Romain Schneider (Luxembourg Minister for Development
Co-operation and Humanitarian Affairs):
Luxembourg, a center of excellence in financial inclusion
Romain Schneider, Luxembourg Minister for Development Co-operation and Humanitarian affairs shares his view on financial inclusion and the Grand-Duchy's added value within the sector.
Can you briefly present microfinance?
Microfinance as we know it today has emerged in Bangladesh in the 1970s as an initiative providing microcredits (small loans) to people living on the fringes of society in developing and emerging countries. By fostering economic development and empowerment, projects aim to address and solve problems of micro-entrepreneurs and facilitate the creation of small businesses. Microfinance has benefited from increased visibility since 2006,
when Muhammad Yunus received the Nobel Peace prize for his pioneering work in the field. Nowadays, microfinance is part of a broader structure - inclusive finance - which provides a wider umbrella of financial services to the poor, such as pensions, savings opportunities and insurance, or digital finance, aimed at the same targeted population.
What added value does Luxembourg bring when it comes to financial inclusion and microfinance?
Through the Ministry of Finance and the Ministry of Foreign and European Affairs, the Luxembourg government spends 1% of its GNI to development co-operation and inclusive finance is an area where Luxembourg can provide sound expertise and added value.
As an example, the ministries, in association with the EIB, are investing €3.6 million over the next two years to provide technical assistance to microfinance institutions in African, Caribbean and Pacific countries.
In the financial sector, 1/3 of global funds that invest in microfinance are domiciliated in Luxembourg. Impact investment therefore represents a new niche for the
financial center and is contributing to a new facet of its brand. To reinforce that positive dimension, institutions such as Luxflag can award microfinance labels to funds which respect specific excellency benchmarks.
« We are now moving towards
financial inclusion 3.0. »
Can you share three inclusive financial inclusion
success stories with us?
I just came back from Burkina Faso where I visited a project run by SOS Faim Luxembourg. Funds are provided for farmers to boost family agriculture and to fight against social exclusion of the entire family structure.
Technology also plays a significant role, helping recipients with stock prevision, benchmarking and improving delivery systems. This technological leap can be seen in all sectors. We are now moving towards financial inclusion 3.0. In addition, by supporting private investor platforms such as LMDF, the government is focusing on multiplier investment strategies. LMDF leverages the government’s financial support more than tenfold by bringing public and private investors together around an investment vehicle with a strong social focus in developing countries. In terms of visibility, The European Microfinance Award, organised by InFiNe.Lu – another government-backed organisation - plays a crucial role. Each year, a panel of experts in microfinance, chaired by H.R.H. the Grand-Duchess of Luxembourg, delivers an award to groundbreaking projects within specific areas of focus. Education was the subject of choice in 2016, while 2017 will focus on housing. The multi-faceted approach of the award ensures visibility for microfinance initiatives in all areas.