Financial inclusion is high on DFIs’ agendas. Indeed, several institutions recognize financial inclusion as one of their top priority objectives (see Box VIII.1). Nevertheless, to our knowledge no DFI has a dedicated strategy to financial inclusion, which instead remains a component of their strategies to achieve inclusive growth and private/financial sector development. Information from the donor project database compiled by the MFW4A partnership, DFIs’ annual reports and websites, press releases, recent stocktaking exercises and research papers were gathered in the attempt of providing a brief overview of DFIs’ support to financial inclusion in Africa by looking at a representative sample of their activities at the household level, SMEs business level and in financial infrastructure.
The donor project database tracks initiatives backed by development partners aimed at supporting financial sector development and inclusion in Africa. The database covers the period 2000-2013. Out of the 351 projects included in the database, 305 were directly supported by DFIs including 224 projects that are currently active.1 While this list is far from being comprehensive, it provides some interesting insights about DFIs’ support to financial inclusion in Africa. The first interesting pattern that emerges from this database is that most projects are supported by a single DFI hinting to a low level of collaboration between these institutions. Indeed, out of the 305 projects that were identified, only 24 involved more than one DFI. In few instances, DFIs partnered with private sector entities such as the Bill and Melinda Gates foundation and the MasterCard foundation. Figure VIII.1 shows that EIB and AfDB are the most active DFIs in terms of number of projects supported in Africa, with respectively 106 and 57 projects. The World Bank follows suit with 43 projects
n terms of approach or delivery mechanisms, DFIs provide both funding and capacity building through advisory services and technical assistance grants. As a matter of fact, at least 56 out of the 305 identified projects in the donors’ database have a capacity building component. Note, however, that resources earmarked by DFIs for capacity building are still limited. For example, in 2010 capacity building funds of European DFIs (a body representing 15 bilateral DFIs) amounted to less than 0.85% of their annual funding (Renault, 2011).2 This severely constraints DFIs’ ability to have a strong impact at the institutional (on governance), organizational (on quality and 119 performance), and individual (on skills and expertise) levels. A similar pattern is observed for DFIs’ operations in the microfinance sector. The CGAP (2011a) reports that the share of total DFIs’ commitments to microfinance extended by the 10 DFIs reporting to the CGAP funder survey in 2011 to build the capacity of retail MFIs was only 2% in 2010. Although this figure does not fully capture DFIs commitments used to strengthen the market infrastructure and legal and regulatory environment, it is expected that those commitments will be even smaller since merely 4% of total capacity building commitments by all funders reporting to the CGAP funder survey in 2011 were targeting the market infrastructure and policy levels (CGAP, 2011b). It is, however, worth noting that as of December 2009, among all developing regions, Sub-Saharan Africa received the largest share of capacity building funding, with 33% of global commitments to microfinance by all funders (including 18 DFIs) reporting to the CGAP funder survey in 2010 (CGAP, 2011c).