Expanding Access to Microfinancing for Over 30 years

For more than thirty years, CIDA has been working to expand access to microfinance, particularly for women, in the world's poorest countries. Funding by the Agency initially supported the delivery of microcredit directly to the poor. Over time, CIDA's assistance has focused more on the development of a wide range of microfinance providers such as cooperatives, credit unions, non-governmental organizations, non-bank financial institutions, and banks that offer a wider range of financial services to the poor.

Despite this good news, the demand for microfinance, estimated at anywhere from 400 to 500 million households, remains unmet. New approaches are required to meet this demand.

As microfinance institutions become more financially sustainable, they rely less on government support and look increasingly to the private sector such as capital markets and socially responsible investors to support their expansion. Averaging $32 million a year over the past five years, CIDA's assistance has evolved with the growing self-sufficiency of microfinance institutions.

Canada's government and its partners continue to be committed to the role of microfinance as a powerful tool to reduce poverty and are increasingly working directly with governments to build an enabling environment for the provision of financial services for the poor. Canada's government and its partners also support development of the infrastructure (e.g. credit bureaus) necessary to support the expansion of this sector. The following examples illustrate how Canada's support for microfinance makes a difference.

Looking Ahead

We are proud of the important work accomplished by our partners with regard to microfinance around the world. Our objective is to improve services so that they are:

• reliable - accessible when needed;
• sustainable - operated on a commercial basis without the need for subsidies; and
• affordable - at a cost that the poor are willing and able to pay.

Access to microfinance allows the poor to meet their basic needs for food, clothing, and shelter without having to sell off assets or curtail consumption; to invest in income-generating opportunities that contribute to economic development in the community; and to manage risk by reducing their vulnerability to unforeseen events. Microfinance changes lives and helps bring the world closer to the Millennium Development Goal of halving between 1990 and 2015 the proportion of people whose income is less than $1 a day. Canada's new government will continue to work with its Canadian and developing country partners to increase access by the poor, with a focus on women, to a wide range of financial services tailored to meet their needs.