027

The devastating earthquake in 2019 revealed that Albania has a weak policy and institutional framework and low public awareness on building damage assessment. The Swiss project will support Albania in strengthening its disaster risk management institutions at national and municipal level to provide sustainable and effective building damage assessment services, leading to safer living conditions and a more disaster resilient business environment.


8th Global Platform for Disaster Risk Reduction, Geneva, June 2025

01.03.2024 - 31.12.2025

The Global Platform for Disaster Risk Reduction is the most important international conference to discuss progress in the implementation of the Sendai Framework for DRR. The eighth session of the Global Platform will be hosted by Switzerland in Geneva in June 2025. It will review advances in the realisation of the calls to action made in 2023 by the United Nations General Assembly on the midterm review of the Sendai Framework and will be key for the identification and support of measures to accelerate DRR implementation and improve coherence with the Agenda 2030 and the Paris Agreement.


Appui aux Programmes PASEC et PACTE de la CONFEMEN (Conférence des Ministres de l’Education des Etats et Gouvernements de la Francophonie)

01.03.2024 - 28.02.2028

En soutenant le Programme d’Analyse des Systèmes Educatifs (PASEC) et le Programme d’Appui à la Transformation de l’Education (PACTE) de la Conférence des Ministres de l’Education de la Francophonie (CONFEMEN), la Suisse contribue au renforcement de l’accès et de la qualité de l’éducation dans ses pays prioritaires en Afrique de l’Ouest. Des analyses approfondies des systèmes éducatifs sont réalisées, et les résultats permettent d’orienter les politiques éducatives pour une efficacité accrue.


Addressing Climate and El Niño-related Risks in Southeast Asia

01.02.2024 - 31.07.2025

Through an innovative partnership with the Asian Disaster Preparedness Centre (ADPC) and Geoneon, the SDC will support the creation of high-quality geospatial data products to support riskinformed and climate-smart decision-making in development cooperation and DRM in priority subnational areas in Lao PDR and Indonesia, contributing to and complementing efforts under the SERVIR Southeast Asia project implemented by ADPC and supported by USAID and NASA.


UNHCR Digital Hub of Treasury Solutions (DHoTS)

01.02.2024 - 31.01.2026

Switzerland supports UNHCR’s Digital Hub of Treasury Solutions to create a UN Center of Excellence (CoE) in Geneva. It will facilitate the UN System’s and its partners’ access to global financial ecosystems and markets. It will trigger collaboration opportunities for advancing new cutting-edge capabilities and technologies, support preparedness and readiness in humanitarian emergencies for the delivery of aid assistance and financial inclusion and reduce financial transaction costs.


Climate & Socially Resilient Livelihoods’ Support (CSRLS)

01.02.2024 - 30.04.2028

The climatic challenges exacerbate Afghanistan's already fragile socio-economic condition. The project by the Afghan NGO, The Liaison Office, aims to sustainably improve lives and livelihoods of the poorest households in selected provinces by strengthening the natural resource base, climate change resilient and diversified livelihoods, relationships within and between communities, as well as joint climate action.


Supporting Anticorruption and Asset Recovery through the United Nations Office on Drugs and Crime and the UNCAC Coalition

01.01.2024 - 31.12.2024

Switzerland has a fundamental interest in preventing corruption so that resources in partner countries flow in public services and sustainable development, and stolen assets are not deposited in Swiss financial institutions. Supporting the effective implementation of the United Nations Convention Against Corruption (UNCAC) including a multilateral dialogue platform on asset return will ultimately lead to increased resources for the implementation of the Sustainable Development Goals.


UNICEF, EMOPS Geneva, Core Contribution 2024-2025

01.01.2024 - 31.12.2025

The Office of Emergency Programmes (EMOPS) ensures that the United Nations Children’s Fund’s (UNICEF) role in complex emergencies is clearly defined, the organization properly equipped and prepared to deliver its mandate to support the needs of children. SDC’s support to EMOPS in Geneva enables UNICEF to lead inter-agency humanitarian coordination, response and standard setting in Water and Sanitation (WASH), Education, Nutrition and Child Protection.


Safeguard Young People (SYP) - Tanzania

Safeguard Young People Programme

01.01.2024 - 31.12.2026

With 62% of its population below 25 years, the Safeguard Young People (SYP) programme supports Tanzania’s demographic dividend. The project advances young people’s sexual and reproductive health and rights (SRHR) through a gender-responsive and inclusive policy environment, empowered youth who make informed decisions, and responsive health and education systems. SYP builds on 10 years of regional experience and UNFPA’s expertise.


Contribution to Medicus Mundi Switzerland (MMS) Network

01.01.2024 - 31.12.2027

Medicus Mundi Switzerland is a Network of 49 Swiss non-governmental organisations, foundations and scientific institutions involved in health advocacy at global level and health programmes in lowand middle-income countries. Taking a multisectoral approach and fostering open dialogue with relevant actors, decision-makers and the broader public, the Network facilitates the exchange of knowledge and experience and contributes to finding solutions to global health challenges.


CABI PlantwisePlus

01.01.2024 - 31.12.2027

PlantwisePlus is a global programme that is supporting countries and farmers to predict, prevent and prepare themselves for plant health threats in a changing climate. This will allow farmers to reduce their crop losses and produce more and safer food using agroecological and climate-smart practices that safeguard human health and biodiversity. The programme is implemented by CABI, a leading intergovernmental research and development organization in plant health, with research facilities in Switzerland.


SUD, OCHA: Sudan Humanitarian Fund 2024

01.01.2024 - 31.12.2024

The SHF is a country-based pooled fund that contributes to saving lives and protecting people in need by strengthening a coordinated and principled humanitarian response. It enables humanitarian actors to respond early and fast to humanitarian needs set out in the Humanitarian Response Plan (HRP) and to critical emergencies. All interventions are in line with the Minimum Operating Standards approved by the Humanitarian Country Team.

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