Acting on behalf of the German Ministry of Economic Cooperation and Development, the goal of KfW Entwicklungsbank’s microfinance initiatives is to create and enhance the sustainable access of un(der)served groups of the population to credit, savings and other financial services (e.g. payment services or money transfers, microinsurance).
Microfinance is part of its concept of financial system development. It goes beyond microcredit and aims at integrating MFIs into local financial markets. KfW’s vision is to develop a healthy microfinance sector including a number of full-fledged deposit-taking MFIs. Apart from financial commitments, successful microfinance initiatives need a favourable framework and strong microfinance institutions to exhaust their full potential to grow. To achieve this goal, KfW Entwicklungsbank uses a variety of complementary approaches to support MFIs, the most important ones being “Greenfielding”, “Downscaling”, “Upgrading” and “Linkage”.
KfW is one of the most important funders of microfinance worldwide. It has deep knowledge of microfinance markets in every region and specific know-how in: Responsible finance, due diligence, client need assessment, gender mainstreaming, local currency financing, structured finance, energy efficiency / renewable, energy finance, promoting and structuring of MIVs (anchor investor); financial system development approach.
