Luxembourg to Support European Investment Bank’s Financial Inclusion Fund

The Financial Inclusion Fund provides technical assistance to microfinance institutions in Africa, the Caribbean, and the Pacific; With an additional €4.8 million pledged by Luxembourg over the next three years, the fund’s size has grown to €11.5 million; Building on remarkable results, the fund will continue to assist micro and small businesses in vulnerable communities to gain access to financial services.

The Grand Duchy of Luxembourg, represented by Minister for Development Cooperation and Humanitarian Affairs Franz Fayot and Minister of Finance Yuriko Backes, has contributed an additional €4.8 million to EIB Global’s Financial Inclusion Fund, increasing the total size of the fund to €11.5 million. The contribution agreement was inked at the EIB headquarters in Luxembourg on 18 July 2023.

The Financial Inclusion Fund will continue to provide support to financial service providers in African, Caribbean, and Pacific nations that target vulnerable groups such as youth, women, and rural populations. The fund was established in 2019 (https://apo-opa.info/3Q3Jf7D) to sustain the long-standing partnership between the EIB and the Luxembourg Ministry of Finance and Ministry of Foreign and European Affairs in the field of microfinance.

The Financial Inclusion Fund aims to strengthen the capacity of the EIB’s current and future microfinance counterparts and to reach out to disadvantaged segments of the population. It is working to achieve the Sustainable Development Goals of the United Nations, particularly SDG 1 (No Poverty), SDG 5 (Gender Equality), and SDG 8 (Decent Work and Economic Growth).

Since its inception, the fund has awarded 32 grants for capacity-building to diverse inclusive finance stakeholders in 25 countries in Africa, the Caribbean, the Pacific, and the EU Southern Neighbourhood. These grants have been used for a variety of projects, including connecting microentrepreneurs and small businesses with funding through digital platforms, empowering female business owners, improving loan application and disbursement processes, and providing savings accounts to make clients more resilient to various types of market shocks.
The ongoing operations of the fund are anticipated to yield additional remarkable results. Examples include training or coaching over 130 000 staff members and clients of microfinance institutions in the targeted regions, providing access to finance to 600 000 people in remote and rural areas of Zambia, deploying digital banking services to thousands of people in sub-Saharan Africa, and enabling 200 000 female microentrepreneurs to access and utilise financial products.

Future projects made possible by the contribution signed today will concentrate on promoting the economic empowerment of women (50 percent of projects will focus on gender and social inclusion), promoting climate action and environmental sustainability by supporting sustainable agriculture, and advancing digitalisation in the world’s least developed and low- and middle-income countries.

EIB President Werner Hoyer stated, “Finance is a crucial enabler of the Sustainable Development Goals of the United Nations.” To speed up development, we need more innovative models, particularly in the fields of women’s empowerment and climate action. The Financial Inclusion Fund is a potent instrument that enables the European Investment Bank to provide vital support to microfinance institutions worldwide and to have a positive impact on development. I am appreciative for the Luxembourg government’s longstanding support in this area. The Financial Inclusion Fund is evidence of our shared commitment to achieving the SDGs through financial means.”

Luxembourg’s Minister of Finance and Governor of the EIB, Yuriko Backes, stated: “With a contribution of €4.8 million to the Financial Inclusion Fund, Luxembourg intends to support meaningful action to promote economic empowerment and enhance the lives of individuals and communities worldwide. Building on our past efforts, we will continue to prioritise the delivery of technical assistance through the fund, focusing on crucial areas for sustainable development such as women’s empowerment and gender equality, climate and environmental protection, digitalisation and food security, among others. This renewed contribution exemplifies the strong collaboration between Luxembourg and the European Investment Bank in advancing finance for change, reinforcing our commitment to making a positive and lasting impact.”

Franz Fayot, the Minister for Development Cooperation and Humanitarian Affairs of Luxembourg, stated, “Providing formal financial services in a socially responsible and financially sustainable manner can significantly contribute to poverty reduction and job creation in low- and middle-income countries. However, the dearth of accessible and affordable financial services, especially in remote rural areas, continues to be a significant obstacle. In this regard, the Financial Inclusion Fund is a crucial instrument for removing obstacles to accessing effective financial services. Its activities contribute significantly to the achievement of the SDGs.”

Kris Peeters, vice president of the EIB, stated: “Luxembourg is a key partner for the EIB and one of the largest donors to EIB Trust Funds in a variety of sectors, including financial inclusion, climate action, economic resilience, and infrastructure. Our collaboration under the Financial Inclusion Fund is producing tangible results on the ground, assisting thousands of vulnerable individuals who lack access to financial services. The additional contribution from Luxembourg to the FIF is an opportunity to reflect on its past achievements and, of course, to strive for greater heights, to do more and to do it better, thereby ensuring a brighter future for marginalised groups, including women.