The MasterCard Foundation and UN Capital Development Fund (UNCDF) have started the expansion plan for the MicroLead program that has already proved its success in the recent past. The launching of the new expansion plan came at the 5th Annual African Microfinance Conference in Addis Ababa, Ethiopia. This new project will run for six years and cost around $23.5 million. It will enhance access to microfinance, particularly savings services, to 450,000 low income people in Sub-Saharan Africa.
According to Reeta Roy, President and CEO of The MasterCard Foundation – “By helping microfinance institutions to develop savings and other financial services that promote financial inclusion for the poor, the MicroLead Program is not only building capacity, but also increasing access to financial services to nearly half a million clients in Africa.”
Recent studies indicate that poor people are active savers and that the demand for savings is significantly higher than the demand for credit. Data show that savings accounts are being opened at rates up to 12:1 compared to loans even when both services are offered by the same institution. Savings accounts help poor people with critical needs smooth volatile income streams and accumulate sufficient funds to address basic needs, protect against shocks such as illness, and enhance productivity by investing small amounts in their businesses.
David Morrison, UNCDF Executive Secretary, said that the creation of MicroLead presents a significant boost for building inclusive financial sectors in developing countries. “We believe that the fight against extreme poverty through building Inclusive Financial sectors needs innovative approaches and strong partnerships” he said. “Since its original creation in 2009 in partnership with the Bill and Melinda Gates Foundation, MicroLead has proven to be a key instrument in shortening the time that poor men and women and small firms in developing countries wait to gain access to savings and a broad range of other financial services. We are excited about the potential of this new phase of MicroLead to bring financial services to more underserved markets and proud that this new partnership between The MasterCard Foundation and UNCDF presents another boost for reducing poverty and accelerating progress towards the Millennium Development Goals.”
MicroLead began in 2009 when UNCDF, in partnership with the Bill and Melinda Gates Foundation, initiated a flagship global microfinance Program to provide loans and grants on a competitive basis to microfinance institutions, commercial banks and financial cooperatives based in developing countries. All of the selected partners are committed to pursuing a savings-based approach, and are working towards the goal of becoming market leaders. To date, the Bill and Melinda Gates Foundation/UNCDF-funded MicroLead Program has awarded funding for 13 projects worth $20.1 million to southern-based market leaders to enable their entrance into developing countries with savings-led methodologies.
