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

Object 13 – 24 of 1059

Improving safety for the Croatian population in mine-infested areas

A deminer removes mines in a meadow

01.06.2017 - 10.12.2024

Mines and other explosive remnants of war are a dangerous legacy from Croatia's 1991–96 war and they continue to pose a threat to the local population. Integrating mine victims economically and socially is also a challenge for Croatian society. As part of its enlargement contribution, Switzerland has provided CHF 3 million to support mine-clearance measures and improve the situation for mine victims and their families. The goal is to improve living conditions for people living in mine-infested areas.

Country/region Topic Period Budget
Croatia
Unallocated / Unspecified
Unallocated / Unspecified
GOVERNMENT AND CIVIL SOCIETY
Sectors not specified
Sectors not specified
Removal of land mines and explosive remnants of war
Enhanced security and safety

01.06.2017 - 10.12.2024


CHF 3'000'000



Support for international R&D cooperation in Croatia

The founder and managing director of lighting company REFLECTA presenting his lighting project with the aid of a flipchart.

01.05.2017 - 31.12.2022

Croatia ranks above average in terms of investment in new technologies compared to other EU member states but lags behind in the development of new products. Innovation is a key driver of economic development and therefore important to a country with a high unemployment rate. Switzerland is therefore contributing CHF 1 million to support Croatia's Eurostars programme. This programme promotes international R&D cooperation between Croatian SMEs and European partners.

Country/region Topic Period Budget
Croatia
Unallocated / Unspecified
Sectors not specified
Promoting economic growth and improving working conditions

01.05.2017 - 31.12.2022


CHF 1'000'000



Maximum cooperation needed to manage glacier melt in Central Asia

Two men working with specialist equipment on a glacier.

01.05.2017 - 31.12.2020

How to meet the needs of Central Asia’s 68 million inhabitants for water while respecting the glaciers overlooking Kyrgyzstan, Tajikistan, Uzbekistan and Kazakhstan? The SDC’s project is building on voluntary regional cooperation and rigorous scientific monitoring of the changes taking place in the glaciers.

Country/region Topic Period Budget
Central Asia
Water
Water diplomacy and security
Water sector policy
Water resources conservation

01.05.2017 - 31.12.2020


CHF 1'200'000



Higher Income in the South Caucasus Thanks to Competitive Agricultural Products

A man in a protective suit holding a honeycomb full of bees on the roof of a high-rise building.

01.04.2017 - 31.03.2022

Livestock farming is an important source of income for a large part of the rural population in Georgia, Armenia and Azerbaijan. But many farmers live from subsistence farming and produce just enough food for their own needs. The aims of the project are to strengthen smallholder farms and to provide them with access to markets. This way, farmers can sell their honey, meat, cheese and wool products, and sustainably increase their incomes.

Country/region Topic Period Budget
South Caucasus
Employment & economic development
Agriculture & food security
SME development
Agricultural development

01.04.2017 - 31.03.2022


CHF 5'100'000



Reform and Development of Markets, Value Chains and Producers’ Organisations

Reform and development of markets, value chains and producers’ organisations, occupied Palestinian territory

01.03.2017 - 31.08.2021

Private sector-led agriculture and agribusiness in the Palestinian occupied territory (oPT) can play a key role in building a resilient economy towards economic growth and in safeguarding rights and entitlements to natural resources and markets. This program aims at improving income and productivity in the agriculture sector, through improved access to markets, increased share of local market, enhanced competitiveness and profitability of Palestinian agribusinesses.

Country/region Topic Period Budget
Palestinian Authority
Agriculture & food security
Agricultural development
Agricultural policy
Agricultural co-operatives & farmers’ organisations

01.03.2017 - 31.08.2021


CHF 3'000'000



Access to drinking water: a challenge in Tajikistan

Three children around a fountain.

01.03.2017 - 28.02.2021

In Tajikistan, the poorest country in Central Asia, half of the 8.5 million inhabitants do not have access to drinking water. In mountainous and rural regions, the figure reaches 80%. This situation poses a serious risk to public health. The SDC's project on 'Safe drinking water and sanitation management in Tajikistan' (SWSMT) focuses on access to drinking water and sanitation in the east of the country.

