INCLUSIVE AND INNOVATIVE FINANCE

Leveraging new financial tools, innovative financing is a diversified set of financial solutions and mechanisms that create effective ways to channel both private money from financial markets and public resources to solving development problems.

In 2023, the Directorate for Development Cooperation and Humanitarian Affairs significantly expanded its activities in the capital markets with the signing of a memorandum of understanding with the Luxembourg Stock Exchange, with the aim of facilitating the development of inclusive and innovative finance activities in the context of development cooperation. This memorandum of understanding follows the co-financing of a technical assistance programme for bond issues of the Global Green Growth Institute (GGGI) in conjunction with the Ministry of the Environment, Climate and Biodiversity and the Ministry of Finance.

In 2023, Luxembourg’s Development Cooperation also continued its support to various players active in inclusive and innovative finance.

A new three-year agreement has been signed with the Alliance for Financial Inclusion (AFI), a global network of around 100 financial sector regulators, whose European secretariat is based in Luxembourg.

In partnership with the Ministry of Finance, Luxembourg’s Development Cooperation has renewed its commitment to the Financial Inclusion Fund (FIF) with the European Investment Bank (EIB). This multi-donor fund supports African microfinance institutions (MFIs) to tailor their services to the needs of their customers, particularly young entrepreneurs, and to mobilise the resources needed to refinance the sector.

The year 2023 also featured the European Microfinance Week, an annual fixture for experts in the sector, which took place from 15 to 17 November 2023. It was organised by the European Microfinance Platform (e-MFP) and the Inclusive Finance Network Luxembourg ASBL (InFiNe.lu), with the support of the Directorate for Development Cooperation and Humanitarian Affairs. On 16 November 2023, at a ceremony chaired by H.R.H. the Grand Duchess at the EIB, the European Microfinance Award was presented to Yikri, an MFI in Burkina Faso, in recognition of its efforts in the field of financial inclusion for food security and nutrition.

Another flagship event was the African Microfinance Week (SAM), organised by the NGO ADA jointly with the Directorate for Development Cooperation and Humanitarian Affairs and the Togolese Government in Lomé from 16 to 20 October, with more than 1,000 participants. The theme of this sixth edition was inclusive and sustainable finance. For example, the conference focused on the role that inclusive finance can play not only in reducing risks and vulnerabilities, but also in supporting the transition to a green economy that is resilient to climate change.