Financial systems is a broad term that covers everything from functioning stock markets to new bank services for the poor. In many countries, cash has been the only form of payment for many. Bank accounts are expensive, and few have had the opportunity to save or send money securely.
The increasingly widespread use of mobile phones and other technology has made a major difference to private individuals and those running small businesses. Today, many of them can make financial transactions using mobile devices. Sida has supported part of this development, as well as other successful solutions such as smartcards.
More people with access to bank services
One example of a programme that works with this type of project is the Financial Sector Deepening (FSD) programme in Kenya. Sida is supporting this and is working to help more people with low incomes gain access to bank services and to secure micro loans.
The system of micro credit providers focusing on the poor and helping them with loans has made it easier for many small businesses to receive capital for starting up or developing their operations. Sida became involved in this at an early stage. Many commercial banks have now woken up to the advantages of micro loans and have entered into that market.
Improved conditions for companies
At the macro level, Sida helps countries and regions to develop functioning financial and capital markets. This increases the possibilities for international companies to invest and establish themselves, as well as creating the right conditions for the country’s local companies to grow and invest.
One of Sida’s major partners in this work is The Financial Sector Reform and Strengthening (FIRST) Initiative. The aim of FIRST is to promote growth and reduce poverty by supporting the financial sectors in poor countries. The organization is managed by the World Bank and provides support for many projects around the world.
