Financial sector development – financial services for all

An African woman sits at a table on which several mobile phones are lying and transfers numbers into a table.
Digital technologies play a central role in the development of the financial sector in developing countries. © John O’Bryan, USAID

A stable and efficient financial system is central to a well-functioning national economy.  Providing poor households, smallholder farmers and small enterprises with improved access to financial services can boost their involvement in economic life and reduce their vulnerability.

The SDC’s focus

The SDC has been active in financial sector development since the 1970s as an important strategy in poverty reduction. It focuses its efforts on promoting access to a range of client-centric, responsible and sustainable financial services for low-income households, smallholder farmers and small enterprises. The SDC also works to improve the financial inclusion of poorer households, i.e. their integration into the country's existing financial sector.

The SDC has long considered the promotion of savings to be a key first step in the financial integration of people with low incomes. It is therefore increasingly focusing on developing markets for agricultural insurance and disaster insurance schemes together with global reinsurance companies in order to break through this final barrier in financial integration.

To this end, the SDC prioritises the following:

  • For the clients: training courses for SDC target groups in general financial education with the aim of ensuring savings, insurance and credits and, thereby, also making access to institutional financial services easier.
  • For the service providers: support for financial institutions that have the capacity and willingness to build up their range of services for SDC target groups over the long term and in a cost-effective manner.
  • In terms of bolstering the financial sector, the SDC supports what are known as financial market infrastructures – a network of financial institutions or training centres, for example.
  • If certain conditions are restricting the positive development of a country's financial sector, the SDC relies on the support of and works together with legislative, regulatory and supervisory institutions.
  • The SDC plays an active role in international centres of expertise and networks such as the Consultative Group to Assist the Poor (CGAP) and the Social Performance Task Force (SPTF). Such organisations also help promote innovations and integrate relatively new topics such as digital technologies. The aims are to improve international coordination and harmonisation, exchange knowledge and experience, and support global and regional networks.

Background

A well-functioning financial sector is central to a country's economic development.  It offers the opportunity to mobilise savings to make productive investments. Providing private households and farmers as well as businesses with secure investment opportunities, access to payment transaction systems, credit and insurance services is essential in order to reduce income risks, achieve a more effective cushion against economic and market fluctuations and save for investments. Such investments can provide the basic foundation for an independent existence or for children's education. Crop and disaster risk insurance help smallholder farmers reduce their risks, which in turn increases their food security. An efficient financial sector accessible to all segments of the population has the effect of reducing poverty, both at the private household level and from the standpoint of the national economy. It also stimulates economic growth at all levels.

Current challenges

At present, poor people in many developing countries are largely excluded from the traditional financial system. They cannot open a savings account at a bank or apply for a small loan, for example. This is particularly true of rural regions, where the majority of the population have no access to such formal financial services.  Typical reasons for this deficiency are a lack of sales and service offices, high costs, insufficient infrastructure, services that are not geared to specific needs, and inadequate legal and regulatory frameworks.

As a result, poorer members of the population often have to resort to relatives, friends and other informal money lenders.  That is why the SDC works in financial sector development – to create enduring financial services for broad sections of the population who have so far had only limited, if any, access to such services.

The SDC also invests in new partnerships with the aim of attracting socially responsible commercial investors and works with other partners such as (local) commercial banks, insurance companies, leasing agencies and venture capital providers.

Microfinance

Financial services for poor sections of the population and microenterprises who have no regular access to the services offered by formal financial institutions.

Small enterprise finance

Small enterprises are of major importance in achieving broad-based development and employment. Yet often such enterprises have no access to services tailored to their needs.

Rural finance

Despite the major role they play in economic development, rural regions suffer from a massive deficit of financial services.

Micro-insurance

People in developing and transition countries tend to be exposed to a wide range of risks, such as disease, harvest failure, loss of income and theft, yet they have virtually no formal insurance protection.

Current projects

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Reducing risk-factors for Non-Communicable Diseases in Ukraine (Act for Health), phase 2

01.03.2025 - 28.02.2029

Non-communicable diseases represent the most significant health problem in Ukraine and the situation worsened as a result of Russia’s military aggression. This disease burden threatens the country’s resilience, development, its human capital, and the capacity of its healthcare system. The Act for Health project is a flagship Swiss engagement that addresses the chronic disease burden through tailored and innovative approaches at all government levels, thereby supporting Ukraine’s recovery and reform path.


SER Culture for Democracy

01.03.2025 - 31.12.2028

Independent culture & arts are strong drivers for improved social cohesion, tolerance and democratic practice at the local level. Building on this potential CfD will support quality cultural and artistic initiatives, mainly outside of urban centers. Strengthening the resilience and strategic focus of independent cultural actors will open up more spaces for critical thinking and reflection and ultimately contribute to stronger foundations for social cohesion, tolerance and democracy in Serbia.


