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Press Release
24 April 2008
Gordon Brown announces plans to unlock the power of financial services for Africa’s poor
Prime Minister Gordon Brown today announced plans for the Department for
International Development (DFID) to work with the
Grameen Group
and private sector partners to help Africa’s poorest citizens to access and unlock the power
of financial services.
DFID will help ensure more people in developing countries have the necessary skills to make microfinance schemes work successfully. Initial funding of £500,000, to be matched by private sector funding, will kick-start the scheme.
Following a meeting with
Nobel Prize Winner and founder of the Grameen Group
Muhammad Yunus, Gordon Brown said:
“With foreign investment into microfinance across the globe tripling to $4 billion between 2004 and 2006, the impact of microfinance is being felt all over the world. There is an urgent need to improve business and management skills in the microfinance industry in Africa to make sure this money is used to help people from the world's poorest communities.”
Microfinance provides financial services including deposit accounts,
insurance and, importantly, small unsecured loans to poor people. Following the
pioneering work of the
Grameen Bank in Bangladesh, which gave small loans to
develop local businesses such as weaving and woodwork, it is widely recognised
as an effective method of reducing poverty and dependency on aid.
Gordon Brown continued:
“As a first step we will provide £500,000 towards bridging the skills gap in the microfinance industry in Africa, which will be more than matched by the private sector. We will bring together civil society organisations, and the private sector to contribute the funding, knowledge and skills required to bring microfinance to those who need it most”.
DFID contributes £30 million every year to improve transparency and support
the development of strong financial sectors that are able to contribute to
growth and poverty reduction.
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Notes for editors
1. Two billion people worldwide have no access to basic financial services, which included bank accounts, insurance and pension schemes as well as loans.
2. The Grameen Bank has reversed conventional banking practice by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity.
3. As of March, 2008, the Grameen Bank has 7.46 million borrowers, 97% of whom are women. With 2,504 branches, Grameen Bank provides services in 81,574 villages, covering more than 97% of the total villages in Bangladesh.
4. Grameen Bank's positive impact on its poor and formerly poor borrowers has
been documented in many independent studies carried out by external agencies
including the World Bank, the
International
Food Research Policy Institute (IFPRI) and the
Bangladesh
Institute of Development Studies (BIDS).
For further information, contact Barbara Hewitt on 020 7023 0423 or 020 7023 0600, e-mail b-hewitt@dfid.gov.uk or call our Public Enquiries Point on 0845 300 4100.