Country/region Topic Period Budget
Tajikistan
Governance
Water
Decentralisation
Water supply
Water sanitation
Public sector policy

01.03.2017 - 28.02.2021


CHF 5'300'000



An attractive labour market for young Kosovars

A young man working on an electrical system.

01.01.2017 - 31.12.2020

The project « Enhancing Youth Employment » is aimed at improving job opportunities for young people in Kosovo, a population segment particularly impacted by unemployment. By connecting employers and job seekers, and by training young people in the skills in demand on the labour market, the project is helping to reduce unemployment and drive economic growth.

Country/region Topic Period Budget
Kosovo
Employment & economic development
Vocational training
Employment creation
Vocational training

01.01.2017 - 31.12.2020


CHF 7'570'000



Better public services in fourteen of Benin’s communes

A woman and a man shake hands in front of a sign with Switzerland's logo and the names of the two towns involved in building the bridge.

01.01.2017 - 31.12.2020

Efforts to decentralise public services in Benin are paying off. The SDC is focusing on two of the country’s departments. Since 2008, when the first support programme was launched, significant progress has been seen on the ground.

Country/region Topic Period Budget
Benin
Governance
Rule of Law - Democracy - Human rights
Decentralisation

01.01.2017 - 31.12.2020


CHF 8'500'000



Effective management and prevention of Non-Communicable Diseases

: A woman doctor examining a woman patient.

01.01.2017 - 31.12.2021

According to the World Health Organization (WHO), non-communicable diseases are the biggest cause of death worldwide. On an international average 60% of deaths are linked to NCDs.  This rate is often much higher in low-to-middle-income countries.  This is the case in Kyrgyzstan where cardiovascular diseases, cancer and diabetes account for 80% of deaths

Country/region Topic Period Budget
Kyrgyzstan
Health
Primary health care
Health systems strengthening

01.01.2017 - 31.12.2021


CHF 4'810'000



Sustainably managed pastures and healthy animals: Mongolia's 'green gold'

A woman holding a blue bucket tends to a herd of yak in a vast grassland landscape.

01.01.2017 - 31.12.2020

Since the collapse of the Soviet Union in 1991, the number of livestock in Mongolia has nearly tripled – to the detriment of the country's grasslands. The SDC is supporting an array of measures to encourage the sustainable use of pastureland, and to improve animal health and the marketing of livestock products. These efforts are helping to safeguard the livelihoods of nomadic herder families.

Country/region Topic Period Budget
Mongolia
Agriculture & food security
Agricultural land resources
Agricultural co-operatives & farmers’ organisations
Agricultural policy

01.01.2017 - 31.12.2020


CHF 7'776'000



Better training to facilitate the integration of youngsters in rural areas into the labour market

Three young Nigerien men walking through a plantation.

01.01.2017 - 31.12.2021

The SDC is committed to improving the education and vocational training system in Niger. Over 1.5 million young people living in rural areas currently have no access to education or vocational training. Their future ability to enter the labour market depends on good-quality basic education and vocational training tailored to their needs.

Country/region Topic Period Budget
Niger

Dosso and Maradi

Vocational training
Employment & economic development
Education
Vocational training
Employment creation
Primary education

01.01.2017 - 31.12.2021


CHF 14'500'000



Safeguarding children’s rights in East Jerusalem

Safeguarding children’s rights in East Jerusalem, occupied Palestinian territory

01.12.2016 - 31.12.2020

By supporting a comprehensive child protection programme in occupied East Jerusalem, Switzerland aims to ensure that vulnerable children at risk of being in conflict with the law or directly affected by the conflict, together with their families, have access to appropriate preventive and protection programmes. The intervention, implemented by UNICEF and its partners, is in line with Switzerland's engagement for the respect of human rights and international humanitarian law in the occupied Palestinian territory.

Country/region Topic Period Budget
Palestinian Authority
Governance
Conflict & fragility
Human rights
Legal and judicial development
Conflict prevention
Human rights (incl. Women's rights)

01.12.2016 - 31.12.2020


CHF 2'250'000


Object 13 – 24 of 1059