Smart Packaging Waste Management

01.03.2025 - 28.02.2029

Improper  waste  management  is  widespread  in  North  Macedonia  and  a  pressing  environmental  issue  threatening public health and environment. To address it Switzerland engages with Pakomak to enhance the effectiveness,  efficiency and  transparency  of  its packaging waste  recovery system1 through  digitalization and modernization of packaging waste selection2, collection, sorting, transportation and recycling. These efforts will significantly decrease the amount of waste disposed in landfills and contribute to the Green Agenda. 


Contribution à l’appel éclair de UNHAS Haiti 2025

28.02.2025 - 31.12.2025

Haiti fait face à une crise prolongée. L’accès des acteurs humanitaires aux territoires se rétrécit. Depuis novembre 2024, les vols commerciaux desservant Port-au-Prince sont arrêtés jusqu’à nouvel ordre. Les populations en besoin d’assistance augmentent. L’appui du bureau humanitaire facilitera des ponts aériens pour un accès vital aux populations affectées, le déploiement du personnel, le transport de biens vitaux et des évacuations médicales.


Kyrgyz Republic: Water Supply and Sanitation Universal Access Program (WASUAP)

20.02.2025 - 31.12.2029

The project will enhance the universal and sustainable access to water and sanitation in the Kyrgyz Republic by establishing a new sector of professional water service providers in the rural area and by building their capacities. This institutional reform will be accompanied by investments in the construction and upgrade of water supply systems and sanitation infrastructure in unserved and underserved settlements.


JIGITUGU+: Appui au renforcementd es competences des jeunes femmes et hommes ruraux dans le secteur agricole

01.02.2025 - 31.12.2028

A travers ce projet intégré, la Suisse veut contribuer à relever les défis des zones rurales du Mali en mobilisant les ressources locales. Il vise à renforcer la résilience, promouvoir l’éducation et l’emploi des jeunes et des femmes, et améliorer la sécurité alimentaire. En intégrant ces publics dans des systèmes éducatifs, professionnels et agricoles adaptés, le projet aspire à un impact durable, notamment par l’augmentation des revenus, la promotion de pratiques agroécologiques et le renforcement des institutions locales.


Direct Humanitarian Actions, Reconstruction of WASH Infrastructure (emergency, recovery, sustainable construction)

15.01.2025 - 31.12.2027

In Ukraine, the areas close to the frontline remain severely affected by the war. International support is needed to ensure access to safe water, restore essential infrastructure and maintain basic water supply and sanitation services. The third phase of this Swiss-led programme focuses both on humanitarian emergency WASH response in frontline/border regions while laying the ground to inform comprehensive and innovative reconstruction approaches.


Asset Recovery Strategic Partnerships

01.01.2025 - 31.12.2029

Switzerland supports strategic partners in asset recovery who provide technical assistance to countries, advocate for international standards, and facilitate knowledge and exchange on international efforts and ongoing cases. The partnerships leverage Switzerland’s potential to influence the agenda more effectively, facilitate the integration of international best practices in ongoing restitution negotiations, and help ensure that returned assets benefit the populations of states of origin.


Backstopping support for SDC’s Cluster Green thematic Knowledge Networks A+FS, CDE and RésEAU

01.01.2025 - 31.12.2028

As a globally active knowledge-based organisation, SDC is critically dependent on effective and efficient knowledge management. SDC’s thematic networks sit at the heart of this endeavour, rendering an essential service across the organisation and its partners by connecting network members, collecting and processing information, and retaining and distributing knowledge. State-of-the art backstopping services are essential to this activity, as is close cooperation between SDC’s thematic networks.


Response to Gender-Based Violence 25-29

01.01.2025 - 31.12.2029

In order to fight increasing gender-based violence (GBV) in humanitarian and conflict contexts, address the root causes in a sustainable way and to contribute to lasting change, Switzerland provides targeted, multi-year funding for GBV prevention and response, and invests in rights-based and survivor-centred projects of three key partners.    


Core Contribution to the Interna-tional Fund for Public Interest Me-dia (IFPIM)

01.01.2025 - 31.12.2028

Public interest media in low- and middle-income countries face existential threats, impact-ing sustainable development and peace. IFPIM is an organization backing the resilience and independence of public interest media. Through SDC’s contribution to IFPIM, Swit-zerland promotes democracy by combating dis- and misinformation and ensuring media freedom and access to reliable information.


Voluntary Contribution to the Adaptation Fund (AF)

01.01.2025 - 31.12.2028

The Adaptation Fund (AF) has a proven track record for implementing innovative adaptation projects, including in SDC priority countries. It supports most vulnerable communities to increase their resilience and adaptation capacities in the face of the rapidly rising impacts of climate change including extreme weather events and slow onset processes. It is one of the four climate funds that reports to the Conference of the Parties to the Paris Agreement.

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