Making Financial Markets Work for the Poor: Guidelines on Microfinance

These Guidelines for Swedish Agency for International Development Cooperation’s (Sida) support to microfinance clarify and discuss why Sida should support microfinance, how Sida can better align its support with international consensus in the field and what Sida’s priorities are. They have been developed as a complement to Sida’s Policy on Financial Sector Development in order to define and communicate Sida’s position on microfinance, both in-house and to external stakeholders. The Guidelines aim to improve the overall quality of Sida’s microfinance project portfolio and thereby poor people’s access to viable financial services.

Sida’s support to microfinance aims to promote the development of efficient and competitive markets for financial services, with a particular focus on the inclusion of the poor. The guidelines focus on Sida’s role in:

• Using a sector development perspective;
• Participating in donor co-ordination;
• Use of grants and smart subsidies;
• Fostering a conducive policy environment;
• Encouraging commercial viability, sound governance and local ownership;
• Using appropriate financial instruments;
• Ensuring sufficient specialist expertise;
• Encouraging linkages to discourage discrimination of clients affected by HIV/AIDS.