BRUSSELS–Managing Director, Amb. Mchumo was in Brussels, where he was an invited participant at the recent high-level Development Policy Forum (DPF) roundtable on: Innovative Financial Techniques for the Developing World, at the Bibliotheque Solvay.
At the forum, Amb. Mchumo called for workable policies for financial instruments, mechanisms and facilities, such as warehouse receipts, that could be directed at commodity producers and small-holder farmers in developing countries. In Brussels, he also briefed the EU-target media on the Common Fund, its activities and provided an overview of the upcoming 20th anniversary seminar in December.
The DPF forum is a partnership between Friends of Europe, an independent think tank, the World Bank, the United Nations, France’s AFD, UK’s DFID, European Commission and Germany’s GTZ.
A staggering 2.7 billion people in developing countries still lack access to formal financial services despite the plethora of services available in the developed world.
Those that did have access to finance were frequently only offered debt facilities with short-term repayment periods, said an official of the organization, Microsave India.
“The poor need a range of financial services such as savings facilities, which are far more important than credit. We don’t give people assets by giving them access to debt – we are effectively asking them to run a marathon on one leg,” he said.
The DPF roundtable focused primarily on innovation to improve the distribution of financial services in developing countries, rather than on innovative products.
Discussants broadly agreed that sufficient finance was available via donor counties and private channels, but that it was often not reaching the people for whom it was intended.
The discussion produced a number of potential solutions to the problems of micro finance, including: a reduction in conditionality on the part of donor countries and institutions; improved infrastructure in emerging economies; introducing taxes aimed specifically at supporting the developing world; reducing restrictions on remittances. Published: November 9, 2009.