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

Object 1 – 12 of 1276

Research for action

01.01.2027 - 31.12.2030

The 2017 Joint Monitoring Report, published in July, states that serious efforts have been made since the Millennium Development Goals to improve access to safe water and sanitation around the world. However, disparities remain, particularly in sub-Saharan Africa and for the rural poor, more drastic for sanitation. This project aims to reduce this gap, by supporting applied research, transformative innovations, capacity development and networking, which will answer to the needs and requirements of the targeted population.


Nurturing Active and Responsible Citiziens

01.01.2027 - 31.12.2030

Molodova's democracy is still young and fragile. The population is disinclined to participate in decision-making, to practice democrtatic values and to demand their rights. Schools have an important role in educating active and responsive citizens, but are not well prepared for it. By improving democratic school governance and introducing practical civic education, Switzerland will support Moldova in raising civic consciousness of chlidren and adolescents, and engaging them in ther communities.


Global Water Security and Sanitation Partnership to achieve a water-secure world for all

01.07.2026 - 31.12.2030

The Global Water Security and Sanitation Partnership (GWSP) of the World Bank Water Global Practice is a global partnership with the objective to address the water and sanitation challenge in an integrated manner, as set out by the Global Sustainable Development Goal 6. This SDC support will promote innovative global knowledge production and exchange, dialogue and partnerships, as well as country-level support across regions at global scale.


UN-Water: Strengthening the Global Water Architecture for the effective achievement of the 2030 Agenda

01.01.2026 - 31.12.2030

UN-Water has now firmly established itself as a major actor in water and in coordinating UN agencies to speak as one voice for water. SDC’s support to UN-Water’s core budget is crucial to ensure that the political ambition of the 2030 Agenda for water and its related targets has an efficient institutional setting allowing an integrated monitoring and an efficient follow-up and review and strong coordination between UN agencies. UN-Water will be key to bring a more effective, integrated and coordinated approach to support the implementation of the 2030 Agenda with regards to water and sanitation and to review progress.


Economic Policy for Inclusive Growth

01.01.2026 - 31.12.2029

The planned intervention aims at supporting inclusive growth that improves the living standards for the Mozambicans, in particular women and youth. It will be pursued through increased analytical capacity and better informed policy making, by means of focussed support to economic analysis and discussion in and between government and non-government institutions. Emphasis on non-government institutions will enhance the demand for and accountability for effective policy making for inclusive growth


Global Alliance for Improved Nutrition (GAIN) – “Making markets work to improve the consumption of nutritious and healthy food”

01.01.2026 - 31.12.2026

Poor-quality diets have become the number-one risk factor for ill health. The quality of people’s diets depends on food systems which shape the demand, availability, affordability, and desirability of safe, nutritious foods. By supporting the Global Alliance for Improved Nutrition (GAIN), a Swiss foundation, SDC aims at enabling small and medium size businesses in low- and middle-income countries to become accountable producers of safe nutritious products for all - women, children and vulnerable people alike. It will leverage the Swiss experience in collaboration between public and private actors.


Global Measurement of Diet Quality

01.01.2025 - 31.12.2025

Diets are the number one risk factor in the global burden of disease and multiple forms of malnutrition co-exist with overweight and obesity being the fastest growing form, particularly among poor populations in developing countries. Routinely collected information on Diet Quality is necessary to better understand dietary trends, help to create awareness, and inform policies to improve diets and health outcomes. Therefore, SDC supports an international initiative to develop diet quality measurements.


UN Joint Programme on Youth Employment

01.01.2025 - 31.12.2028

Cambodia is the most youthful country in South East Asia with more than 50% of the population below 25 years. The key challenge of Cambodia is to create decent and productive employment opportunities for new entrants to the labour market. With its contribution, SDC addresses the challenge by enabling young people to have access to skills and quality education and employment whilst promoting rightful and decent working conditions.


Program contribution to OHCHR for promotion and protection of human rights in the oPt

01.01.2025 - 31.12.2029

Switzerland supports the office of the UN High Commissioner for Human Rights in the occupied Palestinian territory (oPt) to contribute to the effective realization of adherence to human rights and international humanitarian law in the oPt and to influence the behaviour of the relevant duty bearers. OHCHR has an exceptional role both in the humanitarian and development spheres in the oPt’s complex context of multiple duty bearers and harsh political and humanitarian realities.


Horn of Africa: One Health Units for Humans, Environment, Animals and Livelihoods

01.09.2024 - 30.06.2032

The project aims at improving the well-being of targeted pastoral communities challenged with inadequate access to basic health/veterinary services and environmental conditions in Somalia, Ethiopia and Northern Kenya through integrated health service delivery for both pastoralists and their livestock. The project will contribute to stability and vulnerability’s reduction of citizens in the region, thereby reducing their displacement/migration which is in the interest of Switzerland and the international community.


Solar Irrigation for Agriculture Resilience (SoLAR)

01.07.2024 - 31.07.2027

To adapt to climate change farmers rely increasingly on irrigation, ultimately depleting groundwater resources and raising energy demand. The project aims to address these challenges by promoting solar irrigation, water efficient agriculture and groundwater governance. The project will harness Swiss expertise on hydrogeology and technical innovations to contribute to climate resilient agriculture and facilitate knowledge sharing in South Asia and at the global level.


Pathfinders for Peaceful, Just and Inclusive Societies (Sustainable Develoment Goal 16+)

01.01.2024 - 31.12.2030

The promotion of peaceful, just and inclusive societies (SDG16) is integral to the success of the Agenda 2030 for Sustainable Development. In order to accelerate its implementation, a group of UN Member States are coming together to leveraging intersections within the Agenda (16+) and to accelerate national and international implementation, while building a movement of the willing around three grand challenges. Switzerland is a co-convener, a member and a donor to this initiative.

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